“There is a belief among some economists that a country should focus more on export sector explanation and diversification than promoting the import substitution Industries (ISI).” Critically comment on this taking Sri Lankan economy as an example. You are expected to refer relevant articles from recognized sources on the said areas and provide your own views and analysis with proper reasoning. Export means shipping the goods and services out of the port of a country. An import is a good brought into a jurisdiction, especially across a national border, from an external source. Import Substitution Industries (ISI) means an economic theory employed by developing or emerging market nations that wish to increase their self-sufficiency and decrease their dependency on developed countries. Implementation of the theory focuses on protection and incubation of domestic infant industries so they may emerge to compete with imported goods and make the local economy more self-sufficient. Normally importing is not bad. Importing raw materials and goods is one of the paths of increasing the profit margins. There are number of benefits in importing the goods, such as high quality, low prices, and benefits related to the international trade. But I think there are more disadvantages for country. Importing of goods could lead the erosion of the domestic markets and national economies specifically when there is trade deficit occurrence the import is higher than the export. And can also be increased due to import of goods such as conflict in the domestic values due to the acceptance of social values. The domestic industries can also be crippled due to the import of the countries where the wages are low and the domestic industries are unable to compete since they cannot lower down their prices of goods than the cost of goods. The exporting of goods is specifically difficult and disadvantageous for the small and medium size firms. The sale of services and goods into the...
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