Author Question: Historically, why did the import-substitution strategy become popular among developing nations? ... (Read 42 times)

melina_rosy · **on:** Jun 29, 2018

Historically, why did the import-substitution strategy become popular among developing nations?

What will be an ideal response?

Question 2

Refer to Figure 2-11. What is the opportunity cost of producing 1 bolt of cotton in Pakistan?

A) 3/8 of a pound of cashews B) 5/8 of a pound of cashews
C) 1 3/5 pounds of cashews D) 150 pounds of cashews

macagnavarro · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

This strategy gained popularity throughout the 1950s because, at this time, most developing nations exported agricultural and mineral products-goods that often faced very unstable international market conditions. Moreover, the terms of trade for these nations seemed to be headed on a long-term decline. When a country experiences a decline in its terms of trade, its imports become relatively more expensive in its domestic market, whereas its exports become less expensive in the world market. As a result of these conditions, by the 1950s import-substitutions policies started gaining prominence.

Answer to Question 2

B