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The impact of Galawi’s Development Policy

1) Pedro: “I’m going to explain to you the two strategies, first the import substitution. Basically, import substitution is substituting the importedgoods with the locally produced goods in order to meet the internal demand. For this, a protection is needed, and the institution that makes this protection is the government. So, the “importsubstitution” is a government strategy for economic development which encourages industrial growth within a nation in order to reduce imports of manufactures, save foreign exchange, provide jobs, and toencourage local production for local consumption in order to reduce dependency
Secondly, regarding the export promotion, it refers to that policy of the government that offers encouragement to theexporters with a view to enhance the export of the country. And in order to achieve this objective, numerous incentives and facilities are given. Opposite to the import substitution strategy, this strategypromotes only the industries that have the potential for developing and competing with foreign rivals. The main objective of this strategy is to prepare the “potential” industries for competitionwith the other (foreign) firms.
I hope that my explanations were clear enough, if you have some questions please ask”
2) Consequently, the change in development strategy will affect the firm in manyways.
First with the foreign firms, it will be harder to be competitive with them. The advantage is that exports offer the opportunity for economies of scale because by broadening its market reachand serving customers abroad, a firm can produce more and do so more efficiently. Moreover, it will affect
3) The company has to change the strategy in order to trade. Some of these structuralchanges had to be about the exchange rate. The most important necessity for openness in trade is to have a flexible exchange regime.
Some other structural changes may be about the choice of appropriate...