Import Substitution and Local Economic Development

Abstract

Import substitution deserves more consideration as a theoretical basis for local economic development policies. Its role in promoting local growth is theoretically well-founded. Less clear is the extent to which public policies can promote it. In order to facilitate experimentation, the article discusses several examples of analyses and programs that can be used to select target industries for import substitution policies. One approach uses changes in location quotients to identify potential targets; another approach focuses on the potential impact of redirecting purchases by local governments to targeted industries.