Import Substitution, Exchange Rates, and Economic Development

Based on the idea that foreign exchange shortages provide the key impetus to import substitution, this study reveals the fundamental relationship between technological progress and the scarcity of foreign exchange. The author relates technological advancement to the progressive replacement of imported elements in the production process with domestically manufactured ones, a process that requires skills as well as capital. The problem is examined at the macro level and, interestingly, also at the micro level where firms are shown to incorporate the shadow prices of foreign exchange in their production function.Bharat-Ram, Vinay is the author of 'Import Substitution, Exchange Rates, and Economic Development', published 1994 under ISBN 9780195633146 and ISBN 0195633148.