Import Substitution in Tourism

Import substitution is a development strategy that advocates for the replacement of foreign imports with the production of goods (but rarely services) locally. This is with the aim of improving the balance of payments and creating a diversified economy, which is able to create opportunities for growth and welfare generation (Bruton 1989).

Even though it is positioned under development theory, the rationale for import substitution is grounded in trade theory. Such a strategy encourages domestic production, thus reducing a dependency on outbound tourism. This enables developing countries to become self-sufficient and to eliminate the role of developed countries in the process of producing goods and services (Investopedia 2021). Efforts to minimize the importance of outbound tourism can be analyzed through the prism of politics, where political effects, both bilateral and multilateral, peak in 3 months (Zhou et al. 2021). The success of such development strategies is, however, doubtful.

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