Challenges and Opportunities of Import Substitution: In the Case of Intermediate Products

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The general objective of this study is to assess the opportunities and challenges of import substitution in Ethiopia. More specifically, the study has tried to achieve the following specific objectives: to review the different policies, rules and regulations that are undertaken to stimulate import, to appraise the implementation of import substitution and its effectiveness, to describe the economic benefit of import substitution to the economy and to determine the role of manufacturing sector in relation to facilitating import substitution. Descriptive research design was used because it helps to answer the research question and assess, identify, and describe the problem at hand. The study also adopted mixed research approach which includes qualitative and quantitative research approaches to obtain the desired results of the study. The target population of the study is exporters, manufacturers, and government (public) workers. Therefore, the student researcher used interview using non-probability sampling approach, specifically convenient sampling technique by using those customers available in a certain time and place. Convenience sampling is used because it is a type of sampling where the first available primary data source would be used for this research without additional requirements. The study has found that bureaucratic red tape, the difficulty to get well trained labor, technological inferiority, shortage an frequent interruption of electric power supply are found to be the major challenges of import substitution industrialization. On the other hand, efficient road network, the developments of industrial parks, the presence of efficient and low cost telecommunication network, and the presence of various economic incentives are found to be the major opportunities of import substitution industrialization in Ethiopia.



Import substitution, Import substitution industrialization, Intermediate