"Buying Local: The Economics of Import Substitution"

September 15th 
Stephen Cooke - Agricultural Economics, AERS

Abstract: Export enhancement and import substitution are both commonly employed community economic development strategies. The treatment of import substitution has been less rigorous with this strategy relegated to folk economic and qualitative treatments. This presentation describes both strategies symmetrically in both the Leontief and Keynesian models. It is found, predicated on the assumptions of the models and on the existence of unrealized comparative advantages in the regional economy, that import substitution is at least as good an economic development strategy as export enhancement. For either large changes or the cumulative effects of small ones, import substitution creates more economic activity.