methods of import substitution

exchange rate manipulation

• Keeping the local currency undervalued or managing exchange rates to make imported raw materials and capital goods cheaper for local producers while making foreign finished goods more expensive.

tariffs

• Imposing high taxes on imported goods to make foreign products more expensive, thereby forcing domestic consumers to buy locally produced alternatives.

Subsidies

• Financial assistance paid by the government to local producers to reduce their production costs, allowing them to sell goods at lower prices and compete effectively with cheaper imported substitutes

financial incentives

• Direct monetary measures provided by the government—such as tax holidays, low-interest loans, and export/production grants—to lower operating costs for local manufacturing firms