Impact of Import on Economics

Trade has been one of the most primary reasons behind economic activity. Cross-border trade
not only makes the markets cost-efficient but rather also brings up a higher degree of
specialization to the respective nations. However, every economy has a self-interest toward the
domestic produce, and they try to defend their local manufacturers from cross-border
competition. Import sourcing is broadly defined as the acquisition of raw materials, components
etc. from various international sources for use in production process [Kashyap U, Bothra N.
2019]. However, it is assumed that raw materials and components imported largely contribute to
the cost minimization goals of manufacturers particularly due to location economies.
[Swamidass, P. (1993)]. Changes in international trade infrastructure (ITI) have facilitated
international trade through developments in communication, transportation and other structural
elements of international trade. A trade-off exists between domestic economic growth and
favored imports.
Product technology sophistication (PTS) [innovative and technologically intensive product,
likely to be created through greater industrial processing.], product and service quality and
importer strategic objectives are important for the attainment of competitive advantage.
Therefore, attainment of competitive advantage depends upon (a) the exporter to produce the
right products and (b) the importer whose business strategy places substantial weight upon
imports that serve as a vehicle for growth and efficiency gains. [Chryssochoidis, G., &
Theoharakis, V. (2004)]
According to Kee, H. L., Nicita, A., & Ollareaga, there is wide difference in import demand
elasticities across countries and tariff lines. The homogeneous goods have more elastic import
demand than differentiated goods. By taking 32 years data, in the context of Bangladesh, a lower
middle-income country by the blessings of international trade, Uddin, Helal & Khanam, Mst.
(2017), concluded that import is negatively related with GDP growth as well as GDP growth rate
is also negatively related with Import.
Results show that both simple and weighted average tariffs tend to underestimate the distortion
imposed by tariff. Because of the large variance in the United States tariff schedule,
underestimation of trade restrictiveness is among the largest. The import-weighted tariffs in the
United States are around 4 percent.
If the country could trade freely at given world prices, then its domestic production pattern
would be determined solely with reference to its comparative advantage in different sectors.
Where, however, there are only limited foreign trade possibilities, then the production decision
cannot be made independently for different goods considering present and future demand
[Atkinson, A. (1969)].

Internationalization in Import
The 21st century competition stresses that firms look for ways to lower their costs, gain access to
products, services, and knowledge not available domestically, and generally to take advantage of
import opportunities just as they explore domestic supply opportunities. Imports thus provide an
opportunity for organizational learning in the process of supply chain management, as well as in
the process of internationalization, for firms today. (Robert & Alejandro, 2012). . Any
organization that seeks to go global faces various options from which to choose from as an
expansion or market entry strategy. These options basically vary on costs involved, associated
risks and degree of control expected (Abdow & Mokamba,2017). Firms rate management
interest, limited domestic market, and inquiries from buyers as the most significant incentives to
start exporting. Import-experienced exporters assign higher ratings on nearly all export
incentives, while pure-exporters consider themselves more dependent on governmental support.
Importing has a comparatively modest, yet statistically significant, influence on exporting
(Holmlund & Vanyushyn, 2007). Now a days the import phaseout should be closely connected to
the stimulus of the internal demand and state support of the local manufacturers. A study on
agroindustry in Russia revealed that the attractiveness of the Russian food industry led to the
situation when now a large share of the Russian market is under the impact of the transnational
corporations (Zobov, Degtereva, Chernova, Starostin & Golodova, 2017)

Global Perspective of Import

The main motives behind global sourcing as stated in most cases are the location-specific
advantages of different countries which inspire companies to either set up plants or source from
independent suppliers located in those countries to drive down the costs and eventually attain
competitive advantage. Moreover, the increasing trend of global sourcing depicts that companies
nowadays do not only focus on the costs for procurement but they also take the quality,
reliability and other legal factors into account which impacts the importing country including the
local responsiveness of the sourcing country. However, in doing so companies face intense
pressure maintaining the complex and integrated operations taking place all over the globe.
Although importing can offer promising opportunities for companies, the drawbacks of such
global operations may put the companies at high risk. (Kotabe & Murray, 2004)

Asian Perspective of Import

The present phase of advancement of the world economy is described by the expanding job of
exchange. Exchange is a significant component in the dynamic improvement of the national
economy. However, the prospects of imbalance between exports and imports are a negative
aspect of the process. The development of India as Asia's new monetary force has been generally
expected for at some point now. Many theories and models have explained the optimal roles of
government and markets regarding economic growth over the past few decades. It is increasingly
critical to examine how the basic qualities of the connections among government and firms, the
two urgent on-screen characters in economy that impact monetary development from
differentiating points of view (Evans, 1995). Economic growth has a plenty of contributors in
which export-led hypothesis is the fundamental element of economic enhancement. In over four
decades, Bangladesh has managed a tangible growth in its export of goods and services (Mamun
and Nath, 2005). According to Helpman and Krugman (1985), exports can likewise bolster the
thin neighborhood markets of the poor economies to acquire benefits utilizing the economies of
scale. A study evaluates the evidence bearing on the question of whether China’s buoyant export
growth has led to significant changes in the import prices. This evidence recommends that the
effect of Chinese exports on worldwide import costs has been genuinely unassuming (Steven B.
Kamin, Mario Marazzi, and John W. Schindler, 2006). During the 2000–03 periods, as the issue
of deflation grew in prominence, observers increasingly pointed to China as a source of
downward pressures on global prices. It was estimated that, since 1993, Chinese exports lowered
annual import inflation in a large set of economies by 0.25 percentage point or less on average.
The effect of Foreign Direct Investment (FDI) on financial development is an exceptionally
discussed subject in the scholarly world. It has been suggested that FDI is vital to facilitate
capital formation for developing countries, to transfer knowledge and technology, and to create
employment which might have a direct affirmative impact on economic growth (Al-Iriani & Al-
Shamsi, 2009). Bangladesh government may concentrate on required changes and strategy
suggestions to make outside venture increasingly gainful.

Import Substitution
There are high degree of dependence on foreign trade situation, the low level of production
equipment and the demand for domestic products (Tatyana Kysil, Anna Kolodka, Anna
Rosokhata, 2014). It demonstrates the importance of the technique of import substitution. The
main endeavors of import substitution occur because of the crisis of the western economy known
as the ‘Great Depression’. During this crisis the decline of purchasing power of foreign markets
led to a drop in the world trade. Southeast Asia was affected in the middle of the previous
century; the region used the policy of import substitution to overcome the crisis. More
economies have sprung up through home-grown import substitution industrialization (ISI)
strategy in the developing world as compared to those that have plummeted for adopting the
prescripts of the Washington Consensus. According to these institutions (Washington
Consensus), developing countries would have been better developed if they had fully adopted the
neoliberal policy prescript suggested to them (Easterly, 2007).

Import Liberalization
Tariff-Rate-Quota's minimum access expansion can perversely trigger domestic price
increases. Often, TRQs have prohibitive over-quota tariffs to mimic import quotas in providing
minimum market access. In the WTO's Doha Round, it is likely that countries using TRQs will
avoid aggressive tariff reductions if they increase the quota portion of TRQs. We show that when
the import price lies between the unit cost of production and the price received by domestic
upstream firms, an increase in import quota as a share of domestic production may cause an
increase in the domestic retail price (Sébastien,Pouliot & BrunLarue,2012).

While there is general agreement that technology differences must figure prominently in any
successful account of the cross-country income variation, not much is known on the source of
these technology differences. This paper examines cross-country income differences in terms of
factor accumulation, domestic R&D, and foreign technological spillovers (Ram C. Acharaya
&Wolfgang keller, 2007). International technology transfer is found to play a crucial part in
accounting for income differences. We also relate technology transfer to imports, showing that
imports are often a major channel. At the same time, our analysis highlights that international
technology transfer varies importantly across industries and countries. 
International exchange is a two-sided coin, involving exporters and importers (Liang, N, Parkhe,
1997). The first is that exporters are the driving force behind international trade transactions, and
the second is that importers follow the neoclassical economics theory of rational choice in
international sourcing. While there is general agreement that technology differences must figure
prominently in any successful account of the cross-country income variation, not much is known
on the source of these technology differences.
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