What is the likely impact of import substitution on the PPC relating to domestic production ? Illustrate diagram.
PPC refers to the production possibility curve or frontier . Now import substitution means that we should reduce our foreign dependency . That is domestic production should increase to meet our consumption demands and we must reduce imports of foreign goods . Import substitution policy will lead to fullest exploitation of domestic resources and growth of production in the country . Allocation of means of production will be done in a more efficient way . So naturally the overall output or growth will rise . Hence the PPC will shift outward .