In one form or another, protectionism is inherent in all countries. It is symbolic that one of the first decrees of Joe Biden as President of the United States is called “Buy American”. We can also recall the strict requirements for certification and admission of imports to the market, applied in the EU and China, and localization in public procurement in the Russian Federation. As for instance, certificate harmonizing process and obtaining permits for food products export to EU and China can take years.
Each country itself seeks a balance between free competition and government support measures, there is no universal solution. Import substitution really does not develop free competition and can affect consumers who are comfortable with importing. On the other hand, you need to start somewhere.
The more value added is generated domestically, the better for the economy. A good example is the scandalous Lviv tender for the purchase of buses mentioned in “Freedom of speech by Savik Shuster” on “Ukraine” channel.
There is a Ukrainian plant “Electron”, which orders services and components from other national manufacturers, hires specialists. Its products may be more expensive than imported ones, but taxes are paid on every production stage and jobs are created. So, the budget receives twice as much from one Ukrainian-made bus than from purchasing a Belarusian one. It is important that all these funds remain in our economy. Thus a cheaper (imported) bus turns out to be not such a profitable choice in the end.
This raises the problem, namely competition between long-term and short-term goals.
Indeed, it can take years to see the effect of import substitution. This is too long perspective for a business that lives at an ultra-fast pace and has to provide profitability “here and now.”
The second point is balance. In each case, it is necessary to assess when imports are irreplaceable, and when unpopular decisions and restrictions should be made to support Ukrainian producers.
Finding a compromise and determining which goods should fall under the import substitution program is the main task that officials and business must solve.
In the era of globalization, no country can do without protecting its internal market, and Ukraine must also take this step.
