What is the focus of import substitution?

The correct answer focuses on the strategy of import substitution, which involves fostering domestic production to replace imports. The essence of import substitution is to develop local industries that can manufacture goods that were previously imported, thereby promoting self-sufficiency and reducing dependency on foreign products. This approach is often adopted by governments to stimulate local economies and create jobs, encouraging investment in local manufacturing capabilities.

By prioritizing the production of goods domestically, countries can protect their economies from the fluctuations of international markets, enhance national security concerning essential goods, and potentially improve the balance of trade by reducing imports. This strategy aligns with various economic policies aimed at supporting local businesses and industries.

In contrast, focusing on increasing foreign investment or exporting surplus goods does not align with the core principles of import substitution. Additionally, reducing local product quality contradicts the objectives of this approach, which aim to produce quality goods domestically to replace inferior imported products.