EXPERIENCE OF IMPORT SUBSTITUTION IN GREAT BRITAIN AND GERMANY IN THE XIX CENTURY.

Abstract

The article is devoted to the analysis of successful and unsuccessful experience of import substitution in Great Britain and Germany in the 19th century. The English textile industry, with the help of advanced technology, not only ousted cheap Indian fabrics from the domestic market, but also conquered the world market of that time. At the same time, attempts to produce cheaper grain on English lands compared to the grain of continental Europe failed. In Germany, there has been a successful import substitution in a number of advanced industries. The author defines the conditions under which import substitution can be successful: 1). this success can be achieved only in a number of industries, but not in all sectors of the country's economy; 2). to achieve success, the industry must focus not on the local market, but on the world market; 3). within the country for this industry there must be tangible (but not excessive) competition from foreign manufacturers; 4). In high-tech and dynamic industries, successful import substitution represented by state-owned firms is impossible due to the low efficiency of a government official compared to a private entrepreneur. However, in a number of primary industries, this import substitution, carried out by state-owned firms, is quite possible.