Financial incentives and GDP for Import Substitution vs Foreign Buy

Financial incentives and GDP for Import Substitution vs Foreign Buy


Let’s suppose a large order for 100.000 USD for personal care products (shampoo).

Bought from abroad: 100K USD —> 100% GDP


Bought internally with import substitution: 100K USD –> 180% GDP


Additional local GDP:

5 % taxes(assuming 20% corporate taxes)

25% personnel (payslip + taxes/social)

25% operating and production cost

25% ingredients(base chemicals) costs

20% net profits for company

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