import penetration

import penetration

the proportion of domestic consumption accounted for by IMPORTS. In the case of particular products the displacement of domestic supply by imports may be beneficial, allowing consumers access to products at lower prices than can be obtained from local producers (see INTERNATIONAL TRADE). Widespread import penetration across the economy however, when unmatched by an equivalent volume of EXPORTS, can result in BALANCE OF PAYMENT difficulties, falling domestic output and job losses (see UNEMPLOYMENT). In the case of the UK, import penetration in the competitive manufacturing sector has increased substantially, imports rising from 7% of domestic consumption of manufactures in 1955 to 51% in 2004. See also STRUCTURE OF INDUSTRY.

fig. 85 important penetration. The Uk import penetration ratio for manufacutured good. Source:office for National Statistics.

import penetration

an increase in the proportion of domestic CONSUMPTION accounted for by IMPORTS. In particular cases the displacement of domestic supply by imports may be beneficial insofar as it reflects COMPARATIVE ADVANTAGE (imports cheaper than domestic goods). Widespread import penetration across the economy however, not matched by an equivalent amount of EXPORTS, can result in balance-of-payments difficulties and a fall in domestic income and output levels. In the case of the UK, import penetration in the manufacturing sector has increased markedly in the period since 1955, as Fig. 85 shows. See PROPENSITY TO IMPORT, DEINDUSTRIALIZATION.