Import substitution development strategy

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Import substitution development strategy

A development strategy followed by many Latin American countries and other LDCs that emphasize import substitution-accomplished through protectionism-as the route to economic growth.

Import Substitution Development Strategy

A development strategy whereby a government restricts or forbids the import of industrial material and subsidizes local material. For example, a country may not allow the import of refined oil and instead encourage development of local oil refineries. The idea behind this strategy is to make a less developed country less dependent on international assistance and foreign direct investment until such time as it is can absorb investment more easily and also trade its own products. This development strategy was followed in Latin America and some other regions for most of the mid and late 20th century. It has its theoretical foundations in Keynesian economics, though some analysts have claimed that each nation industrializing after the United Kingdom has followed some form of import substitution.
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Import substitution industrialization (state-capitalist under Asad) continued in the 1970s; but its turnkey feature kept Syria dependent upon foreign expertise, raw material and parts.
The balance of payments problems of import substitution industrialization were worsened by declining productivity in South African manufacturing, itself a by-product of tariff-protected import substitution.
Capital-intensive industries, created as a consequence of import substitution industrialization, require economies of scale and longer production runs in order to operate competitively (Williams, 1989, p.
Up until the 1980s he advocated the policy of import substitution industrialization as a necessary condition for Peripheral growth and development.
This strategy almost foundered as a result of fiscal crises in the mid- to late-1960s; crises which caused regimes to contemplate either "deepening" or abandoning efforts at import substitution industrialization and popular mobilization.