Import substitution development strategy

(redirected from Import-substitution industrialization)

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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Instead, they seek to go beyond the traditional focus on economics and politics--related to the rise of import-substitution industrialization schemes, political unrest, and rise of populist regimes in the region--to consider "the broader social, institutional, and political history of the slump while paying attention to the ways in which regional transformations interacted with global processes.
The crisis was due to an exhaustion of the pattern of reproducing industrial capital and the inefficiency of the import-substitution industrialization (ISI) development model, which could no longer facilitate this mode of reproducing capital.
In virtually every Latin American country, national economic planning in pursuit of import-substitution industrialization became the norm.
Singh's rationale for the heavy emphasis on India is that the "country is widely regarded as the classic and oldest case of an import-substitution industrialization strategy now trying to liberalize and enter the world market" (p.
During the depression of the 1930s, it took the form of import-substitution industrialization.
During the 1960s and 1970s, when modernization theory was in vogue, the most common approach to industrial development was import-substitution industrialization (ISI).
The relationship between exports, economic growth and development, and the differences between export promotion and import-substitution industrialization have been a subject of much interest in the development literature.
Export-led growth has been promoted as a universal strategy of industrialization and a superior alternative to import-substitution industrialization.
At the time of its writing, Professor Lustig observed that Mexico had discarded the import-substitution industrialization model that had characterized its post-World War II development, and embraced (perhaps too eagerly it now seems) an open economy-laissez faire model prescribed by the IMF and World Bank.
Recent changes in development economics, in its criticism of import-substitution industrialization, of dirigisme, of the public sector, social welfare, and minimum wage legislation, and the hegemonic policies of the World Bank and the IMF in attacking State enterprises and undermining the interests of the working classes throughout the Third World countries, are all leading to what James M.
If they had followed Japan in the early phase of import-substitution industrialization by banning the entry of foreign capital and foreign firms, they would not have fallen into their present critical phase of dependence and retardation.