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.