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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Since 1970s, Egypt has been implementing the import-substitution industrialization as it imported machinery to manufacture consumer goods.
This orientation has been referred to in ECLAC writing as "inward-looking development" but is more commonly known as "import-substitution industrialization" [...] however, import-substitution was not the most salient feature of this pattern over time, nor one that was shared by all countries during the half-century in which this development strategy held sway.
If only there were more leaders who thought like my Lolo Miguel during the US Commonwealth and after we obtained our independence from the Americans in 1946, our country would have taken a completely different path and would have not gone astray with inward-looking, import-substitution industrialization that wittingly or unwittingly led to the total neglect of agricultural development.
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." (9) Another related, central theme that runs through the book is that the impact of the Great Depression was not the same across the region.
These were mostly part of the import-substitution industrialization strategy initiated in the 1960s, comprising exchange rates, tariffs, and tax/subsidy schemes for select industries.
This was when the world was divided in three: the first world consisting of rich market-oriented economies; a second world of state-led central-command economies; and a third world collection of basically poor countries, many of which - including Brazil, Argentina, Indonesia and India - were practicing import-substitution industrialization policies.
After decades of import-substitution industrialization, Latin America geared its efforts toward export promotion one more time over half a century after the first globalisation wave.
In Chapter 4, Robinson discusses the reorientation of state policies from import-substitution industrialization to global insertion of local economies, and he critiques the notion of "bottom-up globalization." The latter would involve, for instance, local communities of artisans in Otavalo, Ecuador, or Oaxaca, Mexico, who tap globalization to advance their life chances.
In virtually every Latin American country, national economic planning in pursuit of import-substitution industrialization became the norm.
But "import-substitution industrialization," as it was then called, was swept away by the great debt crisis of the 1980s and by new free-trade agreements in the 1990s.
Taiwan has exhibited a very successful pattern of rapid economic growth and declining income in-equality over the past three decades based on four major structural transformations: 1) agricultural reform, 2) import-substitution industrialization, 3) export-led growth, and 4) change from labor-intensive to technology-intensive production.
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.