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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Working out a comprehensive industrial policy to facilitate manufacturing of finished goods, raw material and intermediate goods that are consumed in it and imports substitution has never been a priority by successive governments after the nationalization of private industrial enterprises.
He also underlined the need for large foreign investment in the manufacturing sector to promote value-added exports and imports substitution. 'A level playing field would be given to existing and new local and foreign investors, ' the adviser said.
The new government should focus on an integrated imports substitution policy which is still missing especially for food items.
On 27 February 2017, the CBE announced allocated EGP 10bn for banks with an interest of 12% to be used in funding the working capital of medium companies that operate in the industrial field, agricultural processing, and new and renewable energy only, stressing that banks should give priority to companies operating in the fields of exports or imports substitution.
The relevance of the second wave is linked with the invention of imports substitution policy'.
Pursuing economic prosperity through government intervention to initiate modernization process at large scale and embracing ideology of imports substitution met with complete failure in Africa Latin America and South Asia.
What explains the failure of countries (Ghana China Indonesia India Egypt Peru Senegal etc.) that exercised aggressive government intervention in building modern industries and pursued the policy of imports substitution vigorously The strength of the answer to this mighty question reflects Lin's intellectual depth in understanding the low-income world and bringing powerful analysis of development policy and practice.
on the other hand explains the success of a few other nations that adopted exports promotion strategy instead of imports substitution. Exploiting comparative advantage successful nations were able to alter their human and physical resources preparing gradually for industrialized challenges.
It showed that our policymakers paid no serious attention to support the private sector in producing imports substitutions in order to reduce imports and improve exports.