What Factors Propelled Many Countries to Implement Import Substitution Industrialisation

Topics: Developing country, Developed country, Human Development Index Pages: 4 (1371 words) Published: January 22, 2012
What factors propelled many countries to implement Import Substitution Industrialisation? To what extent did the strategy succeed in helping economies to boost growth rates and to overcome balance of payments constraints? According to Braer, ‘import substitution and industrialisation is an attempt by economically less developed countries to break out of the world division of labour. (Braer 1972), This division of labour meant that the developing nations from Latin America, Africa and East Asia were mainly producers of foods and raw materials and felt they needed to enter into the world market through production of manufactured goods that were previously imported. The impetus for this was the need for growth in their respective economies. A second propelling factor for the implication of ISI in these developing nations is that the firms believed that they needed protection from the free market and their international competitors, while they were in the infant stages of development. If left unprotected firms in the developing nations would have found themselves vulnerable to the low prices of the powerful developed nations who looking to export goods into the developing nations. A further stimulus for country’s to implement an ISI policy on exports is the industrialisation that had already occurred in various developed nations. The developing nations set out to create a framework on domestic industry that would enable them to gain the technological expertise and infrastructure to enable them to become a permanent competitor in the world market and bridge the gap between themselves and the more developed nations. These developing nations were located mainly in 3 different areas of the world, Sub-Saharan Africa, Latin America and East Asia. Each engaging in ISI based strategies with a diverse range of methods, to varied success. Further symptoms these nations shared before they implemented ISI strategies are; wages being held down by surplus labour, which can...
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