Reliance was put on foreign private entrepreneurs to supply capital, technology and management, the legacy of the colonial era. Africas failure to industrialize is partly due to bad luck. Most economists and policymakers view ldcs as consisting of large traditional and modern sectors. What institutions can foster african industrialization in a world of global value chains17. Import substitution industrialization isi was pursued mainly from the 1930s through the 1960s in latin americaparticularly in brazil. See the distorted growth of import substitution industry. Trade and industrialisation policies experiences from zambia. This paper chronicles the evolution of industry in ghana over the postindependence era from an inward overprotected import substitution industrialization strategy between 1960 and 1983, to. Import substitution industrialisation and economic growth evidence from the group of brics countries aregbeshola r. Import substitution industrialization looking inward for.
Import substitution industrialization is simply the industrial development program based on the protection of. The origins of import substituting industrialization in india tirthankar roy1 abstract in the postwar world, india was one of the most protectionist countries. The import substituting industries then formed the basis for increasing the importation of capital inputs nattrass and ardington, 1990 in order to increase local. This strategy comes into being because of the belief that through industrialization, the senegals government would be able to promote the emergence and expansion of. However, it has not until now produced a comprehensive statement of governments approach to. Firstly, why has the level of industrial achievement been so low. Google scholar baer, werner 1984 industrialization in latin america. The war periods in sixties and seventies further limited the flow of funds which resulted in increased recession hawash 2007. Import substitution industrialization isi definition. This article investigates the importance of import substitution industrialisation isi on the economic performance of the countries in the group of brics brazil, russia, india, china and south africa. Iss targets the protection and incubation of newly formed domestic industries to develop sectors fully, so the goods produced are competitive with imported goods.
Like many developing countries, kenyas early years of independence pursued an import substitution strategy in which the government provided both direct support and tariff protection for the industrial sector. In doing so, the study considered the targeted sub sectors for import substitution. November 20 marked the 25th africa industrialization day, yet over the. This policy was intended to promote industrialization by protecting domestic producers from the competition of imports. Industrialization is the process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods. Does import substitution industrialisation strategy hurt. Hence development has come to be seen as a process of contracting the traditional sector and its growthretarding institutions in favour of a growing modern industrial sector. The role of the government in promoting industrialization. Pdf critique of import substitution industrialisation.
Myths and realities in strategy and development kwan s. Successes and failures, journal of economic education. Kim is professor of economics and departmental fellow of the kellogg institute at the. Protectionism originated in british colonial measures to design an industrialization policy in the 1920s. The concept of import substitution 1 is taking an increasingly important place in the theory of development. Options and best practices economic commission for africa. This article investigates the importance of import substitution industrialisation isi on the.
The concept of import substitution in the theory of. It aimed at strengthening the domestic production of those goods that were previously imported. Isi is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. Industrial policies for the structural transformation of. Its core objective is to set out governments approach to south africa s industrialisation. In 1961, industrialization speeded up, however due to high import of raw material in 1965. Import substitution industrialization in latin america. Industrialization for an emerging africa issues paper.
Sustainable industrialization university of victoria. Importsubstitution did not lessen kenyas external dependency, but merely. Import substitution industrialization isi is only one industrialization strategy among others. Lastly, section vi discusses possible ways of financing industrialization in africa. Adewale department of business management, college of economic and management sciences, university of south africa, unisa 0003, preller street, muckleneuk ridge, p.
Import substitution to export promotion kankesu jayanthakumaran abstract import substitution policy creates biases in the incentive structure and lowers the growth of potential exports in the long run. Ghana has since independence undergone three major episodes of industrialization namely an inward overprotected isi import substitution industrialization strategy 196583, an outward liberalized industrialization strategy 19842000, and since 2001 industrial architecture based on valueadded processing of ghanas natural resource endowments through a private sectorled accelerated. The key policy component of isi was protection of domestic firms. Pdf on sep 29, 2010, thomotuya, vincent chinyere thomotuya and others published the role of import substitution industrialization policy in the economy of nigeria find, read and cite all the. Free essay sample on the given topic advantages and disadvantages of import substitution. Industrial policies for the structural transformation of african economies. Africas low level of industrial development and product diversification is reflected in an analysis of the international trade of ssa countries by industrial products. Import substitution industrialization isi definition government strategy that emphasizes replacement of some agricultural or industrial imports to encourage local production for local consumption, rather than producing for export markets. The ensuing slump in global demand for many of south africa commodities resulted in a slowing down of exports and investment in south africa. The eu remains south africas most important economic trade partner, under the auspices of the trade, development and cooperation. Import substitution industrialization is an economic theory adhered to by developing countries that wish to decrease their dependence on developed countries. The chapter concludes with a reflection of factors that have shaped industrial development in kenya. Importsubstitution industrialization was widely accepted in the 1960s and 1970s as a viable policy package to help developing countries achieve structural.
Industrialization in subsaharan africa occurred in two phases. Written by academic experts with 10 years of experience. Baer, werner 1972 import substitution and industrialization in latin america. In contrast, in china and south asia, the industrialisation strategy has been inward looking and focusing on import substitution.
Although these countries were the last to embark on the strategy of import substitution, they followed the same steps of. Trade reforms in this respect are likely to reduce the gap between domestic and border prices. Import substitution industrialization isi, development strategy focusing on promoting domestic production of previously imported goods to foster industrialization. Does import substitution industrialisation strategy hurt growth. Import substitutes are meant to generate employment, reduce foreign exchange demand, stimulate. Other articles where import substitution is discussed. It is important to stress that the nipf is a policy framework and not a blueprint for the industrial economy. A recurrent theme in the east asian model is the use of the import substitution industrialization isi phase as a basis for technological learning and international business. By definition, isi is an attempt by economically lessdeveloped countries to break out of the world division of labor. The industrialization process in subsaharan africa occurred in two phases. South africas industrialisation strategy and import. More specifically, have the import substitution policies followed by most ssa countries failed or have they simply not been implemented effectively.
Institute of statistical social and economic research. Import substitution industrialisation and economic growth unisa. Import substitution industrialisation and economic growth. Problems of industrialization in africa african issues. The process of industrialization in subsaharan africa occurred in two phases. In this article we will discuss about import substitution and export promotion. But the extent of africa s industrial crisis is more farreaching than this. Industrialization rested on the twin pillars of consolidating food selfsufficiency, first stage import substitution and more processing of domestic raw materials for. Subsaharan africas experiment with importsubstitution industrialisation created largely. Pdf this article aims to contribute to the understanding of the process of import substitution in subsaharan africa. Import substitution industrialization isi is a trade and economic policy which advocates. Ajayi department of geography, university of ibadan, nigeria abstract perhaps one major problem facing nigeria today that has received little or no attention remains her low industrial base. In east and southeast asia, the successful economies have followed an outward looking export oriented industrialization strategy. Multinational corporations in south africa, in journal of southern african studies, special issue, 1976.
While some of these policy interventions have culminated in the desired outcomes, quite a few have faltered on the platter of ineptness. Protection, in the form of high tariffs or the restriction of imports through quotas, was applied indiscriminately, often to. Meilink is a senior research officer of the african. It seems, however, that certain ambiguities are concealed beneath an extremely simple idea.
National industrial policy department of trade and industry. The terms of trade shocks and economic crises of the 1970s and 1980s brought with them a 20year period of macroeconomic. Import substitution and export promotion economics. Subsaharan africas isi and the protectionism that underpinned it could then be described as a distortion of the good east asian benchmark business model. Import substitution industrialization isi is a trade and economic policy which advocates replacing foreign imports with domestic production. Egypt faced problems like domestic fiscal and exchange crisis. The korean miracle 19621980 revisited kellogg institute. The conclusion is that the type of industrialization that occurred has not led to a. This article aims to contribute to the understanding of the process of import substitution in subsaharan africa. Advantages and disadvantages of import substitution, essay. How successful was the policy of import substituting. The approach to be used in this policy framework is dual as it encourages and export oriented approach with import substitution for identified strategic industries. One element is the extremely high level of industrial product imports into the vast majority of ssa countries.
However, it ceased being mainly a mechanism of industrialization, and became in the twentieth century part of a continuing process of growth and of a changing pattern of industrial specialization among economically advanced countries. Pdf industrialization in subsaharan africa and import substitution. Unlike in other regions especially brazil, south africa s import substitution policy only covered industrial consumables and virtually excluded capital goods standish, 1992. The latter was epitomized in the import substitution industrialization isi strategy adopted in the midcentury. Import substitution advantages and disadvantages free essays. The next stage is the maintenance of high growth rat.
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