Import Substitution Industrialization

1222 Words5 Pages
Import Substitution Industrialization and infant industry development are the following:
Import Substitution Industrialization (ISI) as an economic development strategy was pioneered and grew out of the belief, “markets alone could not be relied upon to provide the physical capital and set up industries necessary for development,” (Demir, 2017). According to Demir (2017), “the pioneers of development economics viewed underdevelopment as a lack of capital which determined a very low labor productivity. Thus in its early phase (the 1950s and early 1960s), ideas surrounding development focused on capital accumulation and industrialization as the major vehicles to promote development.” It was believed by policymakers that richer countries used the accumulation of capital and industrialization as the primary catalyst to spur development; these policymakers also believed capital accumulation and industrialization would be the best method for developing economies to achieve development themselves. Thus ISI was born.
ISI is an industrialization policy aimed to encourage domestic industries by limiting competing imports (Demir, 2017). Applying the supply and demand model, policymakers who encouraged ISI theorized that consumers would purchase and substitute cheaper goods for goods that were more expensive and imported from other countries. This idea was accomplished by placing higher tariffs on foreign goods to achieve this aim. “ISI’s long-run objective was to first achieve
Get Access