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Import substitution industrialization
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Import substitution industrialization : ウィキペディア英語版
Import substitution industrialization

Import substitution industrialization (ISI) is a trade and economic policy which advocates replacing foreign imports with domestic production.〔''A Comprehensive Dictionary of Economics'' p.88, ed. Nelson Brian 2009.〕 ISI is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. The term primarily refers to 20th-century development economics policies, although it has been advocated since the 18th century by economists such as Friedrich List〔Mehmet, Ozay (1999). ''Westernizing the Third World: The Eurocentricity of Economic Development.'' London: Routledge.〕 and Alexander Hamilton.〔Chang, Ha-Joon (2002). ''Kicking Away the Ladder: Development Strategy in Historical Perspective.'' London: Anthem Press.〕
ISI policies were enacted by countries in the Global South with the intention of producing development and self-sufficiency through the creation of an internal market. ISI works by having the state lead economic development through nationalization, subsidization of vital industries (including agriculture, power generation, etc.), increased taxation, and highly protectionist trade policies.〔Street, James H.; James, Dilmus D. (1982). "Structuralism, and Dependency in Latin America." ''Journal of Economic Issues'', 16(3) p. 673-689.〕 Import substitution industrialization was gradually abandoned by developing countries in the 1980s and 1990s due to the insistence of the IMF and World Bank on their structural adjustment programs of market-driven liberalization aimed at the Global South.〔Konadu-Agyemang, Kwadwo (2000). "The Best of Times and the Worst of Times: Structural Adjustment Programs and Uneven Development in Africa: The Case of Ghana."''Professional Geographer'', 52(3) p. 469-483.〕
In the context of Latin American development, the term "Latin American structuralism" refers to the era of import substitution industrialization in many Latin American countries from the 1950s until the 1980s. The theories behind Latin American structuralism and ISI were organized in the works of Raúl Prebisch, Hans Singer, Celso Furtado, and other structural economic thinkers, and gained prominence with the creation of the United Nations Economic Commission for Latin America and the Caribbean (UNECLAC or CEPAL). While the theorists behind ISI or Latin American structuralism were not homogeneous and did not belong to one particular school of economic thought, ISI and Latin American structuralism and the theorists who developed its economic framework shared a basic common belief in a state-directed, centrally planned form of economic development.〔Renato, Aguilar (1986). "Latin American structuralism and exogenous factors."''Social Science Information'', 25(1) p. 227-290.〕 In promoting state-induced industrialization through governmental spending through the infant industry argument, ISI and Latin American structuralist approaches to development are largely influenced by a wide range of Keynesian, communitarian, and socialist economic thought.〔Arndt, H.W. (1985). "The Origins of Structuralism."''World Development'', 13(2) p. 151-159.〕 ISI is often associated and linked with dependency theory, although the latter has traditionally adopted a much broader Marxist sociological framework in addressing what are perceived to be the origins of underdevelopment through the historical effects of colonialism, Eurocentrism, and neoliberalism.〔Perreault, Thomas; Martin, Patricia (2005). "Geographies of neoliberalism in Latin America."''Environment and Planning A'', 37, p. 191-201.〕
== History ==
Even though ISI is a development theory, its political implementation and theoretical rationale are rooted in trade theory: it has been argued that all or virtually all nations that have industrialized have followed ISI. Import substitution was heavily practiced during the mid-20th century as a form of developmental theory that advocated increased productivity and economic gains within a country. This was an inward-looking economic theory practiced by developing nations after WW2. Many economists at the time considered the ISI approach as a remedy to mass poverty: bringing a third-world country to first-world status through national industrialization. Mass poverty is defined thusly: "the dominance of agricultural and mineral activities -- in the low-income countries, and in their inability, because of their structure, to profit from international trade," (Bruton 905).
Mercantilist economic theory and practices of the 16th, 17th, and 18th centuries frequently advocated building up domestic manufacturing and import substitution. In the early United States, the Hamiltonian economic program, specifically the third report and the ''magnum opus'' of Alexander Hamilton, the ''Report on Manufactures'', advocated for the U.S. to become self-sufficient in manufactured goods. This formed the basis of the American School in economics, which was an influential force in the United States during its 19th-century industrialization.
Werner Baer contends that all countries that have industrialized after the United Kingdom went through a stage of ISI, in which the large part of investment in industry was directed to replace imports (Baer, pp. 95–96).〔Baer, Werner (1972), "Import Substitution and Industrialization in Latin America: Experiences and Interpretations", Latin American Research Review vol. 7 (Spring): 95-122.(1972)〕 Going farther, in his book ''Kicking Away the Ladder'', Korean economist Ha-Joon Chang also argues, based on economic history, that all major developed countries, including the United Kingdom, used interventionist economic policies to promote industrialization and protected national companies until they had reached a level of development in which they were able to compete in the global market, after which those countries adopted free market discourses directed at other countries to obtain two objectives: open their markets to local products and prevent them from adopting the same development strategies that led to the developed nations' industrialization.

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