Munich Personal RePEc Archive

Import Substitution Industrialization [ISI]: An approach to Global Economic Sustainability

Jackson, Emerson Abraham and Jabbie, Mohamed (2020): Import Substitution Industrialization [ISI]: An approach to Global Economic Sustainability. Forthcoming in: Springer Nature, Cham : pp. 1-17.

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Globalisation has over the years brought about openness, thus creating an inextricable link among countries through various channels, including trade and investment. Consequently, there has been a substantial expansion in trade in goods and services and the flow of foreign direct investment between developed and developing countries. Even though, both have benefitted from this global openness, the balance of benefits is mainly tilted to developed countries, reinforced by the fact that developing countries have been importing more and exporting less to these countries – a reflection of the under-developed state of their industrial sector, which is evident in their export of mainly unrefined or primary products, with little or no value addition taking place. This gives attestation to the presence of an insignificant import substitution-oriented manufacturing activity in such countries, which have rendered them heavily reliant on imports for their survival – by extension making them highly susceptible to external risks and shocks. This brought about the inception of ISI, which originated from as early as in the 1930s through into the 1960s in Latin America and some parts of Asia and Africa – a notion that was meant to incorporate three stages, namely ‘domestic production of previously imported non-durable consumer goods, extension of production to a wide-range of consumer durables and complex manufactured items and finally, exporting of manufactured goods, with the vision of diversifying to multiple range of items’ (Bussell,, n/d).

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