By way of contributing to our running glossary of terms, here is a defintion of Import Substituion:
Government strategy that emphasizes replacement of some agricultural or industrial imports to encourage local production for local consumption, rather than producing for export markets. Import substitutes are meant to generate employment, reduce foreign exchange demand, stimulate innovation, and make the country self-reliant in critical areas such as food, defense, and advanced technology.
Defintion provided by http://www.businessdictionary.com/definition/import-substitution.html
Ah, now I get it. From my preliminary readings of modern Africa, especially post 1960s, much analysis of the nations that have fared "better" than most can be attributed to having embraced this strategy - though I should point out that I never once came across this term :-( My understanding as to why more independent African nations did not pursue this strategy is because there were other faster ways in which to grow their economies - albeit with the proceeds landing in the hands of a select few, both indigenous and Western! Combined with the notion that comparative advantage is lauded in the political and economic community, sometimes the more conservative and better in the long run strategy is ignored :-( Who is to judge though - what would you choose if you won the lottery: lump sum of cash that you may blow in a few years, or the option of receiving your winnings gradually as learn how to invest and spend it properly?
ReplyDeleteExactly. Though as you know it was not just about the thirst for rapid development, it was also a matter of the instituions and infrastructure left by the previous regime, the relationship between firms and the state, and of course the pace and strategies dictated by international institutions. OH and the second unrelated point is the role of technology--critical for understanding Aisan development along these lines more than african. THink of Amsden's article on late industrializers and the role of Technology "learning " or "transfer". If ISI (Import Substitution Industrialization) is pursued from an intermediate phase of technology transfer, the state is then later in a position to dislodge foreign firms in favor of domestic firms. ISI was pursued with varying degress of sucess in India, China, Southeast Asia and Latin America.
ReplyDeleteI totally agree that the framework newly independant nations worked with early were fragile. It is easy to forget that Europeans etc had a few hundred years practice in making the "nation state" function, new tricontinental nations in the 50s, 60s and 70s have been judged on a lack of overnight sucess :-( I hate to be all environmentally deterministic, but I do believe that Africa is in a tough position to make successful inroads a la Asian tigers because at the end of the day, they have the fastest growing population on the least agriculturally sustainable continent :-( Sigh!!!
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