Import substitution industrialization (ISI) is an economic theory that is often followed by developing countries or developing countries that want to reduce their dependence on developed countries. This approach focuses on the protection and integration of newly developed domestic industries in order to fully develop sectors so that the manufactured goods can compete with imported goods. Under ISI theory, the process enables the local economy, and its nations, to become self-sufficient.Understanding Import Substitution Industrialization (ISI)
The primary goal of substitution industrialization theory is to protect, strengthen, and grow local industries through a variety of strategies, including pricing, import, and government-sponsored loans. Countries using this concept try to develop production channels at each stage of product development.
ISI directly contradicts the notion of comparable profit that occurs when countries focus on less expensive goods and exports.
Theory of Import Substitution Industrialization (ISI) Theory
ISI refers to 20th-century economic development policies. However, the theory itself has been promoted since the 18th century and supported by such economists as Alexander Hamilton and Friedrich List.
Countries first adopted ISI policies in the southern hemisphere (Latin America, Africa, and parts of Asia), where the goal was to improve independence by building an internal market for each country. The success of ISI policies has been achieved by supporting outstanding industries, such as power generation and agriculture, as well as promoting domestic trade policies and defense policies.
However, developing countries gradually began to reject ISI in the 1980s and 1990s after the emergence of independence driven by global markets, a concept based on the International Monetary Fund and restructuring of the World Bank.
Theory of Import Substitution Industrialization (ISI)
ISI theory is based on a set of development policies. The basis of this view is the controversy over the children's forum, the Singer-Prebisch thesis, and the Keynesian economics. From these economic perspectives, a number of options can be found: an effective industrial policy that supports and regulates the production of strategic variables, barriers to trade as prices, overpayers assist producers in importing goods, and a lack of international support. investment.
It is related to and connected to the ISI school of structuralist economics. Considering the performance of rational economists and financial experts such as Hans Singer, Celso Furtado, and Octavio Paz, the school emphasizes the importance of considering the structural or social aspects of economic analysis. That is, political, social, and other aspects of the institution.
An important factor is the interdependence of developing countries that they often have with developed countries. The economic views of the building were also highlighted by the Latin American Economic Commission (ECLA or CEPAL, abbreviated in Spanish). In fact, Latin American structuralism is the same term for the ISI era that flourished in various Latin American countries from the 1950s to the 1980s.
Import substitution industrialization (ISI) is an economic theory that is often followed by developing countries or developing countries that want to reduce their dependence on developed countries. This approach focuses on the protection and integration of newly developed domestic industries in order to fully develop sectors so that the manufactured goods can compete with imported goods. Under ISI theory, the process enables the local economy, and its nations, to become self-sufficient.Understanding Import Substitution Industrialization (ISI)
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