import-substitution industrialization (ISI)
Structuralist theorist were interested to develop an appropriate development model (unlike global capitalistic model of economic policy) to uplift Latin America from underdevelopment in 1947 after the establishment of National Economic commission for Latin America (ECLA). In 1940 ISI policy was already practiced by Brazil and other countries to increase its domestic exports and reduce imports with the objective of increasing manufactured goods and securing its domestic market. The characteristic of ISI policy matches the objective of structuralist theorist to challenge the claim of Euro-centric theorist that the free trade system based on liberal economy policy would only improve the economy level of the countries. Eventually, This lead Structuralist theorist to adopt ISI as a key policy of their development model.
Structuralist theorist underlines the need of state intervention in national economy so as to protect its ‘infants industries’ from the efficient foreign companies. That would secure their domestic market and increase manufactured goods but later they saw some of the obstacles to the continued growth of economy like the process of production remained complex over the time because there were no entrance of efficient machinery and technological devices. Later people experienced some of those negative impacts of ISI and were reluctant to make slight changes in it (for example applying the policy of export oriented industrialization).
However, it is to be noted that the development policy of structuralism is based on the historical experiences of Latin American countries during mid-twentieth century. The formation of National Economic commission for Latin America (ECLA) in 1947 is considered crucial in the discourse of structuralism because the rhetoric behind the establishment of ECLA is reflected in its economic policy of opposing the global free trade system and implementing the development policies like Import Substitution Industrialization (ISI) and land reforms.
Question: Why was import-substitution industrialization a key policy for structuralist theorists? (from chapter 3, question no 3)
Submitted by: Shekhar KC (08)
Submitted to: Prof Dr Mahesh Banskota
Date: February 12, 2012