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Import Substitution Industrialization

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University of Toronto St. George
Political Science
Sophia Moreau

Monday October 25 2010 Import Substitution Industrialization 4 Strategies of Economic Development -Manufacture- export: (Britain used) build up a strong manufacturer base and then produced secondary goods, then exported the goods -Forced- capitalization: (Britain used) when you have forced savings, and very low wages with a goal of building reserved money, and using that money to invest in industrialization -Primary- product export: most countries in the global South engaged in up until mid way through the last century, you export primary products (agricultural goods, or resources you extract from the ground) because it is a step towards capitalization, or that is your goal Import substitution industrialization (Focus of ISI) -Building up manufacturing enterprises to produce higher-value goods that were formerly imported; reducing economic focus on primary resources -Light consumer goods: textiles, processed foodstuffs, metallurgical products -Heavy industry: iron and steel, heavy chemicals, automobiles ISI is the solution to dependency: build up a manufacturing base by withdrawing from the global market Reasons to implement ISI -Volatility of primary commodity prices: agricultural prices are always changing -Declining terms of trade: lower income of elasticity (people who get more rich buy more secondary products than primary) -Developing and protecting infant industry: logic of ISI is that you start manufacturing in areas where you already know there is an internal market but you cut off import so theres no external competition
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