Import Substitution Industrialization

Import substitution industrialization (ISI) is an approach to national development based on the notion that conditions in the developing world vary markedly from conditions in the developed world. In an attempt to reconcile some of these [Page 1550]differences, ISI relies on strong state intervention to protect developing industries from competition with foreign firms. This protection is most commonly in the form of high tariffs on imported goods. After the initial period of protection, the state then is supposed to remove protections to allow the now established industries to compete with foreign firms. The result of a successful implementation of ISI should be the development of national value-added industries. These industries in turn lead to a reduction in the country's dependence on foreign markets, which is ...