Glossary: import-substitution industrialization

DEFINITION:
An economic development strategy and a form of protectionism that emphasizes the growth of domestic industries by restricting the importation of specific manufactured goods, often by using tariff (q.v.) and nontariff measures, such as import quotas. Theoretically, capital would thus be generated through savings of foreign-exchange earnings. Proponents favor the export of industrial goods over primary products and foreign-exchange considerations. In the post-World War II period, import-substitution industrialization was most prevalent in Latin America. Its chief ideological proponents were the Argentine economist Ral Prebisch and the Economic Commission for Latin America (q.v.). Main weaknesses in Latin America: the domestic markets in the region were generally too small; goods manufactured domestically were too costly and noncompetitive in the world market; most states in the region had an insufficient variety of resources to build a domestic industry; and most were also too dependent on foreign technology.

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