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Chapter3_State-Led Dvt(bis)

Chapter3_State-Led Dvt(bis) - Chapter3: 16:27:00 , .

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Chapter 3: State-Led Development in Practice  29/09/2009 16:27:00 ISI also known as  import substitution industrialization started to spread  throughout the third world after World War 1, and gained a lot of support in third world  countries after World War II. The implementation of ISI had positive and negative  impacts on countries who implemented either the ISI strategy or some variations of it.  ISI became more and more popular in the 30s due to the  recession which forced  governments to change the way they managed public funds. In fact, third world  countries quickly realized that they were very dependent of the West (“former colonial  masters”) and thus, decided to find measures to  diminish this independency. In other  cases, it was the threat of always being controlled by the Great Powers that made them  seek for a new alternative to  reduce the high cost of importation goods.  Import Substitution Industrialization: The Early Decades     Middle East The first IDI moves occurred in the Middle East. Those countries faced a very big  problem when they were unable to import manufactured goods from foreign countries  due to World War I. Because of WWI, Britain and France slowly loosen their grasp over  middle eastern countries, thus allowing countries to implement development banks  (Persia & Iraq) and advance funds in their own state bank (Egypt). In the case of Turkey,  when nationalists came into power (1923), they saved the  Turkish currency which was  falling due the end of the Lausanne treaty, a free-trade regime (1929) by  reducing  overall imports. Turkey's administration under Kemal Ataturk adopted several  protectionist measures such as raising trade barriers based on the Soviet Union's  model. It used a philosophy of statism to create state-owned enterprises and public  private partnerships. By re-investing the profits generated by the  agricultural sector,  Turkey was able to operate its different enterprises.  Latin America in the mid 30s
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In Mexico,  Lazaro Cardenas came in power in the 1930s. Although he calls  himself a socialist, his policies were described as leading more toward capitalism. His  policies did little  to improve workers' lifestyles. He started restructuring the economy by  setting up an important  land reform program. He also decided to  nationalize the oil  sector and railways. By 1940s, Mexico has high import tariffs on imported goods  and  invested in infrastructures in order to encourage the creation of new enterprises. Those 
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