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Chapter 3 Reading Group

Chapter 3 Reading Group - Chapter 3 INTD NOTES part 1(35-51...

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Chapter 3 INTD NOTES part 1 (35-51) STATE-LED DEVELOPMENT IN PRACTICE -After WWI, ISI (or some version of it) began to spread throughout the 3 rd world -However, in the 60’s and 70’s, problems with ISI arise The Early Decades of Import Substitution Industrialization (ISI) -With hopes of ending former colonial influence, governments seek greater economic independence -economic changes forced governments to find ways to reduce import bills -Middle east (dependent on manufactured goods) first to experiment with ISI -had more freedom to determine policies even though they were under French and English rule (post ottoman empire) -1930’s: prices declined in raw materials balance-of-payments problems governments instituted high tariffs protection ex1: Turkey -independent therefore able to build up its industry -Kemal Ataturk led the nationalists -shortly after 1929—value of the lira started to fall so the government started to reduce imports to save the currency. -Barriers to trade were put in place; Ataturk introduced turkey to the idea of statism (range of private/public state enterprises) -to feed these enterprises, the government used trading monopolies to take surplus revenues out of the agriculture sector. Ex2: Latin America -1934: began implementing similar policies -Mexico was one of the firsts -President Lazaro Cardenas put in place: -land reform program -nationalized oil sector and railways -1940’s: ISI structure in place with high tarrifs—1950’s: import licensing (to protect industrialist working in mexico) -furthermore, new enterprises were given tax holidays of up to 10 years, duties on imported inputs were often rebated to manufacturers & subsidised credit was provided through a government bank result: profits increased, domestic and foreign investment boomed - 1950’s- ISI was systemized into a long-term development strategy: import licensing a tariffs sheltered the local market from foreign competition - Governments established development banks or corporations (particularly in Brazil an Chile) - Governments invested in nationalization, industry and infrastructure
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- Result: healthy growth rates Ex3: India -not the first to use ISI but considered to be the “model” for this dev. Strategy -adopted Soviet-style planning
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Chapter 3 Reading Group - Chapter 3 INTD NOTES part 1(35-51...

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