Working Paper: NBER ID: w27919
Authors: Douglas A. Irwin
Abstract: In the 1950s, many economists believed that import substitution – policies to restrict imports of manufactured goods – was the best trade strategy to promote industrialization and economic growth in developing countries. By the mid-1960s, there was widespread disenchantment with the results of such policies, even among its proponents. This paper traces the rise and fall of import substitution as a development idea. Perhaps surprisingly, early advocates of import substitution were quite cautious in their support for the policy and were also among the first to question it based on evidence derived from country experiences.
Keywords: No keywords provided
JEL Codes: B27; B31; F13; F14; O14; O19; O24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial belief in the benefits of import substitution (F14) | implementation of restrictive trade policies (F13) |
| implementation of restrictive trade policies (F13) | economic inefficiencies and lack of export growth (F69) |
| initial belief in the benefits of import substitution (F14) | economic inefficiencies and lack of export growth (F69) |
| import substitution policies (J68) | negative economic consequences (F69) |
| import substitution policies (J68) | diminished economic growth and competitiveness (F69) |