What are the main criticisms of import substitution industrialization? Did ISI fail? The Main Criticisms of Import Substitution Industrialization and its Failure

The Main Criticisms of Import Substitution Industrialization and its Failure

Import Substitution Industrialization (ISI) has been a popular and controversial development policy among many countries since the mid-20th Century. It was utilized by many countries in an effort to reduce their reliance on foreign imports and to promote domestic production and consumption. Despite its popularity, ISI has faced considerable criticism from both economists and policymakers. This criticism can be broken down into four main areas: economic inefficiency, uneven development, lack of competitiveness, and political implications. From an economic perspective, ISI has been criticized for promoting inefficient economic activity and leading to higher prices for consumers. For instance, studies have shown that domestic producers tend to lack the efficiency of foreign producers and can be more expensive to consumers (Mukherjee & Dooley, 2017). Furthermore, many economists have argued that ISI’s protectionist policies distort the market, leading to economic inefficiency and misallocation of resources (Rodrik, 2016).ISI has also been criticized for leading. Cont…