Unsourced material may be challenged and removed. ISI policies were enacted by countries in the Global South with the intention of producing development and self-sufficiency through the creation of an internal market. In the context of Latin American development, the term “Latin American structuralism” refers to the era of import substitution industrialization in many Latin American countries from the 1950s until the 1980s. While the theorists advantages and disadvantages of trade barriers pdf ISI or Latin American structuralism were not homogeneous and did not belong to one particular school of economic thought, ISI and Latin American structuralism and the theorists who developed its economic framework shared a basic common belief in a state-directed, centrally planned form of economic development.
Import substitution was heavily practiced during the mid-20th century as a form of developmental theory that advocated increased productivity and economic gains within a country. This was an inward-looking economic theory practiced by developing nations after WW2. Many economists at the time considered the ISI approach as a remedy to mass poverty: bringing a third-world country to first-world status through national industrialization. 16th, 17th, and 18th centuries frequently advocated building up domestic manufacturing and import substitution.
United States during its 19th-century industrialization. United Kingdom, used interventionist economic policies to promote industrialization and protected national companies until they had reached a level of development in which they were able to compete in the global market, after which those countries adopted free market discourses directed at other countries to obtain two objectives: open their markets to local products and prevent them from adopting the same development strategies that led to the developed nations’ industrialization. By placing high tariffs on imports and other protectionist, inward-looking trade policies, the citizens of any given country, using a simple supply-and-demand rationale, will substitute the less-expensive good for the more expensive. In many cases, however, these assertions did not apply. Volkswagen, Ford, GM, and Mercedes all established production facilities in Brazil in the 1950s and 1960s. The principal concept underlying ISI can thus be described as an attempt to reduce foreign dependency of a country’s economy through local production of industrialized products, whether through national or foreign investment, for domestic or foreign consumption.
Import substitution policies were adopted by most nations in Latin America from the 1930s until the late 1980s. 1930s, when Latin American countries, which exported primary products and imported almost all of the industrialized goods they consumed, were prevented from importing due to a sharp decline in their foreign sales. This served as an incentive for the domestic production of the goods they needed. Latin American military thinking in the 20th century. Prebisch had experience running his country’s central bank and started to question the model of export-led growth. These unequal powers were taking the wealth from third world countries leaving them with no way to prosper. In doing so Prebisch’s predicted many benefits, the dependence for imports will lower and they will not be forced to sell agricultural goods for low prices to pay for industrial goods the income rate would go up, and the country itself would have a strong growth.