What are the disadvantages of import substitution industrialization?

By the 1960s, ISI strategies were seen to have significant drawbacks. Although results varied from country to country, general trends included production that often did not extend into industries other than consumer goods, slow employment growth, agricultural-sector decline, and minimal productivity growth.

How did import substitution affect Brazil?

As a result of import-substitution industrialization, the Brazilian economy experienced rapid growth and considerable diversification. It had an average annual growth rate of over 9 percent between 1950 and 1961, compared with 4.5 percent for agriculture.

Why did ISI fail in Brazil?

Secondly, the lack of demand due to the smallness of the domestic market led to industries not being able to take advantage of the economies of scale. In turn the nation faced inefficient production, high costs, low profits, and thus, unsuccessful implementation of import substitution policies.

Why import substitution industrialization failed in developing countries?

Despite some apparent gains, import substitution was “both unsustainable over time and produced high economic and social costs.” Given import substitution’s dependence upon its developed and isolated markets within Latin America, it relied upon the growth of a market that was limited in size.

What is import substitution strategy in Brazil?

Import substitution was a main strategy used in the 1950s to 1960s, and was employed in Brazil from the 1930’s onwards in the form of import licensing, tariffs, quotas, import prohibitions, overvalued exchange rates, and direct government investment in key industries.

What was the period of import substitution in industrialization?

Import-Substitution Industrialization, 1945-64. The 1974 to 1985 phase was highlighted by import substitution of basic inputs and capital goods and by the expansion of manufactured goods exports. The period since 1987 has been a time of considerable difficulties.

How did Brazil’s industrialization affect the economy?

As a result of import-substitution industrialization, the Brazilian economy experienced rapid growth and considerable diversification. Between 1950 and 1961, the average annual rate of growth of the gross domestic product exceeded 7 percent. Industry was the engine of growth.

Why was the implementation of import substitution policies unsuccessful?

In turn the nation faced inefficient production, high costs, low profits, and thus, unsuccessful implementation of import substitution policies.