First of all, the import substitution strategy often coincides with state-led economic development through nationalisation and subsidisation of key domestic industries. Adopting such a regime usually means having a protectionist trade policy. Many Latin American countries implemented an ISI policy after WWII until around the 1980s, partly as a response to decades of disappointing growth in the early 20th century. Some Asian countries, especially India and Sri Lanka, also pursued such policies from the 1950s onwards. The rationale for doing so is extensive. One reason is known as the infant industry argument. This is where domestic industries are protected through government backing, help, and intervention. This mainly applies to liquidity-constrained companies that are unable to incur short-term losses. The main benefit is to create a level playing field between a backdated industry and a highly advanced industry producing similar goods and services. Without this protection, it would be difficult to compete with foreign firms on the efficiency and quality of goods and services. Eventually, these infant firms
First of all, the import substitution strategy often coincides with state-led economic development through nationalisation and subsidisation of key domestic industries. Adopting such a regime usually means having a protectionist trade policy. Many Latin American countries implemented an ISI policy after WWII until around the 1980s, partly as a response to decades of disappointing growth in the early 20th century. Some Asian countries, especially India and Sri Lanka, also pursued such policies from the 1950s onwards. The rationale for doing so is extensive. One reason is known as the infant industry argument. This is where domestic industries are protected through government backing, help, and intervention. This mainly applies to liquidity-constrained companies that are unable to incur short-term losses. The main benefit is to create a level playing field between a backdated industry and a highly advanced industry producing similar goods and services. Without this protection, it would be difficult to compete with foreign firms on the efficiency and quality of goods and services. Eventually, these infant firms