Advantages And Disadvantages Of Import Substitution

There are many different approaches to development in which countries over the years adopted to further develop and grow their economy. Some countries adopted the approach of import substitution in which they try to decrease their dependency on other nations and protect and foster domestic small companies. The disadvantage for an import substitution based industry, ISI, is although it achieves growth it does so through a greater period of time. On the other hand, growth and development from export oriented industries, EOI, has greater results and is so much faster than import substituting industries. Examples of countries that adopted import based industries are countries of Latin America while countries that adopted Export oriented Industries are countries of East Asia. Countries at one point or another started out as import substituting industries to get their economy going but South Korea, and other Asian countries, were fast to adopt EOI strategy to increase and

Through improving agriculture, export businesses, science and technology, Korea was able to improve living standards in all aspects and improve equality between citizens in terms of the Human Development Index, Gini coefficient, and Per Capita Income. This insured that the road for development in Korea was the right path to follow through improving all aspects of the economy. Although government intervention might be viewed as an incorrect way to achieve development, Korea and East Asia were able to achieve miracles in development in both impact and speed of achieving these growth rates. Since South Korea was able to replicate the Japanese model for development, with minor adjustments, this means other countries have the opportunity to achieve massive growth rates with further adjustments to be compatible with both their culture and economic