Editing Import substitution industrialization (section)

== History ==
[[File:Average Tariff Rates for Selected Countries (1913-2007).png|thumb|Average tariff rates for selected countries (1913-2007)]]
[[File:Tariff Rates in Japan (1870-1960).gif|thumb|Tariff rates in Japan (1870–1960)]]
[[File:Average Tariff Rates in Spain and Italy (1860-1910).png|thumb|Average tariff rates in Spain and Italy (1860-1910)]]
[[File:Average tariff rates (France, UK, US).png|thumb|Average tariff rates (France, UK, US)]]
[[File:Average Tariff Rates in USA (1821-2016).png|thumb|Average tariff rates in US (1821–2016)]]
[[File:U.S. Trade Balance (1895–2015) and Trade Policies.png|thumb|U.S. trade balance and trade policies (1895–2015)]]
[[File:Average Tariff Rates on manufactured products.png|thumb|Average tariff rates on manufactured products]]
[[File:Average Levels of Duties (1875 and 1913).png|thumb|Average levels of duties (1875 and 1913)]]
[[File:Trade Policy, Exports and Growth in European Countries.png|thumb|Trade policy, exports and growth in European countries]]
ISI is a development theory, but its political implementation and theoretical rationale are rooted in [[trade theory]]. It has been argued that all or virtually all nations that have industrialized have followed ISI. 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. It was an inward-looking economic theory practiced by developing nations after [[World War II]]. Many economists then considered the ISI approach as a remedy to mass poverty by bringing a developing country to a developed status through national industrialization. Mass poverty is defined as "the dominance of agricultural and mineral activities – in the low-income countries, and in their inability, because of their structure, to profit from international trade."<ref>{{cite journal|last=Bruton|first=Henry J.|title=A Reconsideration of Import Substitution|journal=Journal of Economic Literature|volume=36|issue=2|date=1998|page=905}}</ref>

[[Mercantilist]] economic theory and practices of the 16th, 17th, and 18th centuries frequently advocated building up domestic manufacturing and import substitution. In the early [[United States]], the [[Hamiltonian economic program]], specifically the third report and the ''magnum opus'' of [[Alexander Hamilton]], the ''[[Report on Manufactures]]'', advocated for the U.S. to become self-sufficient in manufactured goods. That formed the basis of the [[American School (economics)|American School in economics]], which was an influential force in the country during its 19th-century industrialization.

[[Werner Baer]] contends that all countries that have industrialized after the [[United Kingdom]] have gone through a stage of ISI in which much investment in industry was directed to replace imports.<ref name="Import Substitution and Industrialization in Latin America">{{cite journal|last=Baer|first=Werner|date=1972|title=Import Substitution and Industrialization in Latin America: Experiences and Interpretations|journal=Latin American Research Review|volume=7|pages=95–96|doi=10.1017/S0023879100041224 }}</ref> Going further, in his book ''Kicking Away the Ladder'', the [[South Korea|South Korean]] economist [[Ha-Joon Chang]] also argues based on economic history that all major developed countries, including the 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. Those countries adopted free market discourses directed at other countries to obtain two objectives: to open their markets to local products and to prevent them from adopting the same development strategies that had led to the industrialization of the developed countries.