Editing Import substitution industrialization (section)

== Africa ==
ISI policies were implemented in various forms across [[Africa]] from the early 1960s to the mid-1970s to promote indigenous economic growth within newly independent states. The national impetus for ISI can be seen from 1927, with the creation of the East African and Central African common markets in British and French colonies that recognized the importance of common trading tariffs in specific parts of the continent and aimed to protect domestic manufacturing from external competitors.<ref name="Industrialization in Sub-Saharan Africa and Import substitution policy"/>{{rp|124}}  

=== Colonial economies ===
Early attempts at ISI were stifled by colonial [[neomercantilism|neomercantilist]] policies of the 1940s and the 1950s that aimed to generate growth by exporting primary products to the detriment of imports.<ref name="African Economic History"/>{{rp|205}} The promotion of exports to metropoles was the primary goal of the colonial economic system. The metropolitan governments aimed to offset colonial expenditures and attain primary commercial products from Africa at a significantly reduced rate.<ref name="African Economic History"/>{{rp|206–215}} That was successful for British commercial interests in [[Ghana]] and [[Nigeria]], which increased 20 times the value of foreign trade between 1897 and 1960 because of the promotion of [[export]] crops such as [[cocoa bean|cocoa]] and [[palm oil]].<ref>{{cite journal |last1=Austin |first1=Gareth |title=African Economic Development and Colonial Legacies |journal=Revue internationale de politique de développement |date=1 March 2010 |volume=1 |issue=1 |page=21 |doi=10.4000/poldev.78|doi-access=free}}</ref> Such economic growth occurred at the expense of indigenous communities, which had no say over the crops that were produced and retained marginal profits from their agricultural output.<ref>{{cite book |last1=Dumont |first1=Rene |title=False start in Africa |publisher=Earthscan |isbn=1853830275 |pages=31–33|year=1988 }}</ref> That model also expanded [[monocultures]], whose economies were centered on a single crop or natural resource for exports. Monoculturing was prevalent in countries such as [[Senegal]] and [[Gambia]], where [[peanut|groundnuts]] accounted for 85% to 90% of earnings throughout the 1940s.<ref name="How Europe underdeveloped Africa">{{cite book |last1=Rodney |first1=Walter |title=How Europe underdeveloped Africa|edition=Revised |date=2012 |publisher=Pambazuka |isbn=978-1788731188}}</ref>{{rp|234}} That economic model rendered the [[Postcolonialism|postcolonial]] states vulnerable to unstable export prices and failed to promote the diversification of the economy. Postcolonial governments were also sceptical of the reliance on multinational corporations for economic development, as they were less likely to pay taxes and exported capital abroad.<ref name="African capitalism">{{cite book |last1=Kennedy |first1=Paul |title=African capitalism : the struggle for ascendency |url=https://archive.org/details/africancapitalis0000kenn |url-access=registration |date=1988 |publisher=Cambridge University Press |isbn=0521319668}}</ref>{{rp|61}}  Thus, ISI policies were adopted to redirect African economies towards indigenous growth and [[industrialisation]].

=== Post-colonial economic situation ===
The underdeveloped political and economic structures inherited across post-colonial Africa created a domestic impetus for ISI. Marxist historians such as [[Walter Rodney]] contend that the gross underdevelopment in social services were a direct result of colonial economic strategy, which had to be abandoned to generate [[sustainable development]].<ref name="Industrialization in Sub-Saharan Africa and Import substitution policy"/>{{rp|126}}<ref name="How Europe underdeveloped Africa"/>{{rp|203-221}} [[Rene Dumont]] supported that observation and argued that African states were administratively overburdened as a result of colonialism.<ref>{{cite book |last1=Dumont |first1=Rene |title=False start in Africa|edition=2nd|date=1988 |publisher=Earthscan |page=79}}</ref> The initial, unchanged conditions created discontent in states such as [[Ghana]] and [[Tanzania]] during the early 1960s over the fall in wages and employment opportunities. The unrest culminated in a series of mass strikes and tensions between governments and trade unions.<ref>{{cite journal |first=Lynn Krieger|last=Mytelka |title="The Unfulfilled Promise of African Industrialization |journal=African Studies Review |date=1989 |page=91}}</ref> Dissatisfaction with the poor economic progress upon [[decolonisation]] made it clear to African leaders that they could no longer rely on rhetoric and tradition to maintain power and could retain the support of their political base only through a coherent economic model aligned with their political interests. The culmination of the political and economic issues necessitated the adoption of ISI, as it rejected the colonial neo-mercantilist policies that they believed had led to underdevelopment.

=== Ideological foundation ===
For leaders of post-colonial African nations, it was imperative for their economic policies to represent an ideological break with the [[imperialism|imperialist]] models of development. To achieve that, some newly independent states pursued [[African socialism]] to build indigenous growth and break free from capitalist development patterns.<ref>{{cite book |first=Martin|last=Meredith |title=The State of Africa: A History of Fifty Years of Independence |url=https://archive.org/details/stateofafricahis00mere |url-access=registration |date=2006 |publisher=Free Press |page=[https://archive.org/details/stateofafricahis00mere/page/144 144]|isbn=9780743232227 }}</ref> Through the adoption of African socialism, leaders such as [[Kwame Nkrumah]], [[Julius Nyerere]], and [[Leopold Senghor]] hoped to establish a model of development based around  [[Nkrumaism|consciencism]], an intellectual and cultural revolution; and, most importantly, a big push in industrialization towards rapid development for the continent.<ref name="African socialism">{{cite journal |last1=Akyeampong|first1=Emmanuel|title=African socialism; or, the search for an indigenous model of economic development? |journal=Economic History of Developing Regions |date=2018|volume=33 |pages=69–87 |doi=10.1080/20780389.2018.1434411 |url=https://www.aehnetwork.org/wp-content/uploads/2017/11/AEHN-WP-36.pdf }}</ref>{{rp|73-77}} One of the main aspects of the big push towards development was the growth of [[parastatal|parastatals]] from 1960 to 1980.<ref>{{cite journal |first1=Paul Ove|last1=Pedersen|first2=Dorothy|last2=McCormick |title=African Business Systems in a Globalising World |journal=The Journal of Modern African Studies |date=1999 |page=113}}</ref> The state-owned trading corporations were given control over the import-export business as well as the retail-wholesale distribution.<ref name="African capitalism"/>{{rp|65}} That allowed post-colonial states to nationalise industries and retain the profits from their output, rather than allow capital flight to the west through multinational corporations.

The growth of African socialism in the pursuit of ISI can be seen in the 1967 [[Arusha Declaration]] (Tanzania) in which Nyerere argued that "we cannot get enough money and borrow enough technicians to start all the industries we need and even if we could get the necessary assistance, dependence on it would interfere with our policy on socialism."<ref>{{cite journal |first1=Dennis|last1=Cohen |title=Class and the Analysis of African Politics: Problems and Prospects |journal=Political Economy of Africa |page=189}}</ref> The need for indigenous development formed the core of the African socialist vision whereby the state would manage a [[planned economy]] to prevent it from being controlled by the free market, which was regarded as a form of [[neo-imperialism]].<ref>{{cite book |first1=Kwame|last1=Nkrumah |title=Neo-colonialism the Last Stage of Imperialism |date=1965 |publisher=Nelson |pages=239–243}}</ref> In line with that economic vision, Tanzania engaged in the [[nationalization]] of industry to create jobs and to produce a domestic market for goods while it maintained an adherence to African socialist principles exemplified through the [[ujamaa]] program of villagization.<ref name="Industrialization in Sub-Saharan Africa and Import substitution policy">{{cite journal |first1=A|last1=Mendes|first2=M.|last2=Bertella|first3=R.|last3=Teixeira |title=Industrialization in Sub-Saharan Africa and Import substitution policy |journal=Brazilian Journal of Political Economy |date=2014|volume=34 |pages=120–138 |doi=10.1590/S0101-31572014000100008 |hdl=11449/109485|hdl-access=free}}</ref>{{rp|130}} The unaffordability of industrial products and increased tensions between managers and settlers of the villages contributed to a "colossal failure" of ISI in Tanzania, leading it to abandon the villagization project and to focus on agricultural development.<ref>{{cite journal |first=I.G.|last=Shivji |title=The village in Mwalimu's thought and political practice |journal=Africa's Liberation: The Legacy of Julius Nyerere |date=2010 |pages=121}}</ref>

While ISI under African socialism was purported to be an anti-Western development model, scholars such as Anthony Smith argued that its ideological roots came from Rostow's [[modernization theory]], which maintains that commitment to economic growth and free-market capitalism is the most efficient means of state development.<ref>{{cite book |first1=A.D.|last1=Smith |title=The Concept of Social Change |url=https://archive.org/details/conceptofsocialc0000smit |url-access=registration |date=1973 |publisher=Routledge |page=[https://archive.org/details/conceptofsocialc0000smit/page/33 33]|isbn=9780710076076 }}</ref> [[Kenya]]'s implementation of ISI under state capitalism exemplifies the model of development. [[Tom Mboya]], the first minister for economic development and planning, aimed to create a growth-oriented path of industrialization, even at the expense of traditional socialist morals.<ref>{{cite journal |first=Daniel|last=Speich |title=The Kenyan Style of "African Socialism: Developmental Knowledge Claims and the Explanatory Limits of the Cold War |journal=Diplomatic History |date=2009 |page=457}}</ref>  Kenya's Sessional Paper No. 10 of 1965 reinforced the view by claiming, "If Africanization is undertaken at the expense of growth, our reward will be a falling standard of living."<ref>{{cite book|title=African Socialism and Its Application to Planning in Kenya |date=1965 |publisher=Republic of Kenya |page=18}}</ref> Under such a development path, multinational corporations occupied a dominant role in the economy, primarily in the manufacturing sectors. Economic historians such as Ralph Austen argue that the openness to western enterprise and technical expertise led to a higher GNP in Kenya than comparative socialist countries such as Ghana and Tanzania.<ref name="African Economic History">{{cite book |first=Ralph|last=Austen |title=African Economic History |date=1987 |publisher=Oxford University Publishing}}</ref>{{rp|246-247}} However, the 1972 [[World Bank]] ILO report on Kenya claimed that direct state intervention was necessary to reduce the growing economic inequalities that had occurred as a result of state capitalism.<ref>{{cite book |first1=Hans W.|last1=Singer|first2=Richard|last2=Jolly |title=Employment, Incomes and Equality: A strategy for Increasing Productive Employment in Kenya |date=1972}}</ref>

=== Implementation ===
In all of the countries that adopted ISI, the state oversaw and managed its implementation, designing economic policies that directed development towards the indigenous population, with the aim of creating an industrialised economy. The [[Nigerian Enterprises Promotion Decree|1972 Nigerian Enterprises Promotion Decree]] exemplified such control, as it required foreign companies to offer at least 40% of their equity shares to local people.  A state-controlled economy has been criticized by scholars such as Douglas North who claim that the interests of political elites may be self-serving, rather than for the good of the nation.<ref>{{cite book |first=Douglas|last=North |title=Structure and Change in Economic History |date=1985 |publisher=North and Co}}</ref> That correlates with the theory of [[neo-patrimonialism]], which claims that post-colonial elites used the coercive powers of the state to maintain their political positions and to increase their personal wealth.<ref>{{cite journal |first=Daniel C.|last=Bach |title=Patrimonialism and neopatrimonialism: comparative trajectories and readings |journal=Commonwealth & Comparative Politics |date=2011 |page=281}}</ref>   Ola Olson opposes that view by arguing that in a developing economy, the government is the only actor with the financial and political means to unify the state apparatus behind an industrialization process.<ref>{{cite journal |first=S.|last=Wangwe |title=The performance of the manufacturing sector in Tanzania: Challenges and the way forward |journal=WIDER Working Paper No. 2014/085. |date=2014 |page=31}}</ref>  

=== Outcomes ===
Sub-Saharan Africa's experiment with ISI created largely pessimistic results across the continent by the early 1980s. Manufacturing, which formed the core of the  big push towards industrialisation, accounted for only 7% of GDP across the continent by 1983.<ref name="Industrialization in Sub-Saharan Africa and Import substitution policy"/>{{rp|135}} The failures of the model stemmed from various external and domestic factors. Internally, efforts to industrialise came at the expense of the agricultural sector, which accounted for 70% of the region's workforce throughout the 1970s.<ref>{{cite journal |first1=Ernest|last1=Aryeetey|first2=Nelipher|last2=Moyo |title=Industrialisation for Structural Transformation in Africa: Appropriate Roles for the State" |journal=Journal of African Economies |date=2012 |page=65}}</ref> The neglect was detrimental to producers as well as the urban population, as agricultural output could not meet the increasing demands for foodstuffs and raw materials in the growing urban areas.  ISI efforts also suffered from a comparative disadvantage in skilled labor for industrial growth.<ref name="Industrial strategy for late starters">{{cite journal |first1=R.|last1=Gulhati|first2=U.|last2=Sekhar |title="Industrial strategy for late starters: the experience of Kenya, Tanzania and Zambia |journal=Staff Working Paper; No. SWP 457 |date=1981}}{{page needed|date=August 2024}}</ref>

A 1982 World Bank report stated, "There exists a chronic shortage of skills which pervades not only the small manufacturing sector but the entire economy and the over-loaded government machine."<ref name="Industrial strategy for late starters"/>{{rp|32}} Tanzania, for example, had only two engineers at the beginning of the import-substitution period.<ref name="African socialism"/>{{rp|71}} The skills shortage was exacerbated by the technological deficiencies facing African states throughout industrialisation. Learning and adopting the technological resources and skills was a protracted and costly process, something that African states were unable to capitalise on because of the lack of domestic savings and poor literacy rates across the continent.<ref name="Industrialization in Sub-Saharan Africa and Import substitution policy"/>{{rp|133}}

The failure of ISI to generate sufficient growth in industrialisation and overall development led to its abandonment by the early 1980s. In response to the underdeveloped economies in the region, the IMF and the World Bank imposed a [[wikt:neoclassical|neo-classical]] counter-revolution in Africa through [[Structural adjustment program|Structural Adjustment Programmes]] (SAPs) from 1981.<ref>{{cite journal |first1=Olu|last1=Ajakaiye|first2=John|last2=Page |title=Industrialisation and Economic Transformation in Africa: Introduction and Overview |journal=Journal of African Economies |date=2012 |page=10}}</ref>

The new economic consensus blamed the low growth rates on excessive [[protectionism]] in the industrial sector, the neglect of exports, and the low agricultural productivity.<ref>{{cite book |title=Accelerated development in sub-Saharan Africa: an agenda for action (English). |date=1981 |publisher=The World Bank}}</ref> For the [[IMF]] and the [[World Bank]], the solution to the failure of import substitution was a restructuring of the economy towards strict adherence to a [[neoliberal]] model of development throughout the 1980s and the 1990s.