ABSTRACT
In the 1950s and 1960s there was a broad consensus in the economics profession that the basic strategy for development should be based on ‘import substitution’ (IS)—the promotion of industries oriented towards the domestic market by using import restrictions, or even import prohibition, to encourage the replacement of imported manufactures by domestic products. It was widely believed that the primary commodity-dependent status enforced by the excolonial powers was the main cause of economic backwardness of developing countries, and the gap in living standards between developed and developing countries would continue to widen because of an inexorable deterioration in the terms of trade against primary commodities.2 Industrialisation was therefore considered the key to economic development.
