ABSTRACT
Nearly all developing countries began their industrialization through import substitution (see Balassa 1981; Colman and Nixson 1978; World Bank 1987). While achieving rapid growth during the first phase of import substitution, lack of competition due to very high levels of protection produced inefficient industries, often relying on government subsidies for survival. Some countries, particularly those now known as Newly-Industrializing Countries (NICs), changed to exportoriented industrialization (EOI) in the 1960s, while many others did not do so until very much later. On the whole, countries adopting export-oriented industrialization have performed much better in output, productivity and exports than those which continued with import-substitution industrialization (ISI). In the 1980s, therefore, most developing countries have reviewed their industrial policies and, on the whole, changed towards EOI).
