ABSTRACT
This chapter begins with the analysis by placing import substituting industrialization (ISI) in the broader context of industrialization. It discusses the problems inherent to ISI and concentrates on the causes for its exhaustion as elaborated in the literature. The success of industrialization is influenced by two factors: timing and the political-economic context in which the effort is undertaken. The timing of each successive wave of industrializes played a critical role in determining the nature of the process. Induced by the Great Depression, the long and protracted decline in the economic fortunes of the industrialized nations precipitated the adoption of import substituting industrialization among the developing countries. The Turkish case therefore demonstrates how political-economic cleavages in the private sector contribute to the politicization and paralysis of industrialization policies, reducing the state to the role of a spectator unable to take the necessary decisions. If the economics of import substitution seemed relatively simple, its political rationale and perceived ramifications made it irresistible.
