Import Substitution Policies (BRIC)

Developing nations have followed competing strategies for industrial development; “imports substitution policies” are one of them. This strategy leads to an economic development by involving an enlarged use of trade barriers in order to protect national industries from foreign competition.

Brazil, Russia, India and China, adopted Import Substitution Policies, it is referred to these countries by "BRIC", and they are all considered to be at a same phase of freshly advanced economic growth.

 

Between 1960 and 1970, Brazil effectively adopted import substitution policies. This strategy led to an increase in the national economic growth and enabled domestic industries to progress and diversify. It also helped to decrease the dependency on the country’s main export which is coffee, subsequently; the country successfully converted to a manufacturing economy instead of being an agricultural one. In 1990, Brazil decided to be open to international trade, which permitted an additional economic growth and made the country a global economic competitor.

 

In the same period, India implemented import substitution policies involving severe controls on imports. This strategy led the country to be autonomous. In 1980, India initiated a liberalization strategy, tariffs and import controls were less tight. Import costs decreased, which reduced the prices of certain consumer products As a result, India knew a GDP growth, an export development and a productivity augmentation.

We can notice that different developing countries with different histories succeeded to encourage  industrial growth by adopting import substitution policies, which is a great economic strategy that could successfuly work for some other developing countries.

As a first step, these nations can adopt import substitution policies (tariffs, quotas, ...), in that way they would allow:

• Protecting and developing domestic industries
• Reducing reliance on one export product
• Moving to a manifucturing industry
• Decreasing unemployment
• Increasing economic growth

Once after achieving the goals listed above, it would be more profitable for these nations to relax import controls and open the doors to international trade.