After the Second World War Essay

1) Japan  2) The four tigers Taiwan, South Korea, Hong Kong, Singapore (the mid-sixties of the twentieth century) 3) Indonesia, Malaysia, Thailand, China (from the 1970s to the 1980s) In fact, by rejecting second electrical switch industrialisation Asian nations managed to avoid some negative results of this indemnity. First, their economies were not dragged by unable industries. Second, easterly Asia did not have to implement policies benefiting industrial workers at the expense of those working on the farms.This was crucial for Asian countries because farmers made up the majority of their population. In addition, in order to diminish the embody of industrialisation, the cost of food needed to be kept artificially low. And similarly, East Asia assay to prevent the appearance of rent seeking behaviours, which resulted from the usage of the licensing schemes for consequence substitution scheme and which usually increased inefficiency of scotchs.High tariffs on manufa ctured goods, which were obligate by many countries in order to create their manufacturing bases, forced international companies to assemble or produce them locally. For example, manufacturers of motor industry exported vehicles for local assembly. Their vehicles were delivered all knocked down and the local assembly resulted in poorer quality and spunkyer expenditures in comparison with those imported already built up. Moreover, the local assembly of similar products only duplicated resources and reduced economies of scale, which became increasingly inefficient for manufacturers.On the whole, at the begin of 1980s the policy of import substitution industrialisation began to fail some(prenominal) in Latin America and in those Asian countries where the policy was adopted. Generally, it happened because the governments baffling in the policy started to overspend reserves in order to lapse the stability of currency. The governments in Latin America defaulted on their debts and had to turn to the wait on of the International Monetary Fund. Another process which contri anded to the failure of import substitution was globalization.However, some economists think that the collapse of the policy of import substitution industrialisation should not necessarily be taken as an endorsement of globalization. such(prenominal) point of view was supported by the fact that some countries of East Asia also used high tariff barriers while rejecting the rest of the strategy of import substitution. This mixed policy was focused on enthronisation and subsidies on the industries which would produce goods for export. As a result, these Asian countries managed to create competitive industries.However, disregarding of all their achievements, the policies described above also proved to be inefficient and later led to many problems during Asian fiscal crisis. The closing finish of import substitution industrialization was in 1989 when the working capital Consensus as a set of policies designed to promote economical growth in the countries of Latin America was presented by John Williamson. The Washington Consensus included remedys which continued the policy of import substitution industrialization offering a modernized meter reading of its tenets.In particular, the Washington Consensus proposed the following 1) the discipline of fiscal policy 2) measure re multifariousness. It flattened tax curve the tax rates on high tax brackets were lowered and the tax rates on the low tax brackets were raised. Also it suggested lowering the marginal tax rate 3) Competitive put back rates 4) Trade liberalization by means of low and analogous tariffs which would replace quantitative restrictions 5) Reduced limitation for foreign direct investment 6) Privatization of state enterprises7) Deregulation, which implies abolition of regulations that impede entry or restrict competition, pull out for those justified on safety, environmental and consumer protection gr ounds, and prudential oversight of financial institutions 8) Property rights must be legally secured 9) Public spending should be redirected toward the investment of health, education, and infrastructure 10) Interest rates that are market dictated and positive (but moderate) in real terms. In the nineties the Washington consensus was universe disputed.The critics of the reforms argued that they would lead vulnerable countries to crisis instead of helping to overcome it. Naomi Klein and Noam Chomsky claimed that the neoliberal policies of the Washington consensus would lead to the exploitation of labor market of an underdeveloped economy by a more developed one . Privatization of state industries, deregulation, and tax reform were seen by the opponents as the reforms which would ensure the development of the layer of local loaded elite who would pursue local interests and try to maintain local circumstance quo.Jorge Taiana, the Deputy Foreign Minister of Argentina, also disappro ved the Washington consensus saying that such policies neer had a real consensus and nowadays a good proceeds of governments of the hemisphere are reviewing the assumptions with which they applied those policies in the 1990s, adding that governments are working on a development model which would ensure productive employment and tell the generation of real wealth.Another economist Duncan Kennedy in the article for The capital of Massachusetts Review stated that the Washington Consensus completely opposed the initial tenets of import substitution industrialization and more favoured American political interests In the form promoted by the United States, ISI was as hostile to free-market economics as to Communism. The overarching topic of the Washington Consensus was to wipe out every aspect of ISI the Washington Consensus is both that free markets are good and that ISI meaning substitution industrialization was bad.Developing countries were to develop through and through integrati on into the world commodity and capital markets, with policies of deregulated private enterprise, foreign investment, and plainspoken economic borders. All in all, taking into consideration the mistakes of the previous envision and the criticism of the economists, the developmental policy of import substitution industrialization has never been returned since the time of the Washington Consensus. Thus, in the paper import substitution industrialization as a process and as a policy was investigated.It was put together out that import substitution pursues three main goals utilization of underused capacities, reducing unemployment and infant industries protection. The implementation of the policy of import substitution industrialization is found on three tenets particular monetary and industrial policies, and protective betray barriers. However, it turned out that success and efficiency of import substitution industrialization was doubted by the proponents of infinite free marke t.Potential risks of import substitution were also visible while careful theoretical analysis and pointed out by economists. The underdeveloped countries of Latin America and East Asia implemented the policy of import substitution industrialization. It occurred that the potential risks and the negative aspects found out by the proponents of absolute free market constituted the drawbacks of the policy and finally became the chief factors of its failure. However, the major part of East Asian countries rejected the policy and experienced economic growth.The example of Brazil demonstrated that the policy of import substitution industrialization can stimulate economic growth for some period of time, but its drawbacks (first of all high expenditures and inefficiencies) pose real obstacles for continuous and strong economic development.Bibliography 1) Bianchi A. M. Concern with Policy-relevance in the Latin American School of Economics. Post-autistic economics review. outcome no. 18, 5 Fe bruary 2003 article 2 <http//www. paecon. net/PAEReview/issue18/Bianchi18. htm> 10 Nov. 2005 2) Charles J. born(p) in Blood and Fire Chasteen, 2001.p. 226-228.3) Duncan Kennedy on import substitution industrialization. one-man rule Today. The Boston Review October 13, 2003,<http//bostonreview. net/BR28. 5/kennedy. html> 10 Nov. 2005 4) Import substitution, Economic Geography Glossary, 1999, <http//faculty. washington. edu/krumme/gloss/i. html>, 12 Nov. 2005 5) Import substitution, Wikipedia, 24 October 2005, <http//en. wikipedia. org/wiki/Import_substitution> 10 Nov. 2005 6) Stutz F. P & Souza A. R. The World Economy Resources, Location, Trade, and Development (3rd ed. ), prentice Hall 1998.