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Beneficiaries are actors too.pdf - Southern Institute of Peace ...

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countries seriously questioned why they should have to import<br />

manufactured products based on the raw materials they<br />

exported. As discussed by Todaro (1996), advocates <strong>of</strong> import<br />

substitution (Inward-looking development policy) believed that<br />

less developed countries (LDCs) should initially substitute<br />

domestic production <strong>of</strong> previously imported simple consumer<br />

goods (first-stage IS) and then substitute through domestic<br />

production for a wider range <strong>of</strong> more sophisticated manufactured<br />

items (second-stage IS)—all behind the protection <strong>of</strong> high tariffs<br />

and quotas on these imports. In the long run, IS advocates cited<br />

the benefits <strong>of</strong> greater domestic industrial diversification and the<br />

ultimate ability to export previously protected manufactured<br />

goods such as economies <strong>of</strong> scale, low labour costs, and the<br />

positive externalities <strong>of</strong> learning by doing therefore causing<br />

domestic prices to become more competitive with world prices.<br />

The Import-substitution industrialisation strategy raised the<br />

learning curve <strong>of</strong> the African countries that went through it.<br />

Nonetheless, it had the following limitations: (1) being secure<br />

behind protective tariff walls, its products were non-competitive<br />

and very expensive. (2) Import substitution's main beneficiaries<br />

were the owners <strong>of</strong> foreign direct investments. (3) The imported<br />

capital-good inputs and intermediate products that came under<br />

government subsidies contributed not only to heavy debt burden<br />

but also balance <strong>of</strong> payments deficits. (4) IS industrialisation<br />

policy negatively affected the exportation <strong>of</strong> traditional primary<br />

products because the exchange rates <strong>of</strong> some <strong>of</strong> the African<br />

countries were artificially overvalued in order to raise the prices <strong>of</strong><br />

exports and lower the prices <strong>of</strong> imports. (5) Import substitution,<br />

which was created in order to stimulate infant industry growth<br />

and self-sustained industrialisation by creating forward and<br />

backward linkages with the rest <strong>of</strong> the economy, inhibited the<br />

industrialisation process.<br />

Under these economic conditions it seems that to develop a selfreliant<br />

development strategy for Africa would be impossible. It<br />

seems the academicians in the Universities failed to provide viable<br />

strategies for Africa's economic development in the 1950s and<br />

1960s. African countries have tried to form political Pan African<br />

68

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