Import-substituting industrialization (ISI)

Import-substituting industrialization (ISI) is an economic policy that seeks to replace foreign imports with domestically produced substitutes. This policy is adopted in developing countries with the intention of shielding their weaker industries from international competition. ISI seeks to reduce the dependence of a country on foreign imports by promoting local production and consumption, and protecting the local market from foreign competition. The major components of ISI include the establishment of industrialization policies and the adoption of protectionist trade policies. Examples of protectionist trade policies include import tariffs, export taxes, quotas, and other non-tariff barriers like subsidies, which limit the quantity and types of imports that a country can receive. The primary goal of ISI is to create domestic economic growth and job creation by encouraging the development of domestic industries and increasing economic interdependence.