Could Import-Substitution be a Sustainable Industrialization Pathway for Less-Developed Countries?

Abstract

ABSTRACT: The strive for economic sustainability in world economies, most especially Less-Developed Countries (LDCs) in recent time notably see also an unwelcome comeback of the Import-Substitution (IS) trade strategy whose efficacy established overtime has been mixed. Thus, a systematic/meta-narrative review of literature on the appropriateness of the IS trade strategy in absolute terms to world economies, more particularly LDCs in contemporary time and among policy-alternatives, bearing in mind its tenets as well as its implications was carried out. The PRISMA methodology adapted here alongside an exploration of over 100 relevant literature through salient themes aid to present a synopsis of lessons from emerging market economies, and clear-cut submissions in a bid to inform policy directions. Amidst others, this review findings identify resource deficiencies, some time-lag considerations as such that attest the limited applicability of the IS trade strategy in absolute terms , and also emphasize the notion that Developing Economies or LDCs still need give allowance for certain imports, such as capital-goods imports, into their domestic economy for industrial productivity growth. Consequently from the review presented, efforts by LDCs to accommodate Multinational enterprises (MNEs) and or attract Foreign Direct Investment (FDI) to achieve technology transfer must be continually implemented.