Import Substitution Industrialization:Case Study of Zambia

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Bam, Hamid Sabzbalough
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Zambia, like most less developed countries, opted for import substitution industrialization (ISI) as a strategy of economic advancement. The success of ISI performance in Zambia would have resulted in the abundance rather than scarcity of foreign exchange; economic diversification;resolution of the galloping unemployment problem; linkages in the economy with a significant use of local raw materials as inputs- and a host of downstream industries especially industries based on mining. In addition, there should have been an abundance of essential commodities at prices that the common person can afford. /However these noble government objectives have remained largely unrealised. Unemployment has continued to be rife; queues for essential commodities have continued to be long? foreign exchange has continued to be a problem; diversification of the economy has remained a distant dream. The crux of the thesis in this report is that some firms in Zambia have achieved significantly good results in the ISI whilst others have performed poorly. On the national average ISI has not succeeded but has the potential to succeed in Zambia. Basic problems include the mistaken conception that ISI can meet all government objectives of employment creation, economic diversification and social welfare justice. Things also went wrong with ISI because ISI came to be regarded as the only industrial development strategy whereas there are other industrial development strategies such as balanced growth industrial strategy; export promotion industrial development; and indigenous industrial strategy in which emphasis is on the use of local raw materials based on labours-intensive production techniques. On the positive side Zambia has a healthy natural resource base and a population that has become motivated to want to attain great heights in deve .pment. Import substitution industrialization will need to be revamped and given a neu direction. It must be regarded as only one of the many strategies, albeit roads to development, but will need to be supplemented by other development strategies. Export promotion is one of the complements to 131. The government could, through export promotion industrialization (EPl), restructure the economy in such a .nner as to change the present situation in which raw minerals constitute 95$ of foreign exchange earnings and make mining the engine of growth of manufacturing industries and agriculture. There is a good case for a complete review of all import substitution ndustrialization efforts made since independence. The rationalisation of ISI would put Zambia on the path of effective development of the abundant resources for the benefit of all the people of Zambia.
Import Substitution