Import substitution Industrilization

Import substitution generally go through two stages. First stage, the first to establish and develop a
number of final consumer goods industry, such as food, clothing, household electrical appliance
manufacturing and related textiles, leather, wood industry, in order to use the domestic production of
consumer goods to replace imported goods, when the domestic production of consumer goods to replace
imported goods and meet the domestic market demand to enter the second phase

In the second stage, the import substitution from the consumer goods to the domestic shortage of capital
goods and intermediate goods production, such as machine manufacturing, petroleum processing, iron
and steel industry and other capital intensive industries. After these two stages of development, the
import substitution industry is becoming more and more mature, which lays the foundation for the
comprehensive industrialization.

The implementation of import substitution in a certain extent stimulated the development of consumer
goods industry in the national industry, strengthened the ability of developing countries to develop
independently. It can reduce the dependence on foreign countries. Some specialized technical personnel
and skilled labor have been developed. But this strategy is limited to stimulate the development of the
national industry, because it can not completely eliminate the dependence on imports, it is still largely
dependent on imports, it has only changed the structure of imported goods, imported from the end of the
import of raw materials, technology patents, machinery and equipment, intermediate products and capital,
etc.. When developing China's domestic high tariff protection of national industry, the developed countries
also use various measures to destroy or break the tariff protection, resist the import substitution of
developing countries, so the import substitution strategy often appears powerless, and gradually exposed
many defects in practice. Some scholars believe that the core problem of the import substitution strategy
is that it violates the principle of comparative advantage. In the early 60's in the late 70's of the's, the
import substitution strategy was criticized by many scholars.

Since the early 80's in twentieth Century, China has been committed to the export oriented economic
development. At that time, the reason for the export-oriented economic growth, because the Japanese
and the Asian four dragons to export driven economic growth of the successful experience. The 20 years
after that is the dominant position of the export-oriented economic development, in people's minds, to
export growth to drive economic development has become the only correct economic development
strategy. The import substitution is regarded as a wrong way of economic development. Economic policy,
whether in the field of economics or in the media, is to say that it is the root cause of the slow
development of the economy. In this way, the export orientation is the root cause of the high speed
economic development, and the import substitution is the main culprit of the economic development
failure.