Import Substituting Industrialisation:
Industrialisation based on producing import substitutes rather than producing for exports was recommended. Such import substituting industrialisation would tackle many of the constraints to faster growth. Nurkse had argued that one of the factors limiting investment in developing countries was lack of demand.
But if immports were restricted, it would create demand for previously imported goods, so entrepreneurs could be depended upon to invest in import substituting industries. Also, economists were in general pessimistic about prospects of the world economy based on the experience of the inter-war years.
They expected the world economy to grow very slowly there was supposed to be a bias towards stagnation. Economists like Nurkse also expected the continuation of the pre Second World War pattern of countries adopting extensive restrictios on trade, particularly, on exports of labour intensive goods fiom developing countries. Furthermore, developing countries were expected to need ? time to develop the skilled and productive labour force necessary to be competitive in the world market. For all these reasons, many economists recommend the adoption of an IS1 strategy for development.