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 imports 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 restrictions on trade,  particularly,  on exports of labour intensive goods fiom developing countries. Furthermore, developing countries were expected to need ?  t me 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 ISI  strategy for development.