Import Substitution Industrialization Case Study

Introduction According to Martin (2011), few countries in the world have realized social and economic development significantly in the absence of an effective industrialization strategy. However, while many economists agree on this fact, they differ essentially in the application of industrialization polices. There are those such as Hans Singer and Raul Prebisch that make their case for Import Substitution Industrialization (ISI) polices by arguing that it stimulates domestic manufacturing through defensive tariffs and/or exchange controls that afford preferential treatment in the importation of capital goods and industrial raw material by domestic and foreign firms (Martin, 2011). Conversely, there are those quarters that argue for Export

As such, developing countries have been urged to adopt EOI polices to stimulate growth and development. Kenya is one of the developing countries that have shifted from state-led ISI to EOI. According to Martin (2011), the government of Kenya has promoted extensively Export Processing Zones (EPZs) as the key driver for meeting economic growth and development goals, arguing that EPZs promote Foreign Direct Investment (FDI) and eventually the manufacture and production of capital intensive goods. EPZs will transition to Special Economic Zones (SEZs), which the Kenyan government hopes will play a central role in ensuring Kenya becomes a middle-income country by 2030. This paper will provide a detailed SWOT analysis of the EOI regime for Kenya between 2015 and

The EOI regime in Kenya hinges greatly on this discipline. According to Martin (2011), EOI directly results in resource allocation according to comparative advantage. A great example for understanding how resource allocation in the current EOI regime in Kenya increases comparative advantage is the tea and coffee sectors and sub-sectors. Kenya produces these two commodities cheaply and as such, makes for great exports. However, such production can only be realized if these sectors are essentially empowered. The existence of EOI policies in Kenya thus makes it easy for the tea and coffee sectors to be identified as offering comparative advantage and hence in need of more resource allocation to facilitate growth and development that is in concert with Vision