State Autonomy and the Crisis of Import Substitution

Abstract

Import Substituting Industrialization (ISI) strategies that were instituted with great expectations in Latin America and elsewhere have not produced the desired results. Instead, ISI has been blamed for giving rise to inefficient economic structures and even for the emergence of Bureaucratic Authoritarian States. This article argues that the problems generally attributed to ISI are, in fact, due to a lack of state autonomy. What causes the loss of autonomy is the emergence of powerful and fiercely competing private sector interests intent on maximizing their share of “economic rents.” The resulting private sector-state dynamic hampers the formulation of long-term policies. The operation of this dynamic is demonstrated through a case study of Turkey in the 1970s, where the state, paralyzed by private sector competition, just witnessed the collapse of its political economy.