Economics of Independence: Import Substitution Industrialization in sub-Saharan Africa

Abstract

Development economics and Third World’s modernity are strictly intertwined and associated with the work of Raul Prebisch and his theories. Since 1960, labeled as the “year of Africa” due to the considerable amount of African countries which gained independence that same year, the influence of “desarrollismo” on post-colonial economic thought in Sub-Saharan Africa has been evident. The following thesis seeks to illustrate how newly independent African countries embraced the ideas of CEPAL, developed by R. Prebisch and H. Singer on the model of Latin America, as a tool towards economic and social freedom; as well as delving into the “existential crisis” of ISI and finally analyzing its quiet comeback in the 21st century. Import Substitution Industrialization (ISI) in Africa experienced different phases throughout history. Its first stage lasted from the 1960s until the late 70s and carried the weight of “Third World independence”; ISI policies became the embodiment of a newly acquired sense of freedom, a display of the willingness to break chains from the colonial past of many countries in the Third World. In the context of the Cold War, the spreading of ISI policies paved the way to structural change. It became a template of economic development not only in Latin America but for the entirety of the Third World, as the experience of many African countries shows, as an alternative to the influence of both the western and eastern blocs. It was somehow a forerunner of the New International Economic Order (NIEO) in independent Africa before the advent of the Structural Adjustment Programme (SAP) and the neo-liberal turn of the 1980s. The first chapter will build the theoretical foundation to support the thesis. It will provide an insight on the economic theories of R. Prebisch and the historical background to “Desarrollismo” and ISI, which later lead to the transfer of ideas from the Latin American context to Africa. The second chapter will take into account three case studies in the region of Sub-Saharan Africa, namely Ghana, Tanzania and Nigeria. It will seek to demonstrate the different approaches to ISI with the common goal of economic independence, with particular attention to Ghana and his President, Kwame Nkrumah, frontrunner of African independence. The third chapter will provide a glimpse into the political and socio-economic legacy of ISI in Africa, from the Arusha declaration to the African Continental Free Trade Area (AfCFA, 2018), UN Economic Commission for Africa (ECA) and development of the private sector. The fourth chapter will finally show the silent comeback in the last decade of import substitution in the agenda of African countries that had already relied on its policies during the 60s and 70s.