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Published in:
2019 | OriginalPaper | Chapter
5. The Import Substitution Era, 1945–1980: The Consolidation of Interventionism, Financial Repression, and the Slow Way to Industrialisation
Author : Ivan Luzardo-Luna
Published in: Colombia’s Slow Economic Growth
Publisher: Springer International Publishing
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Abstract
Between 1945 and 1980, Colombia operated under the import-substitution industrialisation (ISI) framework. Protectionism against foreign trade and government intervention in the financial sector were the core of the ISI model in Colombia. In practicality, Central Bank assumed the new role of channelling resources from the financial sector to the government, state-owned companies, or favoured business.
Why did the economy not mobilise resources towards industry and trade sectors, where mass production technology could be better absorbed? The government’s interventionism in credit allocation preferentially channelled resources towards sectors of low productivity such as agriculture, which ultimately slowed down the structural change. In the early 1970s, the government finally relaxed its interventionism, allowing the full adoption of mass production technology and an economic boom boosted by the industrial sector.