The Corvus | August 2018
Million in the 80s, and to 2.1Million
by 2016.
The growth of Brazil’s oil and
gas sector began in the late 90s
when the government introduced
legislative and regulatory reforms
to liberalize the market in a bid to
attract private sector participation.
This led to the creation of the
National Council for Energy Policy
(CNPE) and the National Agency of
Petroleum, Natural Gas and Biofuels
(ANP). The Petroleum Law, which
introduced the concession regime
and bid rounds model for granting
of exploration and production right,
was passed. Access to the bidding
rounds was opened to any company
or consortium that met the legal,
technical and financial requirements
established by ANP, and criteria to
determine the winners were based
on the local content offered by each
bidder, amount of signature bonus
and the minimum exploratory
program. The success of the
concession regime greatly reduced
Brazil’s dependence on imported
petroleum and the country became
self-sufficient by 2007.
Russia
Following the plunge in g lobal oil
prices and the economic sanctions
imposed by the EU in 2014, Russia
plummeted into a financial crisis
recording a drop in GDP as can
be seen in chart 3 above. Russia’s
recovery strategy was centered on
import substitution.
The strategies included subsidies
for local producers (remunerating
20 percent of direct costs), ban
on most imported food items
from the West, promotion of
pharmaceuticals and electronics
sector, and ban on use of foreign
automobiles by certain companies.
The food ban in particular served
as a catalyst for investments in
food production in order to bridge
the gap caused by the ban. The
country was also able to reduce its
dependence on western import as it
quickly developed technologies that
it lacked, such as artic drilling. This
progress was attributable to the fact
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that Russia understood that stimulating
local production alone was not enough
to achieve import substitution. It
ensured that what was produced locally
was consumed by enforcing the ban on
certain imported items.
India
After several efforts in the 40s and
50s to achieve a self-reliant economy,
India finally got the right mix of
policies in the 60s with a clear and
In addition, the policy of protection
against import was reinforced by way of
tariffs and quotas in order to allow time
for the local industries to develop until
they were able to compete directly with
those of developed economies.
China
China has had one of the most successful
development strategies, which has
seen its percentage of export to GDP
Source: World Bank Data
specific industrialisation plan. These
policies focused on expanding India’s
consumer goods sector in order
to discourage importation while
expanding the country’s export base.
India also implemented initiatives
aimed at attracting foreign capital
(especially Foreign Direct Investment)
in order to directly address currency
devaluation and bolster investments in
capital goods industries. The initiatives
included setting up special trading
zones, infrastructure development,
favourable labour laws and focus
on strengthening single window
clearance system for fast-tracking
approval processes. Corporations
also played their own part by going
on a self-sufficient drive. Backward
integration became the hottest
game in town; from steel companies
like Mukand Ltd to petrochemical
companies like Reliance. The scope of
India’s revitalization strategy ranged
from manufacture of vehicles, down
to almost any item that could be
produced within the country’s borders.
grow from 2.5% in 1970 to 19.6% in
2016. In 1978, China implemented
the trade reform policy in order to
complement its already adopted import
substitution strategy (which already
boosted industrialization). This was to
enable China achieve its desired level
of competitiveness in global markets in
terms of trade volume, pricing and quality.
The trade reform policy focused on two
major areas; attracting export oriented
foreign investors and encouraging
export promotion. The policy to attract
export oriented foreign investors
included development of infrastructure
facilities in special economic zones, tax
rebates, tariff exemption, income tax
exemptions, cheap and flexible labour,
incentives and funding for export based
projects. The export promotion policies
included adoption of an exchange
rate system favourable to exports,
organizing trade and export fairs,
and permitting companies backed by
foreign investments to engage in their
own foreign trade activities. These
policies encouraged foreign companies
Beyond the Rhetoric of Import Substitution
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