Final answer:
Developing countries that succeeded in significantly raising their per-capita income levels usually did so by focusing on export-led strategies rather than import-substituting industrialization. Notably, East Asian countries like Hong Kong, South Korea, Singapore, and Taiwan thrived by competing in the global market. The Industrial Revolution increased inequality, and integrating into the global market proved more beneficial for economic development than protectionist strategies.
Step-by-step explanation:
Import-substituting industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production. Historically, those few developing countries that have succeeded in significantly raising their per-capita income levels did not accomplish this with import-substituting industrialization (ISI). Instead, more successful economies, particularly in East Asia, such as Hong Kong, South Korea, Singapore, and Taiwan, have seen greater success with export-led growth strategies.
Development successes in these economies were achieved through an emphasis on entering and competing in the global market for various products. They linked standardized production technologies with low-cost labor, rather than relying on heavy protectionism or import substitution. Meanwhile, ISI often increased the demand for expensive capital and skilled labor, resources in short supply in poor countries, leading to limited success especially in capital-intensive heavy industries. By the 1990s, many overt ISI policies were abandoned partly due to pressure from international organizations like the International Monetary Fund.
The Industrial Revolution led to an increase in inequality among nations. As some economies flourished by integrating with the global market, others remained at a subsistence level. The gap in GDP per capita between the most and least developed economies grew from 2.4 times in 1870 to 4.2 times by 1960. Therefore, for sustained economic development, strategies that integrate developing economies into the global market are more beneficial than protectionist import substitution strategies.