The goal of LOIS, or Local Ownership/Import Substitution, is to create sustainable growth and wealth for local communities by bolstering local production and keeping profits local. Practically, LOIS communities aim to use locally-produced goods to replace imported goods. While implementing a LOIS strategy can be advantageous for those citizens within a community, are there negative implications for the global economy? Can a venture be considered a “social venture” if it positively affects some and negatively affects others?
Historically, when countries have tried to implement import substitution policies, like many Latin American countries did from the 1930s-1980s, protectionist policies and inefficiencies ensued. While domestic industry improved, the locally-produced products were not competing in the global marketplace, and therefore many of the products were not of a standard quality and eventually became obsolete. Globalization, while making the local economies more susceptible to global shocks, increased the global workforce and production efficiency. By promoting LOIS policies, those workers around the world who produce products for TINA companies are being as effected as the large companies.
Furthermore, what of those communities that do not have the raw materials to produce goods? Importing raw materials may erode many of the profits intended to remain local. As with micro-finance, a LOIS strategy has the potential to increase self-sufficiency in small communities that have access to raw materials and natural resources. LOIS policies can protect local communities from feeling macroeconomic shocks or recessions. Problems arise, however, when LOIS strategies are adopted by countries or are implemented on larger scales. Those countries that have plentiful natural resources will be more successful that those that do not. In this more individualistic global economy, the separation between “haves” and “have nots” will continue to grow.
Alter, Lloyd. “Cage Match: TINA vs. LOIS.” Treehugger 15 July 2006. Web. 29 Oct. 2012.
Sanderatme, Nimal. “Import Substitution: Is it a pragmatic economic policy?” The Sunday Times 6 Nov. 2011. Web. 28 Oct. 2012.