Module 1:
Import Substitution

Major Sections

I. Opening	II. Import Substitution
III. Strategy Exercise	IV. Summary
Day and Time	Purpose
Learning Objectives	Equipment, Materials and Supplies

Day and Time

Day 3, 9:00-10:15 (1 hour, 15 minutes, including break)

Purpose

To introduce import substitution as a CED strategy.

Learning Objectives

Participants will be able to:

Describe import substitution and practices associated with this strategy.
Discuss the types of resources necessary and available for this strategy.

Equipment, Materials and Supplies

Masking Tape
Newsprint and Easels
Markers
Overhead Projector
Erasable Transparency Markers (Color)
Transparencies
- T-1.1: Learning Objectives
- T-1.2: Import Substitution
- T-1.3: Import Substitution Aims
- T-1.4: Import Substitution Benefits
- T-1.5: Import Substitution Categories
- T-1.6: Patronage Campaigns
- T-1.7(a,b): Summary
Resource Sheets
- RS-1.1(a,b): Strategy Exercise-Import Substitution (2 copies)
Materials in Participant Manual
- All Transparencies
- All Resource Sheets

I. Opening (10 minutes)

T-1.1: Learning Objectives

Review Days One and Two and agenda for today. Review the learning objectives.

II. Import Substitution

T-1.2: Import Substitution
T-1.3: Import Substitution Aims
T-1.4: Import Substitution Benefits
T-1.5: Import Substitution Categories
T-1.6: Patronage Campaigns

Explain that import substitution, in its simplest form, is the replacement of one good or service or service provider for another. Substituting saccharin for sugar is an example. To maximize benefit to the local community, however, doing business with oneself and neighbors is a necessary component.

Through this strategy one seeks to address the community economy from the expenditure side. It is done by "Plugging Leaks" and "Reducing the Cost" of necessary household and business expenditures. Among the kinds of benefits are:

Reduction in exploitation
Increase in competition
Better prices
Better quality goods
Access to jobs

Ask participants to refer to the Cash Flow diagram. Each area along the top of the diagram has potential for concentration. The strategy requires that the partnership identify the sources of leaks and where the cost of goods and services can be reduced. Costs to community can be measured in several ways-quality of goods, higher prices, or the cost of time and distance.

The four categories of import substitution are:

Product substitution
Labor force support
Local patronage campaign
Public policy

A. Product Substitution Examples

In India, Ghandi promoted substituting traditional Indian garments for imported western garb. These Indian garments would be made of home-grown and home-spun cotton.

B. Labor Force Support Examples

During the mid-80's as unemployment rose in Germany because of the worldwide recession, great pressure was placed on the government to expel Italian workers who had been imported to work as laborers and masons in the construction industry.

C. Local Patronage Campaign Examples

In Ft. Greene, Brooklyn, residents forced the closing of one of two absentee-owned supermarkets as a result of an incident which involved the death of a teen resident. The remaining store began price gouging, which hastened residents' efforts to organize a co-op supermarket. The co-op operated for 10 years, averaging about $3 million annually in sales and employed 30 people, fifteen of them full time.

D. Public Policy Examples

Oakland, CA, recently enacted Oakland Equity legislation. Under the act, private development projects seeking public subsidy are rated for the benefit they contribute to achieving policy objectives among which are jobs and employment, affordable housing and minority and community equity participation in the project. The rating helps determine the amount of public subsidy for which the project would be eligible.

Community Reinvestment Act
CDBG/CSBG Monitoring (UDAG recapture)
Section 3 Monitoring

Trainer Note: The concept of Import Substitution in a CED context requires that the community find opportunity to reduce its use or dependance upon as many externally supplied goods and services (including human talent) and utilize locally produced goods and services in their stead.

III. Strategy Exercise (15 minutes)

RS-1.1: Strategy Exercise-Import Substitution

Give participants time to complete the exercise and discuss it in the large group.

Remind participants that these worksheets will be used during the Action Planning piece today.

IV. Summary (5 minutes)

T-1.7(a,b): Summary

Provide a summary of CED strategies. Deciding which one or ones of the above to choose is a strategic decision. Reaching a decision requires that partnerships have good knowledge of the environment in which they are working and have clear goals and awareness of the strengths and weaknesses of the Partnership and its members. This knowledge is the subject of the next sessions.

BREAK (15 minutes)

Module 1: Import Substitution