The modern era of human civilisation is
known as the era of massive industrialisation, engineering and mining.
The countries like US, UK, France, Germany, Japan, Netherlands, Canada,
Italy, etc., have dethroned poverty and unemployment through industrialisation
on massive scale. The newly emerging
countries like China, South Korea, Malaysia, Taiwan, Mexico, etc. have also
shown a remarkable progress in raising their nationís standard of living
through industrialisation. But the
countries like India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, etc. have
failed to eradicate poverty and unemployment through agriculture and so called
industrial development. These less
developed countries (LDCs) are caught up in a vicious poverty circle, in which
the productivity is very low, leading to a low level of income and purchasing
power. The size of market is limited
by low purchasing power, and, hence, investment is discouraged.
Since, there is less inducement to invest, the rate of capital formation
is low and the capital equipment available to each worker is small.
Since the capital availability per worker is small, productivity per
worker is also very low. In this
way, the vicious circle of poverty is completed on the demand side.
This vicious cycle of
poverty can only be broken through production on massive basis.
In other words, through industrialisation on massive basis the living
standard can be climbed up to a desirable level.
We have success stories of UK, France, West Germany and Japan, which were
almost ruined after Second World War, they managed to re-industrialise their
economies and climbed up to a benchmark position.
Therefore, it is obvious that the industrial development is very
essential for any developing country, either agricultural or non-agricultural,
for the following reasons:
in employment opportunities:
Mostly LDCs are agrarian economies furnished with disguised unemployment,
that is, there is a surplus of labour with zero marginal productivity.
Therefore, it is the industrial sector that can cope with such heavy
industrialisation provides employment opportunities on massive basis.
Massive industrialisation means establishment of more infrastructure
facilities, which will in turn lead to more employment.
It will also lead to research facilities and innovation of new
products. Industrialists will
employ more capital equipment and labour for the manufacture of new
in living standard: Higher
employment level, higher income level and greater variety of products mean
higher living standard. With
optimum utilisation of natural and human resources of the country, through
industrialisation, the national income and the per capita income will rise.
More industrialisation will provide greater stimulus to outputs and
stability to the economy.
in productivity: With increased
industrialisation, the industries are furnished with more capital equipment,
new production techniques, and skilled labour to enhance the productivity,
improve quality, and reduce cost per unit.
This will, in turn, reap internal and external economies.
of internal and external economies:
Heavy industrialisation enjoys the economies of scale.
The term 'Internal Economies' refers to the situation, in which the
individual firm gains along with technological and non-technological
factors, the larger the production, the lower the cost per unit.
The external economies arise because the development of an industry
can lead to the development of ancillary services of benefit to all firms; a
labour force skilled in the crafts of the industry; a components industry
equipment to supply precisely the right parts; or a trade magazine in which
all firms can advertise cheaply.
of BOP deficit: Increased
productivity will have a positive effect on balance of payment.
Higher the output level, higher the export.
All the leading industrialised countries of the world are the major
players of globalisation, for example, US, UK, France, Germany, Japan,
China, South Korea, Malaysia, EU, etc. Thus,
the balance of payment deficit can be reduced through a substantial increase
in export of industrially produced goods.
savings and investments:
With increased level of incomes, an industrialised economy enjoys
increased savings and investments. Foreign
investors are encouraged to directly invest in the production, service and
trade. Local investors have
confidence in the economy. Capital
market becomes strong and stable. More
employment opportunities are available, in fact, labour become acute.
With increased level of income, the government revenues are
increased. Therefore, the
government is able to provide more public facilities, like health care,
research and education, infra structure, old age benefits, unemployment
allowance, cost of living allowance, civil defence, etc.