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Francesca DL
13, 2010



There is an international clamor for industrialization throughout
South Asia
The growth of modern industry
o Would provide employment for an underutilized labor force
Industrialization is held to be crucial to development strategy
also because it will radiate stimuli throughout the economy and
lift it out of stagnation
Important influence on the ideology of industrialization :
The recent rapid development of industry :
o The recent rapid development of industry through
government planning
Communist ideology
o Industrialization embraces a theory and a program calling,
in particular, for the setting up of a fairly comprehensive
industrial structure based on heavy industry in every
o A natural one for the underdeveloped countries to imitate
o All the non-traditionalist intellectuals in the region have
been decisively influenced by the Communist doctrine of
planned and directed industrialization as a technique for
engendering development
o In the communist doctrine the true political independence
from colonial dominance can only come through planned
for industrialization
Ideology of industrialization
o Has also been stimulated by the concern over the relative
decline in world demand for raw materials South Asia has
traditionally supplied and the gradually mounting
awareness of the implications of the implications of
accelerated population growth
o The ideology is attractive because it stems from its
promise to bring modern techniques to a backward
economy and to embody them in power and machines :
 Particularly in heavy industry but also in industries
producing consumption goods
In the immediate future

o The impact of industrialization on the growth of direct demand for labor in manufacturing is a function not only of the speed of industrialization but also of the position in the economy already achieved by modernized industry o A very rapid rate of industrial growth will not generate sufficient demand for labor to increase substantially the percentage working in the industrial sector o INDUSTRIALIZATION : is seen as the remedy for “unemployment” and “underemployment” Backwash Effects o Do not occur when newly formed manufacturing units either produce import substitutes or direct their output to export markets .   o Countries of the region have mostly only the alternatives of using technologies of the highly developed countries or rejecting modern machines altogether.  Analysis of the importance and urgency of overcoming the obstacles to successful industrialization Unorthodox view o In South Asia the employment effects of industrialization cannot be expected to be very large for several decades ahead. substantial improvements in average levels of living by the end of this century – when the labor force will probably be twice its parent size – are out of the question unless a considerably larger proportion of workers are engaged in productive activities outside agriculture  The conclusion alone provides a rational basis for the strivings of these countries to industrialize as rapidly as possible  South Asian countries should forego industrial expansion. that is. except for one possibility that has hardly been touched :  That of developing a trade in second-hand machinery from the advanced countries o All South Asian countries face the challenge of a largely unskilled labor force and a small inexperienced managerial force o Large and highly mechanized industries are better suited to the maximum use of what skills and technical education do exist Conclusion that supports the rapid industrialization o In the larger and most populous countries of the region. until the region is much more industrialized.

transport and communication facilities  Which effects to a greater demand for raw materials General structure of South Asian countries suggest that : . though the size of the work force may shrink when vacancies created by normal attention are not filled New enterprises o are not subject to such restraints o their awareness of the government’s interest in protecting employment and of the risk of the friction with workers should they later attempt to reduce the work forces The crude vision of the quick side effects of industrialization has been based too often on a loose analogy with the early experiences of Western economies : o The cumulative development touched all aspects of economic and social lives o The image of the Western economic history appears over simplified and idealized o The process of industrialization would create added potential for expansion in other sectors of the economy o Reduction of costs that occurs as growth gains momentum Solutions : o New plants must be constructed o There must be extensions in most areas of power.    o Export expansion by South Asian countries is extremely difficult o Import substitution is open to new manufacturing industry without risk of internal backwash effects o Problem on labor demand :  Raises several important issues :  Provides a strong supplementary argument for restricting both new industry and the modernization of existing enterprises to sectors that produce export goods or import substitutes  Heavy industry is a particular safe bet o Serious Dilemma  The long-term goal of the planners and the government is to use the industrial expansion as a device for modernizing the entire economy  The short-term interest in preventing serious deterioration in traditional manufacturing  “RATIONALIZATION WITHOUT TEARS” – without depriving anyone of a job.

2010 2ASN2 September SUMMARY AND ANALYSIS : CHAPTER 20 : THE CASE FOR CRAFTS AND SMALL-SCALE INDUSTRY  INDUSTRIALISTS VS. Ma. o The inhibitions and obstacles to the effective spread of growth-inducing impulses through increased demand are formidable o The economies of the underdeveloped countries are lowelasticity ones and there are bottlenecks everywhere Other effects of industrialization : o Rise in demand and supplies o There are other spread effects that could be important o Industrialization is expected to instill a new spirit of :  Rationalism  Enterprise  Discipline  Punctuality  Mobility  Efficiency o The institutional structure and the prevailing attitudes inhibit changes conducive to substantial effects of this type FRANCISCO. Francesca DL __. TRADITIONAL ECONOMIC ORGANIZATION o INDUSTRIAL IDEOLOGY  Wants CHANGE  Complains principally that modern industrial growth was hampered by the colonial powers’ policies  Urge that the development of village crafts should be the primary means for achieving economic and social betterment and national self-sufficiency o TRADITIONALIST IDEOLOGY  Does not demand an industrial revolution  It seeks to preserve and strengthen forms of traditional economic organization  Obsessed with the deterioration of the ancient crafts by the local production of machine-made products  Exists in a number of variants and does not lend itself to succinct summation .

the capital/output ratio is lower than large units o The capital used in the small-scale industry is actually in the form of machinery and equipment that more often can be produced at home without drawing on foreign exhange How small-scale industries can be protected : o Import and investment restrictions can be used to provide considerable marketing shelter o Measures to modernize and improve productivity in small industries can be used in the same way as the cottage industries o Rise in income and production of the country       . The planners can channel development of new industries in such a way as to limit this competition and at the same time subsidize cottage industry to hold its costs down. 2.Believe that village crafts should be encouraged that measures should be taken to promote self-sufficiency  Imports should be viewed with suspicion o BOTH IDEOLOGIES  Protest against the results of colonial economic experience CONCEPT OF THE MORAL SUPERIORITY over working for wages o An important strand of thought that is woven into the traditionalist ideology INDEPENDENCE o The proponents of traditionalism had to shift to the more sobering restraints of national planning o Modern industry o Increase in population o Demand for village craft products depended largely on the level of the income in agriculture o Industrial expansion in exports and import substitution Two ways wherein the cottage industry can be sheltered from modern industrial competition : 1. even when the smaller plants are modern and mechanized. The government can help increase village craftsmen’s protection by providing new equipment and organizing them into marketing cooperatives Small-scale industries deserve support because : o They need lesser capital investment o Studies have shown that in some but not all instances.