Development Economics

Industrialization is the essential basis of a development strategy.

Prepared by- SUMAYA HOQUE

Id- 2010566
1.Introduction

Industrialization is essential for undeveloped countries' economic progress. The industrialized

countries of the world overcame the vicious cycle of poverty by industrializing, rather than
focusing on agriculture or national resource extraction, as history indicates. Industrialization is
frequently required for long-term economic growth and poverty reduction. However, the pattern
of industrialization has a significant impact on how the poor gain from progress. Promoting
industrial higher returns to capital and land tend to increase inequality unless they also include
changes in existing patterns of concentration of physical and human capital and land ownership.
Pro-poor economic and industrial policies focus on increasing the economic returns to the
productive factors that the poor possess, such as raising returns to unskilled labor, whereas
policies promoting higher returns to capital and land tend to increase inequality unless they also
include changes in existing patterns of concentration of physical and human capital and land
ownership. The use of capital-intensive methods rather than labor-intensive methods, as well as
the use of skill-biased technologies, tends to widen economic gaps, especially where education is
low and human capital is concentrated. Industrial facility placement also has an impact on
overall poverty reduction and inequality. Because of easy access to trained labor, greater
infrastructure, and larger markets, businesses are generally concentrated in metropolitan regions.
Industrialization may exacerbate inequality between urban and rural areas due to market and
technological spillovers. Facilitating the development of non-agricultural activity in rural areas,
such as manufacturing in small and medium-sized businesses (SMEs), may help to narrow the
gap.

2.Example of industrialization in developing countries

Industrial development has been an important basis for economic growth. We can see many
countries such as China, India, Brazil, south Korea, Taiwan province in China, Indonesia,
Mexico adopted a development strategy that included deliberate insulation from the world
economy, industrialization, and economic dominance of the state. Export promotion, enhanced
trade opening, economic liberalization, and a better business climate have all been linked to
increased output growth in most countries. Import protection and selective government
intervention, on either hand, have been used.
Increased agricultural production is typically a key to poverty reduction at the commencement
of economic growth in many developing nations because poverty is primarily a rural concern.
This has been the case for instance, in China and Indonesia. Countries that began their economic
reforms with agricultural reform or otherwise focused rural development, such as China, have
often seen reducing inequality due to a reduction in rural poverty at first. Since rapid
industrialisation began in Korea and Taiwan, income distribution was relatively equitable thanks
to preceding decades' land reforms. In Indonesia, oil rents were used in financing rural
development. Growth in the industrial sector, however, is required for long-term growth and
poverty reduction after the early stages of economic development. In some nations, such as
Korea, growth has been unambiguously pro-poor during specific times, with the poor benefiting
proportionally more than the non-poor.

The measure to which industrial development effectively reduces poverty and inequality is
determined by the industrialization pattern. Industries that employ many unskilled individuals
and/or use domestic inputs and raw materials produced using labor-intensive technologies
can boost poor people's salaries. During the early stages of industrial development in Taiwan,
for example, demand for unskilled labor grew faster than demand for skilled people, reducing
inequality and poverty. Later stages have seen a major increase in demand for qualified people,
as well as a shift in Taiwan's export and manufacturing structure. Taiwan had made significant
expenditures in human capital by that time; therefore, the impact of changing skill demands on
income distribution was very minor. A similar course has been taken by the Republic of Korea.
Manufacturing, on the other hand, has tended to be very capital heavy in Brazil and India,
resulting in limited employment prospects for the poor. The service industry has also played a
significant role in India's recent expansion, but dynamic service industries such as software and
back-office processing have created few direct jobs for the unskilled. Despite this, India's
poverty rate has decreased dramatically over the last 15-20 years due to rapid growth.

The geographical location of industry can also affect the extent to which industrialization is
pro-poor. In China, industrialization has increased per capita income significantly, but because
industrial development has been concentrated in the country's eastern coastal regions, regional
inequality has increased, and industrial development has contributed relatively little to poverty
reduction in much of the country's interior. Nonetheless, inter-regional labor mobility is high,
and migrant workers' remittances can help mitigate the effects of geographic concentration of
industry on regional inequality. Geographical factors–or economic distances–also play a role in
explaining why some sections of Brazil, India, Indonesia, or Mexico are less developed than
others.

The government plays a critical role in the development of infrastructure and human resources,
as well as in encouraging and supporting innovation and technological advancement. Education
is frequently a pathway to better work and income options for the disadvantaged. Universal
education, as in China or Korea, provides disadvantaged people with more opportunities to
participate in the growth process. The government's role in establishing these is essential. If these
prerequisites are not met, international and domestic investments will be scarce, and growth
would be limited and erratic. Economic instability is likely to disproportionately affect the poor,
as it did in Mexico in the mid-1990s and Indonesia in the late 1990s, for example. Economic
instability is likely to disproportionately affect the poor, as it did in Mexico in the mid-1990s and
Indonesia in the late 1990s. On the other hand, Korea and Taiwan have experienced far more
stable economic growth.

3.Industrialization basis of development

Industrialization allows countries to make optimal use of their scarce resources. Countries can
make the most use of their limited resources because to industrialization. It raises the number and
quality of commodities produced in that company, resulting in a higher contribution to the gross
national product (GNP). Workers' labor is more valuable in an industrialized society. Individual
income also rises because of increased productivity. A country that relies solely on the
production and export of raw materials will not be able to achieve rapid economic growth. The
limited and changing market for agricultural products and raw materials, along with natural
uncertainties, stymies economic progress and creates an unstable economy. Industrialization
changes the pattern of foreign trade in the country. It boosts manufactured goods exports, which
are more beneficial in terms of foreign exchange. At the same time, refining the raw material at
home reduces the need for commodities to be imported, so conserving foreign exchange.
Industrialization's export-orientation and import-substitution effects serve to improve the balance
of payments. Other sectors of the economy benefit from industrialization. The growth and
expansion of linked industries are triggered by the growth and expansion of one industry.
Increased employment prospects are available in both local and large-scale sectors because of
industrialization. Industry takes underemployed and jobless workers from the agricultural sector
in an industrial economy, consequently increasing the community's income. Industrialization
boosts growth in other areas of the economy. Industrialization boosts growth in other areas of the
economy. In both small and large-scale sectors, industrialization creates more job prospects.
Industry takes underemployed and jobless workers from the agricultural sector in an industrial
economy, consequently increasing the community's income. Specialized work is encouraged by
industrialization. The marginal value product of labor rises because of this division of labor. To
put it another way, specialist labor pays better. A worker in the industrial sector will earn more
money on average than a worker in the agricultural sector. Agricultural activity is more difficult
to govern and regulate than industrial activities. Industrial output can be increased—or decreased
—in response to a product's price, cost, and demand. Industrialization opens more opportunities
for on-the-job training and technological advancement. The application of new technology
expands the scale of production, lowers costs, enhances product quality, and, as a result, helps to
expand the market. The supply of goods for both external and internal markets increase as a
result of industrialization. As we all know, goods exports give foreign exchange. Furthermore,
the government's revenue is increased by customs excise fees and other taxes put on
commodities. Industrialists' income tax contributes to the government's revenue stream, which is
finally spent on the welfare of the country.

4.Conclusion

Since the industrial revolution, industrialization has been identified as essential to the country's
rapid development. Countries that rely solely on agriculture have stayed underdeveloped, but
countries that established industries have advanced rapidly. The advanced countries have
promoted large-scale manufacturing and transmitted benefits to agriculture. Manufacturing, we
might infer, is the third sector of our economy and the backbone of any country. It is extremely
vital for a country's economic progress.
5.Reference

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