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Ind L1braou
Ind L1braou
Ind L1braou
2:
Meaning
of
Industrialization,
2.4.1 Structural changes in the economy 2.4.2 Beneficial effects on agricultural development 2.4.3 Rise in per capita income 2.4.4 Changes in the pattern of trade 2.4.5 Changes in the Social Environment 2.5 2.6 2.7 2.8 2.9 Summary Key Concepts Check your Progress Self-Assessment Questions Answers to check your progress
Objectives:
After studying this lesson, you will be able to understand Meaning of industrialization Need for industrialization Role of industry in economic development
2.1 Introduction:
The term industrialization is generally used in two different meanings. In the narrow meaning, it refers to the establishment and development of the production of the means of production: in the broad meaning, it refers to the completion of the industrial revolution and the transfer of the economy to industrial methods of production.
But in the context of developing countries, the more meaningful definition of industrialization would be as follows: Industrialization is a system of economic development in which the major part of the national resources are used to develop a technically up-to-date, diversified national industry capable of assuring a high rate of growth for the economy as a whole and of overcoming economic and social backwardness. In general the Industrialization is the process of manufacturing consumer goods and capital goods and of creating social overhead capital in order to provide goods and services to both individuals and businesses. As such industrialization plays a major role in the economic development of underdeveloped countries. Industrialization is a pre-requisite for economic development as the history of advanced countries shows. For development, the share of the industrial sector should rise and that of the agricultural sector decline. This is only possible through a policy of deliberate industrialization. As a result, the benefits of industrialization will trickle down to the other sectors of the economy in the form of the development of agricultural and service sectors leading to the rise in employment, output and income. In overpopulated underdeveloped countries there is overcrowding on the land, holdings are subdivided and fragmented and farmers practice traditional agriculture. For rapid development, LDCs cannot afford to wait for changes in farm practices to take place. Therefore, LDCs must begin with industrial development to supply fertilizers, farm machinery and other inputs so as to increase efficiency on the farm.
negligible, they can be transferred from agriculture to industry with little or no loss in agricultural output. Since, the marginal product of labor is higher tin industry than in agriculture, transferring such workers to the industrial sector will raise aggregate output. Thus overpopulated countries have no choice but to industrialize. Further industrialization is essential for the following reasons besides above stated factors: (a) It brings increasing returns and economies of scale than in agriculture (b) To free from the adverse effects of fluctuations in the prices of primary products and deterioration in terms of trade. (c) It provides scope for using the new technology, new and diverse skills in larger enterprises. (d) It followed by urbanization, employment opportunities and incomes increase. (e) People enjoy the fruits of modernization in the form of a variety of goods and services available in urban centers due to industrialization. (f) It also affects the rural sector through the demonstration effect and tends to raise the living standards and promotes social welfare. (g) Industrialization brings social transformation, social equality, equitable distribution of income and balanced regional development in the process of economic development.
The pressure of population on agriculture declines and the disguised unemployed people earning only a subsistence lively wood in agriculture are able to move out to industries where incomes are higher and prospects of progress brighter, thus
industrialization brings with its strong forces of dynamism that help the developing courtiers in breaking the shackles of stagnation.
of Cheney and Taylor shows that large developing countries like India, and small industry oriented countries can gain considerable by encouraging industry.
2.5 Summary
On account of the above reasons, the Indian planners gave topmost priority to programmers of industrialization. They were convinced that the solution to the problem of backwardness lay in emphasizing the process of industrial development. Since the productivity of labor is the highest in the manufacturing industries, national income could be raised at a fast rate only through the establishment of industries on a wide
scale. Moreover, industrialization induced development in other sectors. The growth of industrial sector was also deemed necessary as it was expected to absorb the rapidly increasing labor force of the economy. Moreover, it was expected to provide increasing opportunities to the underemployed people in the agricultural sector and help in reducing the pressure of population on land. As a part of long-term strategy of planned development, the main emphasis was on industrialization. Within the industrial sector itself, a very high priority was given to heavy capital goods industries. The experience of different countries has clearly shown that unless a country develops iron and steel, heavy engineering, machine tools and heavy chemical industries, it will fail to accelerate the pace of economic development. While this high priority to heavy capital goods industries has helped the country in building up a strong industrial base and has given a sense of stability and continuity to the planning process, it has failed to generate enough employment opportunities so that there is no mass scale transfer of labor from the agricultural sector to the industrial sector.
Occupational pattern: It refers to the composition of different occupations such as Agriculture, industry and services. Wage goods : consumption goods synonymously called as Wage goods Primary products: Agricultural commodities are known as primary products Manufactured products: Industrial products in general called as manufactured products Structural changes : Major change in any one sector can be considered as structural change Social Environment: Mention may be made an example here for social environment is of the caste system, spirit of competition and enterprise, literacy rate etc
2.7
State whether the following statements are True or False: 1. Industrial economics deals with the economic problems of firms and industries. 2. Industrialization leads to fall in the per capita income. 3. Industrialization breaks the shackles of stagnation. 4. Industrialization brings more economies of scale than in agriculture. 5. Export diversification is not possible through industrialization.
2.8
Self-Assessment Questions
Short answer type questions: a) What is Industrialization? b) What is the need of Industrialization? Long answer type questions: a) Explain the factors which are influence the industrial development? b) Discuss the relationship between agriculture and industry c) Analyze the impact of Industrialization on employment
2.9
1. Misra, Puri 2. Kuschal.S 3. Sivaiah & Das 4. Bole Rao & Desai
5. Birthwal.R 6. Bhagwati.J.N & Desei.P 7. Chenery.H.B 8. Isher Judge Ahluwalia 9. Pramit Chaudhury 10. Cheruniliam
Industrial Economics. India: Planning for Industrialization. Patterns of Industrial Growth, American Economic Review, September, 1960. Industrial growth in India- Stagnation since the mid 60s. The Indian Economy. Industrial Economics