FRANCISCO, Ma.

Francesca DL
13, 2010
2ASN2

September

SUMMARY AND ANALYSIS :

CHAPTER 19 : THE INDUSTRIALIZATION ISSUE

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
country.
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 Countries of the region have mostly only the alternatives of

using technologies of the highly developed countries or
rejecting modern machines altogether, 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,
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.
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, that is, until the region is much more industrialized.
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 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, 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 governments 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,
transport and communication facilities
Which effects to a greater demand for raw materials
General structure of South Asian countries suggest that :

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, Ma. Francesca DL

__, 2010
2ASN2

September

SUMMARY AND ANALYSIS :

CHAPTER 20 : THE CASE FOR CRAFTS AND SMALL-SCALE INDUSTRY

INDUSTRIALISTS VS. 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

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. 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. The government can help increase village craftsmens
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,
even when the smaller plants are modern and mechanized,
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