INDUSTRIALIZATION

The First Industrial Revolution

 Took place from the 1700s to the mid-1800s

 The ever increasing demand of people for more goods, steam
engine trains, and many machine tools, an essential factor at
that time
 The demand to transport goods led the way for railroad were
the primary energy resources
 Iron and coal used for steam engines for more operations in
factories
 The Second Industrial Revolution

 Took place from the mid 1800s to the mid-1900s with Europe
and the USA taking the lead
 The second industrial revolution brought about the so called
“modern life”
 Nature greatly utilized for the production of goods and services
of food
 Entrepreneurship, international trade, and creation of markets
for trading shares of stocks
 Immense cultivation of knowledge in science and applied
technology
 Steam, electricity, and engine-powered boats, cars, and
airplanes made transportation of goods and services faster and
more reliable
 The impossible became possible, like food preservation with the
use of refrigeration and canning
 The farmers were displaced and became workers in factories
 Photography, music, motion pictures were introduced
 Publishing industry making information available everywhere
in newspapers and other published materials
 More exports, steel production, shipbuilding, and factories
 The Third Industrial Revolution

 Mid-1900s to 1999
 This era revolved around computerization, market competition,
and globalization
 Scientific management continued to be developed
 The Toyota Production System was introduced which
revolutionized the production of cars taking over the car
manufacturing world market
 In 1982, Deming introduced the philosophy on “Fourteen
Points” of quality management
 In 1987, Motorola introduced a better total quality tool called
the “Six Sigma”
 Total Quality Management was widely taught and studied in
colleges and universities
 US, Japan, Germany – sophisticated computer technology, high
speed travel air capability
 Led the way to the transfer of multi national companies to Asia
because of cheaper materials and albor
 China began dominating the globalized economy by selling
garments, toys, technological products, household things, and
other consumer prodcts at the cheapest price.
 The fourth Industrial Revolution

 From the year 2000 to the present time or more commonly

known as the 21st century
 Management systems like Total Quality Management, Lean
Production, and the Six Sigma became widely practiced
nationwide
 More production of goods and services traded in a globalized
economy
 To improve productivity to increase the standard of living
 Focused on biotechnology, additive manufacturing (3D
printing), and transportation
 Almost everywhere, regardless of social status or even social
media account, has one or more smart device
 Public transportation that are run by automated technology
 Samsung and Hyundai continuously develop self-driving
automobiles
 Industrialization

 Mechanized methods of mass production are

an essential component of this transition.
 The positive characteristics of
industrialization include economic growth, a
more efficient division of labor, and a growth
spurt in technological innovation.
 Industrialization

 Industrialization can be driven by a combination of factors including

government policy, labor-saving inventions, entrepreneurial
ambitions, and a demand for goods and services. It has profound
implications for the population, causing a wave of migration from
small farms to cities and towns where jobs can be found.
 The most dramatic example in recent history is that of China, where
government policy changes in the late 20th century led to the
nation's transition from an economy based on subsistence farming
to a global manufacturing powerhouse.
 Effects of Industrialization

 1. allowed for the mass production of commercial goods

 2. transportation, finance, and communications industries all expanded
 3. led to increased labor specialization
 4. motivating a rapid demographic shift. People left rural areas in large
numbers, seeking jobs in budding industries.
 5. led to unprecedented expansion in wealth and financial well-being for
some.
 6. led to unprecedented expansion in wealth and financial well-being for
some.
 Manufacturing. Industrialization began with the invention of
machines that greatly increased the manufacture of goods.
 Transportation. The 19th century was a period of unparalleled
innovation in ways to transport goods from and to marketplaces.
 Mining. Many of the great inventions of the 19th century were
developed to serve the mining industry.
 Retailing. Before contactless payments and self-service checkouts,
there were innovations in retailing that were designed to appeal to
19th century shoppers.
 Effects of Industrialization
(Industrialization Changes Life)

 The factory system changes the way people live and work, introducing a variety
of problems.
 Factory Work.
Factories pay more than farms, spur demand for more
luxurious and more expensive goods.
Work becomes separated from home life.
 Industrial Cities Rise
Urbanization—city-building and movement of people to cities
Growing population provides work force and a market for
factory goods
 Living Conditions In Industrial Cities
Sickness widespread; epidemics, like cholera,
sweep urban slums
Wealthy merchants, factory owners live in luxurious
suburban homes
Rapidly growing cities lack sanitary codes and
building codes
Cities also without adequate housing, education,
and police protection
Modes of Industrialization
 Mercantilism was a form of economic nationalism
that sought to increase the prosperity and power of a
nation through restrictive trade practices. Its goal
was to increase the supply of a state's gold and silver
with exports rather than to deplete it through
imports.
 Mercantilism was based on the idea that a nation's
wealth and power were best served by increasing
exports and limiting imports.
 2. Exportation – surplus
 3. Importation - shortage
4. import-substituting industrialization
 Import substitution industrialization (ISI) is a
theory of economics typically adhered to by
developing countries or emerging market
nations that seek to decrease their
dependence on developed countries.
 The primary goal of the implemented substitution
industrialization theory is to protect, strengthen, and grow local
industries using a variety of tactics, including tariffs, import
quotas, and subsidized government loans. Countries
implementing this theory attempt to shore up production
channels for each stage of a product's development.
 ISI runs directly counter to the comparative advantage concept
that occurs when countries specialize in producing goods at a
lower opportunity cost and export them.
 5. laissez-faire or free-market approach that encouraged foreign
trade, providing new outlets for industrial output.
 Laissez-faire is an economic theory dating back to the 18th
century that opposes any government intervention in business
affairs. The driving principle behind laissez-faire economics is that
the less the government is involved in the economy, the better off
business, and society as a whole, will be.
 It is a French term that translates to "leave alone," or more
literally to "let you do."
6. Protectionism – increasing tariffs,
import quotas, or more regulations to
products derived from other countries
 Today, we are experiencing the 5th industrial
revolution (industrialization), where goods and
services are available that were considered impossible
half a century earlier. There is a price that must be
paid with a modernized, industrialized economy. We
need to constantly visit our laws and policies t protect
the future generation from total degradation .
 COSTS OF INDUSTRIALIZATION

 1. Environmental Disadvantages. One negative byproduct of

industrialization is environmental pollution that harms human
health.
 2. Financial Disadvantages. Industrialization results in a wider
gap between the rich and poor due to a division of labor and
capital. Those who own capital tend to accumulate excessive
profits derived from their economic activities, resulting in a
higher disparity of income and wealth.
.
• Social Disadvantages.
• Poor living and working conditions
• Exposure to hazardous conditions
• Child labor
• Unchecked pollution
• Overuse of fossil fuels
• The mechanization of farming, with questionable health
benefits
 New Ideas About Economics

 Adam Smith
 Leading advocate of Laissez-Faire economics
 Published book “Wealth of Nations”
 Promoted a market economy -- wrote all markets should be
free of government intervention and regulation.
 Businesses can freely compete against one another
 Thomas Malthus
 Wrote that population growth would always grow
faster than food production.
 Believedonly war, disease, famine and decreased
reproduction would cure this problem.
 Believed the poor should have less children.
 Robert Owen
 Thought that for the good of all, the government, not the
individuals should own property and control industry.
 This concept is known as Socialism.
 Built towns around his mills to demonstrate.
 Provided free schools, non-profit shops, better working
conditions and decent housing.
 In turn imposed strict rules on workers personal lives.
 Karl Marx
 Declared as capitalism grew, more and more workers would descend into
poverty and in time would rebel and capture the “means of production”
 Workers would then establish a society based on cooperation and an equal
distribution of wealth.
 Workers would have to control the government.
 Communism – System in which the government owns almost all means of
production and controls economic planning.