Industrial economics

1.

DEFINITION of 'Industrialization' The process in which a society or country (or world)

transforms itself from a primarily agricultural society into one based on the manufacturing of goods and
services.
2. Industrialisation or industrialization is the period of social and economic change that
transforms a human group from anagrarian society into an industrial one, involving the extensive
re-organisation of an economy for the purpose ofmanufacturing.[2]
3. As industrial workers' incomes rise, markets for consumer goods and services of all kinds tend to
expand and provide a further stimulus to industrial investment and economic
growth.The process by which traditionally nonindustrial sectors (such

as agriculture, education, health) of an economy become increasingly similar to

the manufacturing sector of the economy.Sustained economic development based on
factory production, division of labor, concentration of industries and population in certain
geographical areas, and urbanization.

ROLE OF INDUSTRIALISATION IN INDIA

Industrialisation is the process of manufacturing consumer goods and capital goods and of building
infrastructure in order to provide goods and services to both individuals and businesses. As such
Industrialisation plays a major role in the economic development of underdeveloped countries
like India with vast manpower and varied resources. Let us discuss, in detail, the role of industrialization
in the Indian economy.
1. Raising Income: The first important role is that industrial development provide a secure basis for a
rapid growth of income. The empirical evidence suggests a close correspondence between the high level
of income and industrial development. In the industrially developed countries, for example, the GNP per
capita income is very high at around $ 28,000. Whereas for the industrially backward countries it is very
low at around $ 400 only.
2. Changing the Structure of the Economy: In order to develop the economy underdeveloped countries
need structural change through industrialization. History shows that in the process of becoming
developed economy the share of the industrial sector should rise and that of the agricultural sector
decline. This is only possible through 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.
3. Meeting High-Income Demands: Beyond certain limits, the demands of the people are usually for
industrial products alone. After having met the needs of food, income of the people are spent mostly on
manufactured goods. This means the income-elasticity of demand for the manufactured goods is high and

that of agricultural products is low. To meet these demands and increase the economys output
underdeveloped countries need industrialization.
4. Overcoming Deterioration in the Terms of Trade: Underdeveloped countries like India need
industrialization to free themselves from the adverse effects of fluctuations in the prices of primary
products and deterioration in their terms of trade. Such countries mainly export primary products and
import manufactured goods. The prices of primary products have been falling or are stable whereas the
prices of manufactured products have been rising. This led to deterioration in the terms of trade of the
LDCs. For economic development such countries must shake off their dependence on primary products.
They should adopt import substituting and export oriented industrialization.
5. Absorbing Surplus Labour (Employment Generation): Underdeveloped countries like India are
characterized by surplus labour and rapidly growing population. To absorb all the surplus labour it is
essential to industrialise the country rapidly. It is the establishment of industries alone that can generate
employment opportunities on an accelerated rate.
6. Bringing Technological Progress: Research and Development is associated with the process of
industrialization. The development of industries producing capital goods i.e., machines, equipment etc.,
enables a country to produce a variety of goods in large quantities and at low costs, make for
technological progress and change in the outlook of the people. This results in bringing about an industrial
civilization or environment for rapid progress which is necessary for any healthy economy.
7. Strengthening the Economy: Industrialisation of the country can provide the necessary elements for
strengthening the economy. In this regard the following points may be noted.
(a) Industrialisation makes possible the production of goods like railways, dams, etc. which cannot be
imported. These economic infrastructures are essential for the future growth of the economy.
(b) It is through the establishment of industries that one can impart elasticity to the system and overcome
the historically given position of a primary producing country. Thus, with industrialization we can change
the comparative advantage of the country to suit its resources and potentialities of manpower.
(c) Through industrialization the requirements for the development of agriculture can be met. For
example, improved farm-implements, chemical fertilizers, storage and transport facilities, etc., appropriate
to our own conditions can be adequately provided only by our own industries.
(d) The industrial development imparts to an economy dynamic element in the form of rapid growth and a
diversified economic structure which make it a progressive economy.
(e) Providing for Security: Industrialisation is needed to provide for the countrys security. This
consideration becomes all the more critical when some international crisis develops. In such situation,
dependence of foreign sources for defence materials is a risky affair. It is only through industrial
development in a big way that the national objective of self-reliance in defence materials can be achieved.

Home

About Us

Study Centres

Extension Services

Student Bodies

Faculty

Gallery
ROLE OF INDUSTRIALISATION IN INDIA
Industrialisation is the process of manufacturing consumer goods and capital goods and of building
infrastructure in order to provide goods and services to both individuals and businesses. As such
Industrialisation plays a major role in the economic development of underdeveloped countries
like India with vast manpower and varied resources. Let us discuss, in detail, the role of industrialization
in the Indian economy.
1. Raising Income: The first important role is that industrial development provide a secure basis for a
rapid growth of income. The empirical evidence suggests a close correspondence between the high level
of income and industrial development. In the industrially developed countries, for example, the GNP per
capita income is very high at around $ 28,000. Whereas for the industrially backward countries it is very
low at around $ 400 only.
2. Changing the Structure of the Economy: In order to develop the economy underdeveloped countries
need structural change through industrialization. History shows that in the process of becoming
developed economy the share of the industrial sector should rise and that of the agricultural sector
decline. This is only possible through 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.
3. Meeting High-Income Demands: Beyond certain limits, the demands of the people are usually for
industrial products alone. After having met the needs of food, income of the people are spent mostly on
manufactured goods. This means the income-elasticity of demand for the manufactured goods is high and

that of agricultural products is low. To meet these demands and increase the economys output
underdeveloped countries need industrialization.
4. Overcoming Deterioration in the Terms of Trade: Underdeveloped countries like India need
industrialization to free themselves from the adverse effects of fluctuations in the prices of primary
products and deterioration in their terms of trade. Such countries mainly export primary products and
import manufactured goods. The prices of primary products have been falling or are stable whereas the
prices of manufactured products have been rising. This led to deterioration in the terms of trade of the
LDCs. For economic development such countries must shake off their dependence on primary products.
They should adopt import substituting and export oriented industrialization.
5. Absorbing Surplus Labour (Employment Generation): Underdeveloped countries like India are
characterized by surplus labour and rapidly growing population. To absorb all the surplus labour it is
essential to industrialise the country rapidly. It is the establishment of industries alone that can generate
employment opportunities on an accelerated rate.
6. Bringing Technological Progress: Research and Development is associated with the process of
industrialization. The development of industries producing capital goods i.e., machines, equipment etc.,
enables a country to produce a variety of goods in large quantities and at low costs, make for
technological progress and change in the outlook of the people. This results in bringing about an industrial
civilization or environment for rapid progress which is necessary for any healthy economy.
7. Strengthening the Economy: Industrialisation of the country can provide the necessary elements for
strengthening the economy. In this regard the following points may be noted.
(a) Industrialisation makes possible the production of goods like railways, dams, etc. which cannot be
imported. These economic infrastructures are essential for the future growth of the economy.
(b) It is through the establishment of industries that one can impart elasticity to the system and overcome
the historically given position of a primary producing country. Thus, with industrialization we can change
the comparative advantage of the country to suit its resources and potentialities of manpower.
(c) Through industrialization the requirements for the development of agriculture can be met. For
example, improved farm-implements, chemical fertilizers, storage and transport facilities, etc., appropriate
to our own conditions can be adequately provided only by our own industries.
(d) The industrial development imparts to an economy dynamic element in the form of rapid growth and a
diversified economic structure which make it a progressive economy.
(e) Providing for Security: Industrialisation is needed to provide for the countrys security. This
consideration becomes all the more critical when some international crisis develops. In such situation,
dependence of foreign sources for defence materials is a risky affair. It is only through industrial
development in a big way that the national objective of self-reliance in defence materials can be achieved.

advantages of industrializatioayushi

1.
2.
3.
4.
5.

Industrialization in economic condition marked by an increase in the importance of industry to

an economy. During the process of industrialization per capita income increases and productivity
levels increase
The advantages of industrialization are as follows:
1. employment opportunity
2. affordable price
3. development of skills
4. utilization of resources
5. earning of foreign currency
explanation :
1. employment opportunity :- Industries have provided employment to people. As we know an
industry requires skilled, semi skilled and unskilled manpower. so people having different
abilities are employed
In the context of our country Nepal industrialization has been of great importance in reducing
unemployment. According to the data it is found that even now 48% of total population of Nepal
are unemployed. So an industry can be of great help in reducing unemployment.
2. affordable price :- An industry produces goods in large quantities so the production cost is
reduced and the price becomes affordable like for example a computer is a demand of people it is
imported from other countries the costing is definitely very high but if the same computer is
started to be produced in own country the price will be reduced and it will be affordable to
everybody.
3. development of skills:- An industry develops skills and ability in an individual, so we can say
industry is a factor which is responsible to built up a countrys manpower. It makes a person
specialize in a particular field. For example a person is employed in a noodle factory he/she can
learn the skills to manufacture noodles and he/she can start own noodle business. so an industry
is of great importance in developing individual skills
4. utilization of resources: Industry utilizes the resources present in country, and produce finished
products which are of affordable and best quality. For example there is sufficient sugar cane
present in the Terai side of Nepal so it can be used to produce sugar in the sugar industry.
5. earning foreign currency :- If the goods are produced in bulk quantities then the goods can
even be used for export purpose which will help in earning foreign currency. Our country Nepal
is specialized in production of carpets and pashmina shawls so it exports the products in order to
earn high foreign currency.
Related posts:
development of country depend upon business activity
basic economic issues
Efficiency- Allocative and Productive
Market Economy
The Equilibrium Price
6.

NEGATIVE EFFECTS

7.
8.

In many ways, industrialization is negatively

impacting our world today. As shown in the
picture above, one impact of industrialization

is the release of mercury into the world's lakes

from manufacturing, mining, fossil fuel
combustion, and hazardous waste
combustion. The release of carbon
dioxide into the air from factories pollutes the
world's air, harming the environment. Factory
pollution is one of the causes of global
warming, which is the theory that all around
the world, the temperature on earth is
increasing. Global warming is the effect of two
hundred years of burning fossil fuels, such as
coal and oil. These fossil fuels released from
factories prevent the heat on earth from
escaping into space, causing the temperature
to rise.
9.

POSITIVE EFFECTS

10.
11.

Aside from the numerous negative impacts

of industrialization, it also has proved to have positive effects.
Because of factories and industries, the quality of
products are very high, and the production of goods is very
efficient, giving us more leisure time, and improving our
standard of living. Along with this, the large amount of
factories provide numerous job opportunities for people
around the world. In addition, because of industrialization,
further advances in technology are continuously being made.
12.

Imagine...

Life without factories.

14. Without factories,the production of
goods would be very inefficient, and not
a many products would be able to be made
in short amount of time. Also, because
the U.S. has such a large population,
13.

without factories, we would not be able

to supply everyone with goods because it
would take too long to make each
product.