Industrialization and Economic Development
Industrialization is the process of making consumer goods and capital goods and creates social overhead capital to provide goods and services to individuals and businesses. Because such industrialization plays a major role in the development of LDCs (less developed countries).
Industrialization is a prerequisite for economic development because the history of developed countries shows. For development, the share of industrial sectors must rise and the agricultural sector decreases. This is only possible through intentional industrialization policies. As a result, the benefits of industrialization will be “dripping down” to other economic sectors in the form of the development of the agricultural sector and services that lead to the increase in work, production and income.
In LDC, the excess population there is a density of land, ownership is divided and fragmented, and farmers practice traditional agriculture. For rapid development, LDC is unable to wait for change in agricultural practice. Because of that. LDC must begin with the development of the industry to supply fertilizers, agricultural machinery and other inputs to improve efficiency in agriculture. Again, industrialization is needed to provide work to unemployment and unemployment in the agricultural sector. In excessive LDC, a large number of unemployed people or unemployed are disguised whose margin products are zero or can be ignored. They can be transferred from agriculture to industry with little or no disadvantages in agricultural products. Because marginal product products are higher in the industry than on agriculture, transferring the workers to the industrial sector will increase aggregate output. Thus LDC, the excess population has no choice but industrialization.
Industrialization is also important in LDC because it carries an increase in return and economic scale while agriculture is not. “These economies live in training, stimulate communication, industrial interactions (inter-sectoral relations), demonstration effects in production and consumption, and so on. Rural community tends to be stagnant, urban society dynamics. Because industrialization brings urbanization, it is superior to stimulation Agriculture. “
LDC further requires industrialization to free ourselves from the adverse effects of fluctuations at the price of primary products and decreases in their trade requirements. Such countries mainly export primary products and imported goods produced. The price of primary products has fallen or remain stable because of the protectionist policies of developed countries, while manufacturing prices increase. This causes damage in terms of trade LDCs. For economic development, these countries must release their dependence on primary products. They must adopt import and export-oriented industrialization substitution.
The case for industrialization in LDCs also rests on psychological impulse provided by polio in their residents in marching towards modernization. Industrialization is seen as a proud material by every LDC, because it implies using new technology, new and diverse skills, larger companies and more major cities. Moreover, income rises rapidly in the industrial sector which is stored and invested to create more demand for goods and services. Because industrialization is followed by urbanization, job opportunities and income income.
People enjoy the fruits of modernization in the form of various items and services available in urban centers because of industrialization. It also affects the rural sector through the demonstration effect. Thus industrialization tends to improve living standards and promote social welfare.
Finally, industrialization brings social transformation, social equality, a more equitable income distribution and balanced regional development in its process