INDUSTRIALIZATION AND IT’S IMPACT ON WORLD ECONOMY
Industrialization can simply defined as the process of transforming economy based on extractive activities based on manufacturing.
In other words, industrialization refers to the process by an economy based on agriculture, lumbering, mining etc is transformed based on industries. Industrialization requires the establishment of many firms which are of producing goods and services.
ROLE OF INDUSTRIALIZATION IN ECONOMIC DEVELOPMENT OF A NATION
Industrialization or the industrial sector contributes greatly to the economic development of nations in the following way
- Increase in gross national product (GNP): The industrial sector, through its operations like payment of taxes, increases the earning accruable to the nation.
- Employment opportunities: Industries provide employment (job) for many people.
- In international trade, it improves trade balance: Most of the products of manufacturing industries like machinery are usually imported from western nations. This forms the basis for international trade and improves trade balance between countries.
- Stimulation of other sectors: The industrial sector stimulates the growth of other sectors like agriculture, mining and lumbering.
- Control of inflation due to mass production: With modem technology, products like car and machinery can be mass produced. This can help to reduce inflation.
- Technological development: Industrialization can also lead to the development of technology in the country.
- Infrastructural development: The establishment of an industry in a place stimulates the development of infrastructural facilities like roads, telephone, electricity and pipe-borne water.
- Diversification of the economy: The industrial sector helps different countries to prevent over-dependence on only one product like Nigeria’s present over dependence on crude oil. If Nigeria can invest in the industrial sector, her economy will in time be diversified.
- Training and development of skilled manpower: Many people are trained in different technical areas in order to acquire special skills to manage different aspects or machines in an industry. Owing to industrial development, many people are given such skill training.
- Funding of education and research: The industrial sector provides capital for the funding of education and research work in all nations, e.g. the Education Tax Fund (ETF) in Nigeria.
- Conservation of foreign exchange: Industrialization has led to the conservation of foreign exchange which would have been used for importing goods now produced locally.
- Improving standard of living: Industrialization also leads to the improvement or raising of the standard of living of the people through production of goods that are cheap and affordable.