Posted by Chester Morton / Wednesday 4 January 2017 / No comments
The importance of industriazation in economic development
Definition of industrialization
Industrialization can be defined as the system by which an
economy which hitherto produced basic agricultural goods, now manufactures
those same goods with the use of machines instead of manual labour and assembly
line instead of skilled artisans.
Generates revenue for the economy
One of the important roles industrialization play in the
development of the economy of a country is that it helps to raise revenue for
the economy. This is realized through the payment of appropriate taxes to
governments after profit is declared. Apart from that, companies pay excise
duties, import duties, export duties etc to the government. This helps the government
to raise revenue.
It generates employment
Another important role played by industrialization is the
creation of employment for the people. As industries are established, it needs
labour as a component of production. The citizens of the land are engaged to
work in these industries in order to put food on their tables. So industrialization
can create employment.
Industrialization leads to the manufacture of products, some
of which are exported to other countries to earn foreign exchange. Many of the
European industrialized countries export their products to West Africa and
these earn them foreign exchange. Similarly, countries in West Africa export
some of their products abroad to earn foreign exchange for their country.
Helps to preserve foreign exchange
Another role of industrialization is the accumulation of
foreign exchange reserved for other areas of development of a country. As a
country industrializes and produces some or most of the products needed for consumption
at home, the foreign exchange that would otherwise have been used to import
that particular product is saved for other purposes or just kept in the foreign
reserve.
Encourages technology transfer
Another importance of industrialization is that it helps to
improve upon the technology that is available. Once technology improves, there
is efficiency in production that leads to increased production and subsequently
to more profits and money. A lot of the industries in West Africa are
technologies that were brought from elsewhere.
Ensures value addition
Also industrialization allows for value addition. Where
hitherto the product was exported in its raw form, industrialization introduces
the concept of adding value to the commodity through manufacturing. As value is
added, it can fetch much more on the foreign markets and this usually increases
what goes into the national coffers.
1. Highlight six ways in which industrialization is important
to an economy.
2. Discuss six roles industrialization plays in the economy
of your country.
