Virtual Kollage: The importance of industriazation in economic development

Posted by / Wednesday, 4 January 2017 / No comments

The importance of industriazation in economic development









THE IMPORTANCE OF INDUSTRIALIZATION 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.

As a foreign exchange earner
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.  

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