Industrialization is a crucial driver of economic growth and development, as the quote goes, ‘Poor industrialization means poor economy and poor economy means poor state.’ The relationship between industrialization, the economy, and the state is complex. Poor industrialization leads to a stagnant economy.
The development of industries is fundamental for a country’s growth and progress, as it can have a profound impact on different areas of the economy such as employment rates, trade activities, agriculture, economic stability, poverty levels, and national security. The establishment of new industries creates job opportunities and reduces unemployment rates. As more people become employed, they have disposable income, which leads to an increase in consumer spending. This, in turn, further boosts economic growth. However, industries can be negatively impacted by various factors, ultimately leading to a decline in their strength and success. These factors can include:
Low foreign investment:
Undoubtedly, developing countries cannot afford to ignore the significance of foreign investment. If I take a glimpse of the current situation in Pakistan, due to inflation, a number of industries are shutting down their operations nationwide, leading the country towards more inflation. To sum up, low foreign investment is a major challenge for developing countries like Pakistan, and steps must be taken to address the issue. One solution is for the government to create a more business-friendly environment by reducing bureaucracy, improving infrastructure, and providing incentives for foreign investors. Another solution is to encourage entrepreneurship and innovation by providing education and training in these fields. Furthermore, developing countries should focus on improving their human capital by investing in education and healthcare. This can lead to a more skilled and productive workforce, which can attract more foreign investment. By taking these steps, developing countries can attract more foreign investment, create more jobs, and ultimately improve their economies.
Another factor that weakens industrialization is trade imbalance. A significant portion of a country’s economy relies on trade. However, trade imbalance can lead to disastrous inflation. If a state imports luxury goods like heavy machinery, electronic appliances, and petrol from any country but experiences a decline in exports, it will cause a trade imbalance. In contrast, global powers like the USA, Russia, Japan, Saudi Arabia, and China balance their trade, resulting in a boost to their economies day by day.”
Increase in unemployment:
From the process of manufacturing to delivering goods, many people directly or indirectly rely on the industry, including employees, laborers, security guards, transporters and retailers. We can easily assume that a large number of people solely rely on the industry. However, if any new industry starts operation in the country, we can see how many job opportunities can be produced within one industry. On the other hand, if any industry shuts down its operations in the country, a terrifying number of people can become unemployed, leading the state towards poverty and increase in crime rates.
Questionable industrial policies:
Industrial policy is a fundamental factor for a country’s industrial development. The government’s industrial policy can have a significant impact on the country’s industrial sector, which in turn can affect the overall economy. However, if there is a lack of focus on research and development, and the policy is not doing enough to promote innovation and entrepreneurship, it can lead to questionable industrial policy. Furthermore, factors like corruption and lack of transparency can also contribute to discouraging investment and growth of local Industries, and negatively affect the country’s economy. By prioritizing research, innovation and transparency, the government can foster an environment that encourages local industries to flourish, and contribute to the overall well-being of the economy.
Insignificant role of mineral resources:
Mineral resources are like straw for making bricks; they are essential for a country’s economic development. Without them, a nation can not progress it’s economy.
Mineral resources such as iron, copper, and aluminium are worth their weight in gold. For instance, Saudi Arabia, one of the world’s largest oil producers, has used advanced technology in their industries and utilized their mineral resources efficiently. This example can be useful for developing countries like Pakistan and India. Therefore, it is crucial for countries to use their mineral resources effectively and efficiently to promote their economic growth.
Devaluation of currency:
When a country’s currency is devalued, it becomes cheaper relative to other currencies. This makes imports more expensive, which can reduce demand for imported goods. However, it also reduces the purchasing power of the consumers, making it difficult for them to afford locally produced goods. This can lead to a decrease in demand for locally produced goods which can cause a reduction in Industrialization.
On the whole, poor Industrialization can have a detrimental effect on a country’s economy, which can lead to a poor state. To avoid this, countries should invest in their industries and promote innovation and technology to keep up with the changing times.
(The writer is a student at Szabist Larkana Campus)