MODULE4

INDUSTRILISATION

Defination of terms

Industry-is the production of goods and services on large scale, this can include
construction, mining, manufacturing etc.
Or organized economic activity corned with manufacturing, processing of raw materials,
construction etc.
Industrial production-is making of goods and services on a large scale through the use
of modern machinery and mechanical energy.

Industrial society- is where goods and services are produced on large scale using
modern machinery and the majority of the people are dependent on paid employment in
factories and services.

Industrialization- is the setting up of organizations or growth of large-scale machines.

Production which includes mining, construction, assembling etc.

HISTORICAL BACKGROUND OF INDUSTRIALISATION

In Europe industrialization started in early 1800 century. In Britain inventors were on

new ways of improving the process involved in the production of textiles, water and later
steam were used to drive the machines and to speed up the production of clothes from
raw cotton and wool. Ample labour was provided by laid of farm workers, who have
rendered useless or jobless by similar invention on the farming sector. By the 19 th century
most countries of Western Europe, North America and Japan had started
industrialization.

REASONS WHY COUNTRIES/ GOVERFNMENT WANT TO INDUSTRIALISE

Why industrialsation?

a. To create employment for its people

b. To earn more foreign exchange through exports of manufactured goods
c. To develop modern infrastructures e.g roads, railways, buildings
d. To accumulate a lot of revenue through taxation of industries
e. To improve the standard of living and incomes
f. To improve countries technological capability
g. To achieve economic and technological independence
h. To develop manpower skills
i. To create a sense of national pride
j. To fully utilise natural resources

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FACTORS NEEDED FOR INDUSTRIALISATION TO TAKE PLACE

a. Cheap power e.g hydroelectric power, oil, coal, etc

b. A large pool of skilled manpower
c. A well-developed infrastructure e.g roads, Railways, dams, telecommunication
d. A large market for industrial goods
e. A large amount of capital for investment
f. A technological capability i.e. the ability of society to improve its level of technology
g. A large resource of base to supply the industry with raw materials e.g minerals,
timber, agricultural commodities
h. A large pool of entrepreneurs
i. Peace and stability in order for a country to attracts investors

STRATEGIES OF INDUSTRILIASATION

There are two broad strategies of industrialization, which have been successfully used by
many industrialized and newly industrialized countries. These are import substitution
industrialization (ISI) and export oriented industrialization (EOI).

IMPORT SUBSTITUTION INDUSTRIALISATION

This is when the country starts making goods for itself instead of buying elsewhere
(outside the country). Example on Book 1 (page 113, South Korea)

A country promotes this strategy and protects local industries through:

a) Putting high tariffs on imported goods
b) Providing loans and grants to local business people by the government
c) Encouraging students to specialize in science and technology so as to provide the
much-needed skills.
d) Starting national research center to encourage technical inventions.
e) Inviting MNCs to invest in the country to produce for the home market.
f) Controlling the workers to ensure stability at the workplace where organisations
operate within the barriers set by the government.
g) Protecting individual property rights thus reducing fear from the private companies
that their assets may be nationalized.
h) Providing the necessary infrastructure such as telecommunication, water, power
i) The government investing directly in heavy industries which are of strategic
importance or which can not attract private investors.

ADVANTAGES
a. The prices of local products are protected because imported goods are taxed.
b. The locals have a chance to start their own business
c. It create employment opportunities for locals
d. The locals develop their entrepreneurial skills as they are in business.
e. There is development of infrastructure like roads, telecommunication, buildings etc.

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f. The raw materials are used to benefit the locals

DISADVANTAGES
a. This denies the country’s the highly needed foreign exchange
b. If the MNCs are used most of the profits are taken out of the country
c. There is technological dependence as the developing countries still buy the machines
outside.
d. If the market is small the country will yield less profit. (The poor and small local
market leads the country to yield less profit.)

Example in Botswana Poultry industry

EXPORT ORIENTED INDUSTIALISATION

This is when a country develops industries directed toward selling goods outside in high
demands on the outside world. Example on Book 1 (page 115, South Korea and Brazil
pg 116)

This done for a number of reasons:

a) To generate high foreign exchange
b) To create jobs opportunities for all locals
c) To encourage research innovation and development skills
d) To encourage economies of scale i.e. they can produce more for a bigger market and
be able to reduce prices while still marking good profit.
e) To ensure or make more profit through the use of local labour and export goods
which many may not find a market locally.

ADVANTAGES
a. It brings highly needed foreign exchange as goods are sold outside the country.
b. It creates job opportunities as industries are opened in the country.
c. There is development of infrastructure.
d. It enables the country to utilises its natural resources
e. Research, innovation and entrepreneurial skills are earned.

DISADVANTAGES
a. Locals are exploited as they normally paid low wages yet they are working long hours
to satisfy the demand of outside market.
b. The high use MNCs leads to most profit being taken outside the country.
c. The high demand of outside market can lead to depletion of natural resources.
d. The needs of the locals are not taken into consideration.

Examples in Botswana Nortex, Caratex

NB
These two strategies can be achieved by various means such as
 Multi-National Companies

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 Parastatals
 Local investment
 Joint enterprises
 Small scale industries
 Large scale industries

(For MNCs, Parastatals, refers to notes on enterprise)

LARGE SCALE INDUSTRIALISTION

These are heavy or capital goods industries, which produce goods such as iron and steel,
processed heavy metals, vehicles, locomotives etc.

They are also known as basic industries because all developed countries started with
these. Also they produce machinery for other industries.
They require large amounts of capital and mostly owned by governments or T.N.Cs

Requirements for large scale industries

 Large amounts of capital
 Abundant skilled and unskilled labour
 A very strong technological base
 Large deposits of minerals/wide resource base
 Large market for industrial goods
 Well developed infrastructure

NB Large-scale industries are generally unsuitable for LDCs because they do not have
the capital or technological capability.

ADVANTAGES

a. They make a country technologically independent i.e. Produce own machines

b. Develops manpower skills
c. Create a lot of employment opportunities
d. They initiate the development of other types of industries e.g. Small scale industries,
engineering, services etc
e. They make full use of local resources
f. Develops local infrastructure e.g. roads, telecommunication
g. Earn country income through exports and taxation

DISADVANTAGES

a. They are very expensive to establish and maintain

b. Cause a lot of environmental damage e.g. pollution
c. Some are unprofitable e.g. iron and steel
d. Mostly owned by TNC`s hence profits are taken outside the country

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SMALL SCALE INDUSTRIALISATION

They are also known as light industries. Mostly they produce goods like processed foods,
textiles, electronic goods etc.
They are many because they tend to be small and the majority of the industries in
Botswana are small scale. They can be individual or family owned e.g. Bakeries, meat
processing

Characteristics of small scale industries

a. They need a small sum of money to establish and run

b. Need fewer skills i.e. workers can be trained to use the machinery.
c. They are labour intensive
d. Small out put capacity /produce goods on a small scale
e. They are easier to manage because they are small
f. The generally use small quantities of energy
g. They mostly based on local resources e.g. milling-grain. Dairy-milk; textiles-cotton
etc.

ADVANTAGES

a. Cheaper and easier to establish

b. Produce goods needed by people i.e. they respond quickly to market to demand
c. The employ large numbers of unskilled people e.g. women
d. Make full use of local resources
e. Develops local infrastructure
f. Develops manpower skills

DISADVANTHAGES

a. They collapse very easily

b. Low output capacity
c. They depend on foreign technology
d. Limited revenue base for govt. because they are small i.e. they pay small taxes

LOCAL INVESTMENT

A. Local Private investment

 Also known as domestic or citizen investment

 Occurs when citizens use their money to start new industries
 Can be individuals or private companies
Examples Zainab toilet paper factory, sun plastic, Sefalana

Conditions required for local private investment

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 Large domestic savings
 Access to capital for investors e.g. loans or grants
 Business or entrepreneurial skills
 Low interest rates on loans
 Good infrastructure
 A large pool of skilled manpower
 Low taxation levels
 Protection of local industries from foreign competition
 A large domestic market
 Availability of services e.g. Water, power

ADVANTAGES

a. Private companies are flexible i.e. they produce what consumers want
b. Profits remain within the country
c. Increases the country’s GNP/wealth(capita)
d. Improves the technological base
e. Can earn foreign exchange through exports
f. Expansion of the government revenue base through taxation

DISADVANTAGES

a. Small and poor domestic market

b. Lack of entrepreneurial skills
c. Lack of adequate capital for investment
d. Absence of a wide resource base/ limited variety of resources
e. Expensive services e.g. electricity

B. PUBLIC OR GOVERNMENT INVESTMENT

The government is sometimes involved in direct industrial investment. In Botswana the

government uses the Botswana Development Corporation as its industrial investment
arm.
The government also sets up parastatals or public corporations examples BTC, BMC,
BHC

(Refer to enterprise for advantages and disadvantages of parastatals)

JOINT VENTURES

This is when the government enters into a partnership with a private company to establish
an industry or two companies’ join together to do a project together,

Government role is to provides land, materials, labour, security, capital etc

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Private Company role provides capital, technology, skills/expertise, market etc

Examples in Botswana
Debswana-De Beers and Botswana government
Bolux milling- BDC (govt.) And Luxembourg
Kgalagadi Breweries-BDC, S.A Breweries and Czech Breweries

ADVANTAGES

a. Part of the profits remain within the country

b. Develop manpower skills
c. It improves infrastructures
d. It also improves technological base
e. It create employment opportunities
f. It enables the country to fully utilize its resources

DISADVANTAGES

a. Parts of the profit is taken out of the country

b. The foreign partner may bring inappropriate technology for the country
c. Most of the high paying jobs are occupied by foreigners.
d. Unequal partnership which usually ends with the foreign partner dominating

CHARACTERISTICS OF MODERN INDUSTIES

Modern industrial production is complex and highly mechanized. In order to industrialize

a country must have natural resources (land), human resources (labour), financial
resources (money) and entrepreneurial skills to help in production of goods and services.
Here are some of the characteristics of modern industries.

a. RAW MATERIALS; may determine the location of an industry e.g. industries using
large quantities of bulky raw materials such as a cement factory, brick work, iron
making will be located near to their source of raw materials. Industries processing
perishable may also be influenced by the location of the raw materials e.g. fruit and
vegetable canning.

b. ADVANCED TECHNOLOGY; Modern industries require complex technology.

The machinery’s very complicated and expensive, It requires a special skill to
produce and repair it.

c. MECHANISATION; Industries also require factory building machinery and various

types of equipment.

d. DIVISION OF LABOUR AND SPECIALIZATION; for the factory to be more

efficient to make products within a short period of time it has to divide its workers into

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different tasks in other words each worker has to specialize in small part of the whole
task.

e. AUTOMATION AND ROBOTICS; in modern industries most of the machine

processes are controlled by computers, such industries are called high technical
industries. In such industries goods are not handled by people at all during the whole
production process. Only a few skilled workers are required to ensure that machines do
their work properly.

f. FEMINASATION OF LABOUR; in industries today women are increasingly doing

the job which used to be considered as man’s work. This is so because mechanisation has
done away with much heavy work. Women excel in work requiring precision and
delicacy of touch; they appear to tolerate long hours of machines.

g. SYNTHETIC PRODUCTS; Technology has made it possible to replace natural

products with artificial ones e.g. synthetic fiber and synthetic rubber and synthetic rubber
made hydro carbons derived from petroleum.

h. COTTAGE INDUSTRIES; The manufacturing wholly or partly carried out at the

home of the worker. Here a big industry can supply raw materials to the cottage industry
operators, to turn them into finished goods for a fee then return it back to the big industry
to sell. This is done to minimize costs.

i. COORDINATION OF SPECIALIZED TASKS; large-scale industries are made up

of large numbers of independent specialists. E.g. in a mining industry there are people
specializing in engineering, research, sales, accounting, advertising, personnel etc.
Management team is required to coordinate the specialized tasks.

j. SUB-CONTRACTION; Because of high specialization in industries, some companies

fond it increasingly hard to complete some tasks alone. They therefore hire some
companies to do part of the job for them.

EFFECTS OF INDUSTRILIASATION

Industrialization and development are closely linked. Development as noted in module 1

can have negative or positive effects to people.

POSITIVE

a. Industrialization can produce more goods and services so the Gross National Product
will increase.
b. More jobs can be created. There will be different kinds of jobs.
c. The government can collect more taxes to spend on welfare services.
d. The standard of living will rise. People will have more choices.

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e. When a country has its own industries it is more independent. It does not have to
depend on other countries for so many things.
f. Industries creates a surplus for further investment

NEGATIVE

a. People have to change their way of life move into cities and often-loose touch with
the family.
b. Work has to match the pace of the machines; some jobs are repetitive and boring.
People may get stressed and dislike their work.
c. People may become greedy for more and more goods; wealth becomes more
important than human relationships.
d. They may forget the importance of agriculture and craftsmanship.
e. Traditional culture may be lost or changed
f. Large cities grow around industries with poor housing, overcrowding, bad sanitation
and diseases.
g. Industries tend to use up natural resources like minerals and fossil fuels are non-
renewable. This leads to depletion of natural resources.

NEWLY INDUSTRIALISED COUNTRIES.

These are countries with new and fast growing industries. They are the third world
countries, which started industrializing after the Second World War. E.g. South Korea
Brazil, Argentina, Egypt, India, Malaysia, Mexico, Philippines etc
NIC’s have achieved high levels of industrialization over the last 30 years. They have
achieved remarkable levels of development in that short period of time.

SUCCESS
a. They have obtained high levels of industrial technology
b. They have higher production levels (mass production)
c. Employment opportunities for many people have been created in many industries
opened.
d. There is commercialisation of agriculture, which has made it more efficient.
e. Countries have increased dependence on manufactured goods for exports
f. There is emergence of TNC`s based in the NCI’s e.g. Samsung, Daewoo, Hyundai,
in South Korea
g. They have managed to penetrate into local market for manufactured goods especially
clothing, sports equipment, electronic goods, vehicles etc.
h. They have managed to attract a lot of MNCs because of low labour costs e.g. Sony,
Adidas, Nike etc.
i. There is higher levels of skills, literacy and access to health services
j. They have a positive balance of trade i.e. surplus or profits

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CHALLENGES

a. They are still dependent on technology from western countries. They need to develop
their own
b. Most people are paid low wages and still do not enjoy the high standards of living.
c. Working conditions are poor, overcrowding, unhealthy and unsafe.
d. There is uncontrolled environmental degradation by TNC`s e.g pollution, depletion of
resources
e. There is increased level of economic competition from developed countries because
of free trade agreement by World Trade Organization
f. There is world economic recession which means less people buying industrial goods
g. They have high debts to IMF

INDUSTRIALASATION IN BOTSWANA

In Botswana industrialization is still at its infancy. This sector makes only 12% of
employment in the formal sector. The sector is dominated by mining, processing of meat
products and light manufacturing industries such as brick molding, textiles and clothes
making, pottery, food and beverages.

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