REASONS WHY COUNTRIES/ GOVERNMENT WANT

TO INDUSTRIALISE
Why industrialisation?

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

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).

1). 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 are unable to 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 e.t.c
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

2). EXPORT ORIENTED INDUSTIALISATION

This 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
 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

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

 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 VENTURE
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
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 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 machines process 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 so because mechanization has
done away with much of heavy labour. 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 e.t.c 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.
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 lead 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 commercialization 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 e.t.c
h. They have managed to attract a lot of MNCs because of low
labour costs e.g sony, Adidas, Nike e.t.c
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

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.

Small-scale (light) and large scale (heavy) Industries

The scale of an industry is determined by the;
a.) Size of labour
b.) Level of output
c.) Capital and investment

Characteristics of small and large scale industries

 Small scale industry Large scale industry
(craft)
Labour Mainly unskilled- use Mainly skilled labour
traditional skills Work done by
Employ mostly machines
women
Work is done by
hands/manual
Labour intensive
Capital Little capital needed Large capital needed
Capital intensive
Raw Local raw materials Lot of raw materials
materials used needed
Few raw materials Raw materials mostly
needed imported
Location Mainly located in Located in urban areas
rural areas e.g reeds e.g. meat processing,
or wood. brewery etc
Output Low/small products Large production
produced Products mainly
Product sold locally exported
Furniture Simple furniture e.g. Modern furniture eg
benches cautch.
Machinery Simple machine e.g. Heavy machines
hand tools Modern technology
used.eg drilling
machine.
Buildings Small premises on Operate in large
tree shades. buildings e.g.
factories.
Power Little power needed More power needed