Introduction to Industrialization

CHAPTER # 1 : INTRODUCTION TO
INDUSTRIALISATION
INSTRUCTOR: MR. MANZOOR AHMAD
DEPARTMENT OF ECONOMICS
UNIVERSITY OF SWABI
Lecture # 3

Types of Industries
1. Cottage Industry
2. Small Scale Industry
3. Private Scale Industry
4. Large Scale Industry
5. Public Sector Industry
6. Joint Sector Industry

1. Cottage Industry
 An industry where the creation of products and
services is home-based, rather than factory-based.
 A Cottage Industry is defined as a service performed or
product made in one’s own home for remuneration.
 These are the industries in which not much capital or
space is required.

Examples of Cottage Industry
 Handicraft Wood carvings

Examples of Cottage Industry
 Brocades Glazed potteries

 An industry is defined as small scale if it employs 5 to
9 workers which may include proprietor and his family
members or hired labor on wages
 An industry is defined as small scale if it employs 5 to
9 workers which may include proprietor and his family
members or hired labor on wages.
 Note: The definition of small scale industries differs
from country to country. All the definitions are based
upon certain factors like number of persons employed,
amount of investments, power, inputs,
productions/turnover, locations, technology etc.

 For example in U.S.A, U.K and Pakistan, employment
is taken as a basis for defining small scale industry.
 In India, Srilanka, Indonesia, and Malaysia
investment is taken as a basis for defining small scale
industry.
 In Japan, Korea and Philippines investment and
employment are taken as a basis for defining small
scale industry.
 In China Turnover is taken as a basis for defining
small scale industry.

 A small scale industry is defined as follows in various
countries:
1. USA: No official definition exists but generally taken
to mean less than 100 employees.
2. UK: A manufacturing unit employing less than 200
employees.
3. Japan: In manufacturing unit the investment limit is
100 million Yen and employing below 300 persons.
4. Korea: In manufacturing unit the investment limit is
500 million Won and employing more than five
persons but less than 300.

5. Malaysia: In manufacturing unit the investment
limit is less than R.M 250.000.
6. Philippines: Investment between P1,00000 and P1.0
million and employing workers between 5 to 99
persons.
7. Indonesia: The small scale unit is one which
employs an investment in plant and machinery not
exceeding Rp 150 million.
8. Srilanka: Investment limit below Rs. 2 lacks.
9. Pakistan: An industry is defined as small scale if it
employs 5 to 9 workers .

Examples: Small Scale Industry
 Poultry Farm Dairy Farm

 Honey Making Carpets Making

 Sports Goods Fish Farm

Examples of Small Scale Industry
 Naswar Production

3. Private Sector Industry
 It is a kind of industry which is set up by few private
individuals with their own capital.
 They manufacture such commodities, which according to
them, will be readily accepted by the society and through
which they will get maximum profit.

4. Large Scale Industry
 Large scale industries are industries that employ a lot
of people. For example, engineering companies are
large scale companies.
 These industries need large capital, machine and
space.
 All the heavy industries of Pakistan like the Iron and
steel industry, textile industry, automobile
manufacturing industry fall under the large scale
industrial arena.
 However in recent years due to the IT boom and the
huge amount of revenue generated by it the IT
industry can also be included within the jurisdiction of
the large scale industrial sector.

Examples: Large Scale Industry
 Automobile industry

Examples: Large Scale Industry
 Steel Mills

6. Public Sector Industry
 Those industry which is run and controlled by
government of a country.
 The basic objective of this type of industry is to
enhance and protect the welfare of the society.

6. Joint Sector Industry
 It is a type of industry in which capital and controlled
is neither exclusively in the hands of the state nor that
of the private individuals , but in both the state and
the private individuals combine together.
 In such an industry usually the share capital and
investment of state is more than that of the private
individuals

Characteristics of Modern Industry
1. Big industries:
 Modern industries are usually quite big in which a
large number of people are employed.

2. Trade union:
Trade union is another feature of our modern industry.
Those who work in an industry usually organize
themselves into trade union.
These organized people then try to bargain with the
management for better working conditions, better
emoluments and for getting other facilities.

3. Impersonal Character:
 In modern industry worker has no close association
with the goods which he is producing.
 It is primarily because one who starts work does not
finish it. It is to pass through various stages before it
completely becomes a finish goods.
 The top bosses meet together and have personal
contacts only and do not know much about workers.

4. Need for Money:
A good modern industry cannot run without finances.
In the past a craftsman could manage with little
money, but today heavy finances and amounts are
needed to keep the industry running.

5. Division of labor:
In the past there used to be no division of labor in the
industry.
But today there is clear division of labor.
Each person is required to do only a particular type of
job.

6. Desire for Monopoly:
Another feature is that every industry wants to have
less competition and more monopoly conditions.
But in spite of this desire, almost every industry is
faced with competitions from other industries.

7. Mechanization:
 In modern Industry, industry is typical for
mechanization, i.e., usage of machines, e.g. tractors,
trucks, bulldozer, excavator, etc.

8. Automation:
Usage of robots

9. Computer usage:
 Another feature of modern industry is use of
computer.

Types of industry according to the position of industry to
needed raw materials
1. Primary Industry:
 Primary industries are those that harvest or extract
raw material from nature, such as agriculture, oil and
gas extraction, logging and forestry, mining, fishing,
and trapping.
 Industry, such as mining, agriculture, or forestry,
that is concerned with obtaining or providing natural
raw materials for conversion into commodities and
products for the consumer:

Types of industry according to the position of
industry to needed raw materials
2. Secondary industry:
This sector generally takes the output of the primary
sector and manufactures finished goods.
Unlike a primary industry, which collects and produces
raw materials for manufacture, a secondary industry
makes products that are more likely to be consumed
by individuals.
Examples of secondary industry divisions include
automobile manufacturing, steel production and
telecommunications.

Types of industry according to the position of
industry to needed raw materials
3. Tertiary Industry:
Also called Service sector
The tertiary sector of industry involves the provision of
services to other businesses as well as final consumers.
Services may involve the transport, distribution and
sale of goods from producer to a consumer, as may
happen in wholesaling and retailing, or may involve
the provision of a service, such as in pest control or
entertainments.
It also includes: repairs, shops, restaurants,
accommodation, police, schools, etc.

Introduction to Industrialization

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