Presentation2.pptx

II. Industrial Development
Industrial Development means a development
that involves a manufacturing or industrial
process (industrialization).
Industrial development set free dynamic and
competitive economic performance which
generates income and employment, facilitates
international trade and increases resource
efficiency, and is thus a major driver of poverty
alleviation and shared prosperity(UNIDO,2020).

Industrialization
•Industrialization is the process by which:
•An economy is transformed from a primarily
agricultural one to manufacturing of goods.
•Individual manual labor is replaced by
mechanized mass production, and
•Craftsmen are replaced by assembly lines.
•Characteristics of industrialization include:
 economic growth,
 the more efficient division of labor, and
 the use of technological innovation.

industrialization is a process of structural
change.
• Sources of productivity and out-put growth as
well as of employment move away from
agriculture toward industrial activities.
• Rising productivity and output in industry:
 drive an economic growth,
increased national and per capita incomes,
provide an ever enlarging market for industrial
products(Arnulf ,1995).
It is the process of converting to a socio-
economic order in which industry is
dominant(Encyclopaedia Britannica's)

1. Industrial Revolution
• The process of change from an agrarian and
handicraft economy to one dominated by
industry and machine manufacturing.
• This process began in Britain in the 18th century
and spread to other parts of the world.
• The term Industrial Revolution was first
popularized by the English economic historian
Arnold Toynbee (1852–83) to describe Britain’s
economic development from 1760 to 1840
(Encyclopaedia Britannica's).

• The main features of Industrial Revolution were
technological, socioeconomic, and cultural change.
• The technological changes included the following:
(1) the new materials use chiefly iron and steel,
(2) the use of new energy sources, including both fuels
and motive power, such as coal, the steam engine,
electricity, petroleum, and the internal-combustion
engine,
(3) the invention of new machines, like spinning jenny
and the power loom that permitted increased
production with a smaller expenditure of human
energy

(4) a new organization of work known as the
factory system,- increased division of labour and
specialization of function,
(5) developments in transportation and
communication- the steam locomotive,
steamship, automobile, airplane, telegraph, and
radio, and
(6) the increasing application of science to industry.
These technological changes - increased use of
natural resources and the mass production of
manufactured goods.

• There was new developments in non-industrial
spheres, including:
(1) Agricultural improvements that made possible the
provision of food for a larger non-agricultural
population,
(2) Economic changes that resulted
wider distribution of wealth,
 the decline of land as a source of wealth in the face
of rising industrial production, and
increased international trade,
(3) Political changes reflecting the
Shift in economic power,
New state policies corresponding to the needs of an
industrialized society
.

(4) sweeping social changes
the growth of cities
 the development of working-class
movements
the emergence of new patterns of authority
(5) cultural transformations
Workers acquired new and distinctive skills
 being craftsmen working with hand tools -
became machine operators
• Finally, there was a psychological change:
confidence in the ability to use resources and
to master nature was heightened

• From 1760 to 1830 the Industrial Revolution was
largely confined to Britain.
• The British forbade the export of machinery, skilled
workers, and manufacturing techniques.
• Two Englishmen, William and John Cockerill,
brought the Industrial Revolution to Belgium by
developing machine shops at Liège(c. 1807), and
Belgium became the first country in continental
Europe to be transformed economically.

• France was more slowly and less thoroughly
industrialized than either Britain or Belgium.
• By 1848 France had become an industrial
power, but, despite great growth under the
Second Empire, it remained behind Britain.

Causes of the Industrial Revolution
1. The Agricultural Revolution: Between 1750 and
1900 Europe’s population was dramatically
increasing, so it became necessary to change the
way that food was being produced.
• Involved in the separation of land, and the latter
dealt more with developing different sections to
plant different crops in order to reduce the
draining of the land.
• More land was being used and there weren’t
enough workers it became necessary to create
power-driven machines to replace manual labor.

2.Socioeconomic changes: Prior to the Industrial
Revolution, the European economy was based on
agriculture.
• From the aristocrats to the farmers, they were linked
by land and crops. The wealthy land owners would
rent land to the farmers who would in turn grow and
sell crops.
• With the changes that came with the Industrial
revolution, people began leaving their farms and
working in the cities.
• The new technologies forced people into the
factories and a capitalistic sense of living began.
• The revolution moved economic power away from
the aristocratic population and into the bourgeoisie
(the middle class).

2. Manufacturing
• What is Manufacturing?
• It is the production of goods through the use
of labour, machinery, tools and biological or
chemical processing or formulation.
• It is either mean transforming raw materials
into finished goods on a large scale, or
• The creation of more complex items by selling
basic goods to manufacturers for the
production of items such as automobiles,
aircraft, or household appliances.

• Raw materials are transformed into finished
products through manufacturing engineering or the
manufacturing process.
• This process begins with product design and
materials selection.
• The materials are modified during various
manufacturing processes to create the finished
product.
• Modern advanced manufacturing often includes
several intermediate processes to create a finished
item
• Therefore, manufacturing has close connections to
the engineering and industrial process design
sectors.

• Manufacturing is a secondary sector of the
economy.
The term may refer to:
• The change of human activity, from handicraft
to high-tech, industrial design,
• The change of raw materials from the primary
sector is transformed into finished goods on a
large scale.
• The Distributed via the tertiary industry to end
users and consumers (through wholesalers,
who in turn sell to retailers, who then sell
them to individual customers).

3. Industry
• What is an industry?
• An industry as the collective large-scale
manufacturing of goods in well-organized plants
with a high degree of automation and
specialization.
• An industry is a group of manufacturers or
businesses that produce a particular kind of
goods or services.
• An Industry is the work and processes involved in
collecting raw materials, and making them into
products in factories.

3. 1. Light industry
• Light industry covers manufacturing businesses
that are usually less capital-income intensive.
• Most light industry products are produced for
end users rather than as intermediates for use of
other industries.
• Their facilities normally have less environmental
impact than those associated with heavy
industry.
• For that very reason, zoning laws are more likely
to permit light industry near residential areas.

• Light industries require fewer raw materials,
space and power.
• Light industries are usually located in business
parks, industrial estates, investment parks, and of
course, science parks.
• They include sectors of the food industry, paper
making, plastic, leather, textiles, and household
electric appliances.
• They usually cause little pollution, particularly
compared with heavy industry,
• But some light industries can cause significant
pollution or risk of contamination, so they have
to be monitored regularly

3. 2. Heavy Industry
• Produce large and heavy products, large and
heavy equipment and facilities (such as large
machine tools, huge buildings, and large-scale
infrastructure), or complex or numerous
processes.
• They are usually the industries that often sell
their products to other industries rather than to
end users and consumers.
• In other words, they usually make products
that are used to make other products.

• They are very capital-intensive, meaning they
require a lot of machinery and equipment to
produce, and they are often more heavily
cyclical in investment and employment.
• Some of the examples of heavy industry
include oil, mining, shipbuilding, steel,
chemicals, machinery manufacturing and
similar industries.

3.3. Different levels of Industries
• Primary (first): Primary industries are those
that extract or produce raw materials
• from which useful items can be made.
Extraction of raw materials includes mining
• activities, forestry, and fishing. Agriculture is
also considered a primary industry as
• it produces “raw materials” that require
further processing for human use.

• Secondary (second): Secondary industries are
change raw materials into usable products
through processing and manufacturing.
Bakeries that make flour into bread and
factories that change metals and plastics into
vehicles are examples of secondary industries.
The term “value added” is sometimes applied to
processed and manufactured items since the
change from a raw material into a usable
product has added value to the item.

• Tertiary (third): Tertiary industries are those
that provide essential services and support to
allow other levels of industry to function.
• Often simply called service industries, this
level includes transportation, finance, utilities,
education, retail, housing, medical, and other
services.
• Primary and secondary levels of industry
cannot function without these services, they
are sometimes referred to as “spin-off”
industries.

• Quaternary (fourth): Quaternary industries
are those for the creation and transfer of
information, including research and training.
Often called information industries, this level
has seen dramatic growth as a result of
advancements in technology and electronic
display and transmission of information.

• Quinary (fifth): Quinary industries are
those that control the industrial and
government decision-making processes.
• This level includes industry executives and
management and bureaucrats and elected
officials in government.
• Policies and laws are made and
implemented at this level.

Manufacturing vs. Industry
• The main difference between
Manufacturing and Industry is that:
• The Manufacturing is a industrial activity
producing goods for sale using labor and
machines and
• Industry is a production of goods or service of
a given field within an economy.

4. Asian industrialization model
• The economic achievements of the East Asians
are truly extraordinary and historic, and their
success has been aptly referred to as “the East
Asian miracle.”
• Despite numerous differences in history, culture,
and economic and political institutions in most
of the East Asian countries (economies) that are
part of the “East Asian miracle.”
• “Government undertook major responsibility for
the promotion of economic growth” in these
countries (Stiglitz 1996).

• This miraculous economic success was
initiated by Japan, which grew by 9 to 10
percent per year from the mid-1950s to the
early 1970s.
• Followed by the four East Asian tigers started
to grow rapidly in the late 1970s. These are
South Korea, Taiwan, Hong Kong, and
Singapore

• Their economic success are as follows:
(1) These countries (economies) have all pursued
export-oriented development strategies;
(2) They have been successful in maintaining high
rates of saving and investment;
(3) Emphasis has been placed on promoting
universal education and making enormous
investments in human capital so as to better
absorb and adapt the most advanced technology;
(4) For almost all of the East Asian economies, with
the exception of Hong Kong, industrial policies
were an important part of their growth
strategies.

An important lesson from Asia’s economic
transformation is that:
1.Policy formulation by government and
2. Technological innovation by firms are key
ingredients.
• They perform well in mobilizing domestic resources
for economic development.
• Planning and bureaucratic regulation and protection
may boost economic growth rapidly in the early
stages of development.
• They may be effective in mobilizing resources and
channeling investment into new activities that are
artificially selected, protected, and promoted.

5. Industrialization & economic growth
• Industrialisation brought about rapid economic growth
and the source of demand increased dramatically.
• It contributes to the universal objective of economic
growth, and its impact differs depending on the
country’s stage of development.
• In developed economies, industrial growth is reflected
in achieving higher productivity, embracing new
technologies, intelligent production processes and
reducing the effects of industrial production on the
environment and climate.

• For developing economies, industrialization
implies structural transformation of the economy
from traditional sectors such as agriculture and
fishery to modern manufacturing industries
fuelled by innovation and technology.
Such an expansion of the manufacturing sector
creates jobs, helps improve incomes and thus
reduces poverty, introduces and promotes new
technologies and produces essential goods and
services for the market.

• LDCs only accounted for 0.8 per cent of
total worldwide manufacturing production
in 2017.
• Industrialized economies with a share of
around 17 per cent of global population,
accounted for over 55 per cent of global
manufacturing output.

Top 10 largest manufacturing producers in the world.
Source: UNIDO,2019

• Industrialization plays a vital role in the economic
development of underdeveloped countries.
• As the historical record shows, the developed
countries of the world broke the vicious cycle of
poverty by industrialization.
• It is thus crucial for LDCs to expand their
capacities to reach an overall higher growth
trajectory (UNIDO,2019e).

• Industrialization plays a complex role in economic
development:-
• 1. Increase in National Income: Industrialization
allows countries to make optimal use of their scarce
resources. It increases the quantity and quality of
goods manufactured in that company, which makes
a larger contribution to gross national product
(GNP).
• 2. Higher Standard of Living: In an industrialized
society, workers' labor is worth more. In addition,
because of higher productivity, individual income
increases. This rise in income raises the standard of
living for ordinary people

3. Economic Stability :A nation that depends on
the production and export of raw material
alone cannot achieve a rapid rate of economic
growth.
• The restricted and fluctuating demand for
agricultural products and raw materials—
along with the uncertainties of nature itself—
hampers economic progress and leads to an
unstable economy.
• Industrialization is the best way of providing
economic stability.

• 4. Improvement in Balance of Payments
• Industrialization changes the pattern of
foreign trade in the country. It increases the
export of manufactured goods, which are
more profitable in foreign exchange.
• At the same time, processing the raw material
at home curtails the import of goods, thereby
helping to conserve foreign exchange.
• The export-orientation and import-
substitution effects of industrialization help to
improve the balance of payments.

5. Stimulated Progress in Other Sectors
• Industrialization stimulates progress in other
sectors of the economy.
• A development in one industry leads to the
development and expansion of related
industries. For instance, the construction of a
transistor radio plant will develop the small-
battery industry. (This is an example of backward
linkage.) In another case, the construction of
milk processing plants adds to the production of
ice cream as well. (This is forward linkage.)

• 6. Increased Employment Opportunities
• Industrialization provides increased employment
opportunities in small- and large-scale industries. In
an industrial economy, industry absorbs
underemployed and unemployed workers from the
agricultural sector, thereby increasing the income of
the community.
• 7. Greater Specialization of Labor
• Industrialization promotes specialized labor. This
division of work increases the marginal value
product of labor. In other words, specialized labor is
more profitable. The income of a worker in the
industrial sector will be higher on average than that
of a worker in the agricultural sector.

8. Rise in Agricultural Production
• Industrialization provides machinery to the farm sectors,
including technologies like tractors, thrashers, harvesters,
bulldozers, transport, and aerial spray.
• The increased use of modern technologies has increased
the yield of crops per hectare.
• The increase in farmers' income boosts economic
development more generally.
9. Larger Scope for Technological Progress
• Industrialization provides greater potential for on-the-job
training and technological progress.
• The use of advanced technology increases the scale of
production, reduces costs, improves the quality of the
product, and ultimately helps to widen the market.

10. Reduction in the Rate of Population Growth
• In a somewhat roundabout way,
industrialization leads to smaller families
• Surplus workers migrate from the farm sector
to industries, which are mostly situated in
urban centers.
• Cities have better sanitation facilities, and
health care is more widely available there.
• Through the adoption of family-planning
measures, people reduce the rate of
population growth overall.

11. Increased Savings and Investments
• Because industrialization increases workers'
income, it also enhances their capacity to save.
• These voluntary savings stimulate economic
growth. By cumulative effect, they eventually lead
to the further expansion of industry.
12. Provision for Defense
• If a country is industrialized, it can manufacture
arms and ammunition that are necessary for its
own self-defense.
• A country that depends on other nations for its
arms supply will eventually suffer, and may face a
serious defeat.

13. Development of Markets
• With the development of industry, the market for
raw materials and finished goods widens even
within the country.
14. Increase in Government Revenue
• Industrialization increases the supply of goods for
both external and internal markets.
• The exports of goods provides foreign exchange,
as we know. In addition, the customs excise
duties and other taxes levied on goods increase
the revenue of the country's government.
• The income tax received from industrialists also
adds to the revenue stream of the government,
and is eventually spent for the welfare of the
country as a whole.

6. Impact of Industrialisation
• It is unfortunate that we have not yet realized
the evils of industrialization due to unplanned
growth in our time.
• The ecological imbalances and greenhouse
effects have posed serious threat to human
kind and its survival is questioned

• The pollution of land, water and air.
• The increase in vehicular traffic, launching of space
ships and rockets
• factories have brought in noise-pollution and dust
and smoke.
• The general dirty and unhealthy conditions in and
around the industrial sites have affected human
health and happiness.
• Diseases, unheard of before, are spreading far and
wide.
• There has been instances of child labor in factories.
• The exploitation of the poor by the rich has
increases the crime-rate, isolation and sense of
loneliness.

• There has been a steady decline in spiritual
values and well-being of man consequent
upon the growth of an artificial, mechanical
and materialistic civilization brought about by
industrialization.
• Capitalistic ethics with a craving for more and
more money seem to dominate and influence
millions of people.
• The grave uncertainties in the money-market
sometimes bring misfortunes for the common
people.

• Inflation sets in, the value of money goes
down and the poor working class becomes
poorer.
• Class conflicts, strike, then lockouts cause
hardship and unrest.
• Large scale heavy industries lead to a sharp
fall in the number of cottage industries and
their gradual disappearance.
• Regional and local artisans and workers of
various trades and professions suffer a great
deal.

• The industrialisation or industrial development
of Europe also happened through the colonisation of
other continents, including Africa.
• Many Africans were shipped as slaves to work in
Europe.
• Also, raw materials extracted in Africa were taken by
Europeans in order to advance industrial
development in Europe.
• This is still largely the case even though Africa has
become politically independent.
• Lately, China is developing rapidly also through
processing Africa’s raw materials and precious
metals into finished goods.

6.1.Industrialization and Urbanization
• Industrialization as a generalized process of
economic organization and social integration is
the basis of modern urban development.
• Weber (1899), Haig (1927), and Webber (1984),
among many others, have alluded to the notion
of the city as an outgrowth of the social division
of labor and industrial diversification.

• Intensely developed clusters of producers
develop on the landscape, and with the
growth of markets the clusters themselves
grow in size and formed the current cities
• Agglomerations of jobs result in parallel clusters
of workers, and these labor reserves then attract
more jobs into central agglomerations.
• In this manner, the city properly emerges

6.2.Industrialization & env’t pollution
• The environmental implications of
industrialization can perhaps best be described
by Gray's (1989) paradox of technological
development.
• Impacts of industrialization on the environment
need to be analyzed
• Based on the nature and severity of the
pollution, industries have been categorized as
Red, Orange and Green, referring to high,
medium and low pollution potential,
respectively.

• Impacts on water -.
• The indiscriminate discharge of industrial
effluent along with municipal solid waste
disposal is the principal source for surface
water contamination [Murugesan et al.,1999
[Abbasi et al.,2002].
• The heavy metals, salts and fluoride effluents
from the industries of chemicals production,
metal processing and paper manufacturing
were found to have contaminated the
surrounding groundwater.

2.Impacts on air-The air quality is equally
affected by industrialization.
3.Impacts on ecosystem - This uncontrolled
industrialization brought changes in
community and habitat structure
4. Impacts on flora and fauna - Due to the
changing climate of industrialization and in
the absence of forest cover in most of the
areas of the world, several endangered and
threatened plant species

Immediate causes
• The current study identified inadequate/uncontrolled
disposal of industrial wastes, discharge of untreated
industrial effluent, lack of/complete absence of
proper facilities for the waste treatment system,
absence of secured hazardous waste landfill site,
increased use of heavy metals and hazardous toxic
substances, leaching of hazardous and toxic wastes as
immediate causes of industrial pollution.
• With rapid industrialization, there has been a
substantial increase in generation of various
hazardous wastes, discharge of industrial effluents
and emission contaminating groundwater resources.

Root causes
• Issues related to governance, law, knowledge, technology
and socio-cultural aspects are major root causes of
industrial pollution .
• These include lack of long-range commitment from
businesses to the environmental-friendly approaches,
insufficient management systems, ineffective institutional
mechanism for strategic planning, development,
implementation and monitoring of pollution management,
lack of access to appropriate technology and know-how, a
failure to understand the specific potential of green
approaches, lack of time and resources, corporate
conservatism and a reluctance to drastically change
business practices regardless of the economic and
environmental benefits.

• Application of green approaches based on
6Rs technologies (reduce, reuse, recycle,
recovery, redesign, rethink) and closed-
loop systems within the integrated
framework of industrial ecology (IE)
provides an excellent opportunity to
preserve the natural resources

7. Industrialization Strategies
• An industrial policy (IP) or industrial strategy of
a country is its official strategic effort to
encourage the development and growth of all or
part of the economy, often focused on all or part
of the manufacturing sector.
• Strategies are government long term plans
"aimed at improving the competitiveness and
capabilities of domestic firms and promoting
structural transformation."

• Most of the history of industrialisation in the
less developed countries (LDCs) of the
capitalist world has been examined under two
headings:
1 Import‐substituting industrialisation (ISI) and
2.Export‐orientated industrialisation (EOI).

1. Import Substitution
Industrialization Strategies
• Industrialization through import substitution (ISI)
is one among many industrialization strategies.
• Industrialization is the main hope for most poor
countries trying to increase their levels of
income.
• It is a relatively old strategy which was applied
early during the industrialization of Western
Europe.
• It is based on the protectionism of the domestic
production capacity.

• ISI refers to the development economics policies
of the 20th century.
• However, the theory itself has been advocated
since the 18th century and was supported by
economists such as Alexander Hamilton and
Friedrich List.
• The theoretical bases of the ISI were first
developed by Raul Prebisch and HansSinger
(1950) suggested the procurement of
production means to decrease the imports of
manufactured goods

• The composition of imports changed from
light to heavy intermediate inputs leading to the
demand for large amounts of the scarce foreign
exchange resources.
• Import substitution, instead of saving foreign
exchange, became a gobbler of foreign
exchange causing indebtedness.
• The end result was either stagnation or
dangerous external dependency.

• Import substituting strategy often invoked the
"infant industry" -temporary protection for
nascent industries until they achieved economies
of scale.
• Import substitution revealed that in many
developing countries the average effective rates
of protection in manufacturing industry were
staggering.

• Countries initially implemented ISI policies in the
Global South (Latin America, Africa, and parts of
Asia).
• The intention was to develop self-sufficiency by
creating an internal market within each country.
• The success of ISI policies was facilitated by
subsidizing prominent industries, such as power
generation and agriculture, and encouraging
nationalization and protectionist trade policies.

• Nevertheless, developing countries slowly
began to reject ISI in the 1980s and 1990s
after the rise of global market-driven
liberalization, a concept based on the
International Monetary Fund and the World
Bank's structural adjustment programs.

2. Export Oriented industrialization
• The failure of import substituting strategies to meet
the goals of industrialization in many countries
pursuing an alternative strategy, led to en masse shift
to export oriented industrialization strategies.
• The hall mark of the export oriented industrialization
strategy was "promotion" in contrast to the
“protection" that characterised the import
substituting strategy.

• Promotional measures are a direct means of
giving industries subsidies to overcome various
disadvantages that thwart their achievement of
economies of scale.
For instance, promotional measures in developing
countries for manufacturing industries may
include improving financial and credit
institutions, expanding infrastructure facilities,
rewarding external economies conferred on
other industries, and the provision of subsidies
for training of labour.

• The adoption of export oriented strategies
 Generate more employment than import
substitution because of the labor intensive
character of the production technology that an
export oriented strategy encourages.
Expose the developing economies to the fresh
air of competition and innovation.

ADLI
• In this strategy, agriculture was taken as the engine
of national economic growth.
• Through ADLI, to achieve rapid growth in agricultural
production, raise income for rural households, attain
national food self-sufficiency, and produce surpluses
which could be marketed to the urban or industrial
sectors, smallholder farms, especially crop producers
were initially targeted by the ADLI strategy.

ADLI
• Two-pronged approach:
Smallholder agriculture–better agronomic
practices, more labor use, research &
extension, technology transfer, rural
infrastructure
Extensive mechanized agriculture and
intensive farming–efficient land allocation,
labor supply, health and road for new lands,
research and training, quality, marketing, etc.

Requirements of ADLI
• Leading role of private sector
• ADLI link (use of domestic materials)
• Export orientation
• Focus on labor-intensive industries
• Proper roles of local and FDI firms
• Strong state guidance
• Mobilization of all social forces

Protectionism and Liberalism
• The liberalization of foreign economic relations
and protection or subsidy of home industries are
not contradictory;
• The combination of these two sets of measures is
the realistic trend in developing economies in
their relations with other countries in the
contemporary world

• Protectionism is the economic policy of
restricting imports from other countries
through methods such as tariffs on imported
goods, import quotas, and a variety of other
government regulations.
• Protectionist policies shield the producers,
businesses, and workers of the import-
competing sector in the country from foreign
competitors.

• A protectionist trade policy allows the
government of a country to promote domestic
producers -by imposing tariffs or otherwise
limiting foreign goods and services in the
marketplace.
• Governments use various policies to prevent
imports from international competition to
prevent them competing with local businesses.
Examples include subsidies, tariffs, quotas,
foreign direct investment restrictions, and
exchange rate controls.
• Protectionism has a negative effect on economic
growth and economic welfare.

• By reducing competition and increase prices to the
final consumer.
• Proponents of protectionist policies argue that
domestic jobs will be lost to foreign competition
without such policies being imposed.
• Protectionism allows infant industries to develop
unhampered, protected against competition from
more mature similar industries, from other
countries.

Liberalism
 Liberalism implies for free trade, and free trade policy lies at
the core of liberal economic order.
 It is the policy where the governments impose minimum trade
barriers on imports or exports.
• They promote global competition which forms the basis of
globalization.
• Liberalization is the removal of restrictions or barriers on the
free exchange of goods between nations.
• These barriers include tariffs, such as duties and surcharges,
and nontariff barriers, such as licensing rules and quotas.

• The outcome of trade liberalization and the
resulting integration among countries is
known as globalization.
• This reduced regulation decreases costs for
countries that trade with other nations
and may, ultimately, result in lower consumer
prices because imports are subject to lower
fees and competition is likely to increase

• It negatively affect certain industry within a
nation because of greater competition from
foreign producers and may result in less local
support for those industries.
• liberalization can pose a threat to developing
nations or economies because they are forced
to compete in the same market with stronger
economies or nations.
• This challenge can stifle established local
industries or result in the failure of newly
developed industries there.

Industrial Location
• Influenced into two broad factors :
• (i) Geographical factors: Land, climate, water
and power resources, and raw materials.
• (ii) Social-economic factors: Capital, labour,
transport, demand, market, government,
policies, tax structure, management, etc.

• The basic question posed by scholars
regarding industrial location has been “where
ought industries to be located?”
• The traditional answer has been “where they
derive maximum profits”.
• But this is not so simple because factors are
varied and complex in nature and also change
with space and time.

• To explain these complexities several theories of
industrial location have been proposed by
economists like _Weber, Tord Palander, Edgar
Hoover, August Losch, Walter Isard, and
geographers like George Renner, Rawston, Allen
Pred, Smith, etc.
• Some of the theories had been developed in early
19th century, while others in the 20th century.

• The prime concern of all the theories of
industrial location is to find the ‘optimal
location’, which is economically the best and
one that gives maximum profits.
• There has been a change in factors which
distinguish earlier theories with contemporary
reality:
decrease in importance of transport costs;
 increased organisational dynamism
 interdependence and variety and
the rise of corporate enterprise.

Park Approach
• Industrial park refers to the concentration of
industrial activities in confined areas.’
• Industrial parks offer
1 Developed land
2.Collective services such as roads, telecommunications,
and utilities, and
3. Range of common facilities such as recycling, waste
collection, and effluent treatment, tool rooms,
testing, standard quality control and heat treatment,
refrigerated storage, even security services, recreation
areas, and an infirmary and a post office.

4. Offer managed and serviced workspaces such as
buildings, halls, or parts of such, or serviced
plots on which to build. Some parks have
technical libraries, engineering (mill wright)
services, even housing for workers.
• An industrial park can be owned and operated
by a public agency, a semi-public one, or a
purely private organisation.

• Sometimes industrial parks serve as the
stepping-stone towards more advanced
industrial infrastructure such as export
processing zones and science and technology
parks.
• Well-planned and serviced industrial parks
stimulate the location of industries to socially
desirable areas near but not in urban centres.

• Additional benefits include reduction in
commuter traffic, increased efficiency in urban
land use, and reduced cost in servicing land and
industry.
• However, due to the concentration of industrial
activities in confined areas industrial parks can
have major impacts on the environment, and on
human health and safety.

The impact include
• Rapid depletion of groundwater supplies,
• Pollution of both surface water and groundwater,
• Air and noise pollution,
• Soil contamination,
• Damage to fisheries and other natural habitats, and
• Increased costs for medical treatment of affected
individuals.

• Negative impacts can be prevented, mitigated
and even eliminated through informed and
responsible environmental management in
conjunction with the planning and operation
of industrial parks.

Assignment- II (group)
• Evaluation on Agricultural Development led
Industrialization (ADLI) Policy’s Effectiveness in
Ethiopia.

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