course material

1. Industrial Development
Industrial DevelopmentIndustrialisation is the process of economic and social
transformation where a group of people are transformed from an agricultural society to an
industrial one. Industrialisation helps a community to achieve various social objectives.
These objectives are such as poverty eradication, employment, labour standards, healthcare
and access to education. Industrialisation began with the industrial revolution in the 19th
century with the UK being the first country to become industrialised (Clark, 2007, p.50).
However, industrialisation also does have negative effects. The industrial processes cause
climate change, water and air pollution, loss of natural resources and also extinction of
species. These effects threaten the social and economic welfare of the world. The European
Union aims to eliminate the negative impacts of industrial development all through the
world while also promoting the positive impacts. This has led to the development of
environmental friendly products, services and technology which help in achieving economic
growth as well as environmental sustainability. The EU also came up with policies that
facilitate environmental protection, social cohesion, sustainable resource use and economic
growth. Industrial development has also brought about urbanisation. There is increased
concentration of labour in industries that are increasingly growing bringing about the rise
of large cities and towns to house these labourers. This has brought about a change in the
family structure as more people have to leave their families in search of work in the cities
and towns. There is the emergence of child labour which has also come about as a result of
the industrialisation. This has led to the springing up of human rights organisations to help
the children who are being exploited as well as industrial workers who may not know their
rights.From time to time governments should issue industrial policies that foster and
facilitate the growth of the industry. This helps in maintaining a country’ s competitiveness
and productivity while also eliminating the negative effects that come as a result of the
industrial development. Government involvement is most common with energy supply. In
many countries the government is always involved in introductory stages of energy supply
especially electricity supply where they influence the ownership. Once the electrical supply
has been initiated, the government now leaves the production to private firms that compete
with one another with the consumer having the option of choosing the company with the
least cost. The government is then involved in creating a legal framework that protects the
citizens from being exploited by some of these companies that are now responsible for the
electricity supply. This shows that regulation should go hand in hand with the liberalization
of the energy supply. Any successful economy depends on the effective supply of energy

2. with its use being safe and secure. This gives the government the duty to put in place clear
policies that govern national energy supply and that should be checked by regulatory
mechanisms (Rawski, 2008, p. 100). The practice of most governments is to link such
policies with those of commerce, environmental and industrial care. The energy industry is
a utility for the public service and therefore the government should always make the
regulation of this industry a priority. In the regulation of industrial development, the
government issues licences that are usually related to performing audits on management of
regulated firms, reporting the regulatory activities to the government, intervening on
disputes among the stakeholders, human resources development, establishing the structure
and level of tariffs, setting the performance standards that should be maintained by the
industries, ensuring that the performance of the regulated companies is always monitored
and coming up with a uniform accounting system.There are various countries that have
pursued policies in achieving industrialisation. One of these countries is India which an
industries development and regulation act that was enacted in 1948 in pursuance of the
Industry resolution policy. The act empowers the government and helps it in regulating the
direction and pattern of industrial development, in controlling the results, performance and
activities of industries in the public industries and also in taking the necessary steps
towards the development of industries (Shafaeddin, 2011, p.70). The ministry of Industries
and Commerce in India is responsible for the administration of the act and works through
the Department of Industrial Policy and Promotion (DIPP). The DIPP in India is the
department responsible for the implementation and formulation of developmental and
promotional measures that are aimed at the growth of the industrial sector. It monitors the
industrial production and growth in industries such as the paper and pulp, cement, rubber
and tyre, consumer durables, consumer goods, light machine tools, light engineering
industries, light electrical machinery, light electrical industries and also other major
industries. It also increases and facilitates the foreign direct investment inflow into India. In
addition, it encourages the acquisition of technological capability in the various industries
in the country.The IT industry in India has greatly been helped. For a long time, computers
had been a new thing for most Indians. With the industrial development of the nation,
computers have become an integral part of the population of India. With the central
government making industrial policy to regulate technology in the country, computers have
spread widely being used in the newspaper and news agencies with each newspaper agency
having its own home news page and website (Shafaeddin, 2011, p. 12).The act has various
provisions such as the making of a ‘ Development Council’ that helps in the development of
any group of scheduled industries. The council consists of members representing the
interests of consumers, employees, owners and other persons that may have knowledge of
the technical aspect of the industries. This can greatly help in reaching the objectives of
globalisation as it ensures the interests of all the parties involved are well taken care of. The
consumer and employees are protected from exploitation while the owner is also able to
maximize on the profits. Another provision is that the council gets to perform the functions
of suggesting the rules for efficiency with the view to obtain maximum production, reduce
costs, eliminate waste and improve quality, promoting better marketing and devising a
system of sales and distribution of the industrial produce that is satisfactory to the

3. consumer, encouraging the training of persons in the technical subjects relevant in the
industry, co-ordinating production programmes and recommending targets for production
and recommending measures to improve the working of the less efficient units of the
industry (Mathews and Cho. 2000, p. 8). The development council is required to prepare an
annual report and submit it to the advisory council and the central government for the work
done in a financial year.The central government is responsible for the licensing of a new
business or the expansion of an already existing business. The applicant is issued with an
industrial license once it has been cleared and approved after the applicant has fulfilled
conditions such as approval of import of capital goods and foreign investment proposal. The
Government usually does an investigation before issuing the license for the purposes of
regulating the output produced by the industry as well as fixing the standards of production
of that industry, ensuring the industry takes the necessary steps as the central government
may deem necessary to aid in the development of the industry, barring the industry from
undertaking any act that might reduce its production, economic value or capacity,
regulating the distribution and controlling the prices to ensure the availability of its
products at a fair price (Linden, 2004, p. 4). It also provides for the central government to
issue directives any time investigations concerning any industrial regulation are in place.
These measures go a long way in ensuring that the aims of industrialisation are met while
also eliminating the adverse effects that may result as a result of industrial
development.Another country that has adopted policies towards industrialisation is China.
Most of these policies were adopted after the World War II. China’ s reforms have mainly
followed those of other successful East Asian countries with its economic growth largely
based on increased exports and trade openness, rapid industrialization together with the
liberalization of its financial markets (Lim & Pang, 1991, p. 68). China’ s industrial policy
combines key features of other policies that are pursued in East Asia. Some of the policies
are such as those that support domestic firms as well as opening up to foreign
investors.China’ s ability for developing and absorbing technology coupled with the foreign
investment fuelled industrial development in the country making it realize a very huge
growth in its economy. The Chinese government introduces industrial policies that help
improve the competitiveness of Chinese companies. The industrial policies have taken
different forms such as export subsidies, preferential loans and educational programs.
China has an industrial policy that oversees the development of product standards for
electronic products, integrated circuits, digital televisions, mobile telephones and consumer
video discs. The electronics industry in China is the largest industry in the country on both
domestically and foreign-controlled production and it plays a central role in the nation’ s
economy. China is exceptional because of its growth rate and potential market size giving it
an advantage in implementing and crafting industrial policy in areas like absorptive
capacity, industrial structure and technology transfer concessions that many other
developing nations do not. These advantages are just like those that were enjoyed by the
United States in the late 19th century (Linden, 2004, p.6). One area that makes China to
stand out from its neighbours is its industrial structure. After studying the experiences of
Korea and Japan, China restructured most of its small, uncompetitive state electronic
producers transforming them into larger companies such as the SVA Group and the China

4. Electronics Corporation.China’ s market size has given it leverage in terms of technology
transfer and foreign investment making it receive foreign direct investment on an
astonishing level starting in the 1990s. China received the second largest inflow of foreign
direct investment in 1993 after the United States. The Chinese government together with
the policy makers have been able to entice and demand technology transfers on a large
scale from those investors who are eager to manufacture and market their goods there.
China does also have the absorptive capacity to adapt to global competition with the
suitability of its basic institutions and attitudes acting to its advantage. China ensured that it
had a dysfunctional and well-organized innovation system before it opened its markets to
the outside forces in the late 1970s. With Chinese policymakers making concerted efforts to
update the technological base of the nation, China’ s technological resources became
considerable in the global market (Hong, 1997, p.80). China’ s innovation system at the
beginning of the transition to a market economy was split into silos with enterprises being
made responsible for production while the government research institutes were given the
responsibility for research. The post graduate education expanded rapidly with a growth
from 10,000 post graduate student entrants in 1978 to 200,000 in 2002. This was in
addition to 20 % of Chinese postgraduates that were studying overseas.The industrial
policies in these two countries have helped reach the objective of industrialisation as the
characteristics of an industrialization policy are geared towards achieving the objective of
industrialisation. The characteristics of the industrialisation policy are such as promoting
and directing the diversification of industrial production as well as diversifying economic
activities, encouraging foreign direct investment and other new investments (Easterly,
2002, p.8). It also includes, eliminating major barriers to industrial development such as
labour relations, administration of tax, time delays, commercial laws, red tape delays and
administration barriers to the provision of government services, improving the
environment for sustainable industrial development for private investments which are both
foreign and domestic and enhancing productivity, competitiveness through proper
industrial governance, macro-economic management and by also ensuring that the
knowledge resources, human resources, physical infrastructure and capital resources are
properly managed and developed to be of relevance to industrial developmentAn analysis
of the industrial policy reveals that a proper industrial policy should be functional and
realistic and should target creating an environment which would attract increased
investments with the end result of generating incomes and creating more employment. It
should also be able to address capacity building and macro-economic conditions to aid in
transforming the industrial positioning of a nation. The policy should address effective
management and utilization of human resources while also promoting the effective
mobilization of innovative and knowledge resources, competitiveness and product
improvements (Shafaeddin, 2011, p.75). The policies should be implemented immediately
they are defined. The objective of industrialisation is to help nations achieve economic
development and reduce poverty using a socio-economic strategy. The strategy aims at
raising skills of the population through education, investing in infrastructure, development
of industries etc.Industrial policies have a very essential role to play in accelerating the GDP
growth of nations with the aim of accelerating industrialisation to achieve a knowledge

5. economy (Ernst and O’ Connor, 1992, p. 4). The policies also set up a vision for the
industrial economy for both the long term and the short term. Moreover, the policies
provide strategic direction to a country’ s economy towards industrial development.
Greater clarity is achieved through these policies as they define the social partners and the
private sector in matters pertaining investment decisions. They provide a point of reference
for effective improvements in industrial development.There are no developing nations that
are considered to have industrialized rapidly without a well-implemented and strong
industrial policy. This shows that the industrial policy go a long way in meeting the
objective of industrialization and therefore governments should be very effective in crafting
policies that will help manage the process of industrial development in their countries.
Clear benchmarks for failure and success should be put in place to help the government
evaluate the progress it is making as industrial policy is considered to be an experimental
process. Failures usually get entrenched when there is the absence of a clear idea to
differentiate between failure and success. Benchmarks also provide a quick way of
determining how the nation’ s industry is doing in relation to other competitors globally.
The authority of carrying out industrial policies should be given to agencies that are
competent to avoid the issue of corruption cropping up.There is a labour protection policy
in most Asian countries that aims at increasing the protection of workers while improving
their working conditions to increase their motivation. The policy assists entrepreneurs to
become more competitive and efficient, improves and extends protection to workers who
operate on self employment, agricultural workers, seasonal workers, contract workers,
home workers, and informal economy workers. The policy also alerts the workers,
employers, the international community and the investors that the governments in question
are committed to offering labour protection as well as eliminating the negative effects that
may come about with industrial development.The various policies that have been discussed
above encompass several sensitive factors such as living conditions, coverage, working
conditions, working environment, basic rights, social security, enforcement and compliance
and capacity building for social partners and labour administration. The Chinese
government also has a child labour policy that aims at eliminating all forms of child labour,
the evaluation and also monitoring child labour with the help of Manpower and Provincial
labour departments. Children are immediately withdrawn from exploitative and hazardous
situations and taken to rehabilitation centres with specially designed training and education
schemes. The Chinese government is also committed to providing the industrial workers
with reasonable working hours which are not supposed to exceed 48hours in a week.
Overtime hours should also voluntary and should also not exceed 12 hours in a week. They
should also be paid at a premium rate that has been prescribed in a collective agreement.
The industrial workers are also entitled to rest periods and leaves in form of sick leave,
special leave and annual leave as is determined by the law of the country. The workers are
nevertheless advised to negotiate the terms of these leaves with their employers to make a
suitable arrangement for themselves other than that prescribed by the law. Maternal leave
is also offered as prescribed by the law.There are also policies to guard against sexual
harassment in the workplace with proper legal intervention put in place in case one finds
themselves in such a situation. Companies that plan on terminating the services of the

6. workers should give advance warning to the workers to enable the workers to make
arrangements to find employment elsewhere. Employers do also have the responsibility of
ensuring that the working environment is safe.In a nutshell, the industrial policies that are
set by governments go a long way in establishing the objective of industrialization in
developed as well as developing nations. The negative effects of industrialization can be
greatly reduced or eliminated altogether by embracing these policies that aim at improving
the working conditions of workers and ensuring that the environment is well taken care of.
Health and safety policies eliminate hazards from the working environment or in cases
where elimination of the hazards is not possible; they isolate them from workers
(Shafaeddin, 2011, p.80). The policies also ensure that the workers are provided with
protective clothing and this also serves in making the working environment conducive.The
objective of industrialisation is largely achieved when these policies are made and
implemented because they play a large role in the industrial development of nations. All the
developed nations have realised that policies are essential for the rapid industrialisation of
their nations and have quickly embraced these policies. The conclusion then is that
governments should embrace policies to help in regulating the industrial development of
their nation. This would help in dealing with problems like child labour, emergence of the
informal sector and also the rapid urbanization that is experienced as a result of industrial
development. It is clear that industrial development is necessary for the growth of a nation
and it is therefore the responsibility of the government to see to it that the negative effects
of globalization are completely eliminated. This ensures that the government achieves
economic growth as well as the primary objective of industrialization.Reference List:Clark,
G. 2007. A Farewell to Alms: A Brief Economic History of the World. London: Princeton
University Press.Easterly, W. 2002. The Elusive Quest for Growth. Cambridge: MIT
Press.Ernst, D & O’ Connor, D. 1992. Competing in the Electronics Industry: The Experience
of Newly Industrializing Economies. Paris: OECD, Development Centre.Hong, S. 1997. The
Political Economy of Industrial Policy In East Asia: The Semiconductor Industry in Taiwan
And South Korea. Northampton: Edward Elgar.Lim, L & Pang, E. 1991. Foreign Direct
investment and Industrialization in Malaysia, Singapore, Taiwan and Thailand. Paris:
OECD.Linden, G. 2004. China Standard Time: A Study in Strategic Industrial Policy. Business
and Politics 6 (3), 1-24. Retrieved online on 10th December 2011 from:
http://isic.ucsd.edu/papers/Linden04.pdfMathews, J. & Cho, D. 2000. Tiger Technology:
The Creation of a Semiconductor Industry in East Asia. Cambridge: Cambridge University
Press.Rawski, T. et al. 2008. China’ s Industrial Development, China’ s Great
Transformation. Cambridge: Cambridge University Press.Shafaeddin, M. 2011. Trade
Liberalization, Industrialization and development: The Experience of Recent Decades.
Penang: Third World Network.