AS A Level Business: Industrialisation

• It is often taken for granted in developing economies like Zimbabwe that one of the macroeconomic goals the government has to pursue is industrialisation
• Industrialisation is a term that is used to explain the increasing importance of the secondary and tertiary sectors of the economy
• In developing countries such as Zimbabwe, the economy is usually dominated by primary based businesses (the primary sector as it is sometimes called)
• The bulk of the country’s Gross Domestic Product usually comes from this sector
• Such countries are called developing or unindustrialised
• Industrialisation refers to the process,where in such an economy, the secondary and tertiary sectors become increasingly important
• It is characterised by an increase in the number, size and complexity of industries within the economy and the growth of the service sector
• An increasing number of people become employed in secondary and tertiary sectors instead of the primary sectors usually composed of agriculture and mining
• The amount of output from the tertiary and secondary sectors also continues to increase as measured by contribution to GDP

Benefits of industrialisation

• There is an increase in the Gross Domestic Product (GDP) i.e. there is economic growth
• This is often accompanied by an increase in the standards of living as everyone gets in on the country’s/economy’s prosperity
• There is an increase in employment opportunities
• There is an improvement in the balance of payments (BoP) which is often caused by trade imbalances brought about by trading with more industrialised nations which often export less high-value goods and services
• An increase in foreign currency earnings from increased export value
• The government can raise more taxes
• This will allow it to increase social spending

Drawbacks of industrialisation

Industrialisation is not without its disadvantages. Some of these demerits include:

• Often industrialisation is associated with increased pollution including air, land and water pollution as happened in China
• Can lead to rapid urbanisation which comes with social problems such as homelessness, degradation of morals and social decay
• Leads to the destruction of the extended family model
• Often comes with unequal distribution of wealth as the gap between the rich industrial class and the poor widens
• Can actually lead to increased unemployment if it involves automation of repetitive tasks e.g. farmworkers may lose out to combined harvesters

De-Industrialisation

• Is when the importance of both the tertiary and secondary industries within an economy
• Often this involves the reduction of industrial activity/operations within a given region in developed countries
• Deindustrialisation is usually a very much localised affair rather than involving the entire economy/all regions
• The city of Detroit in the United States is a perfect case study of deindustrialisation
• In the mid-twentieth century, Detroit was one of America’s prime cities with a population of millions and a thriving industry
• Now it is a former shell of itself and facing urban decay and a whithering industry
• Deindustrialisation is often caused by industries moving away from a given region

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