Cambridge AS A Level Business Studies/ ZIMSEC Advanced Level Business Studies/ Business Enterprise Skills Notes: 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

To access more topics go to the Advanced Level Business Studies page

To access more topics go to the ZIMSEC Business Enterprise and Skills page

To access more topics go to the Cambridge AS A Level Business Studies page

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