Essay No. 248:
The Importance Of Industrialization: Industrialization holds a great importance in the economies of the developed and underdeveloped countries. The former want to perpetuate the high growth rate already attained, while the latter aim at accelerating the growth rate to reduce the magnitude of poverty. It is through rapid industrialization that the objective can be achieved.
Industrialization is a key to promote economic prosperity in developed countries, and to reduce poverty in the underdeveloped countries. Industrialization creates opportunities of employment for different categories of labor. The untrained labor gets employment at low wage rate, while the trained, technical labor commands a high wage level.
Expanding opportunities of employment help increase the volume of production consisting of consumer and capital goods (i.e., machinery). That goes a long way in increasing gross domestic product (GDP) which raises income per capita (If GDP is divided by the total population in a country, it gives income per capita).
Rising GDP is an indication of an improvement in the living standard of people in country. This means that if there is an accelerated type of industrialization in a country there is increasing volume of industrial output, which can be exported to earn foreign exchange, critically needed in a country like Pakistan.
Industrialization thus promotes employment opportunity, apart from increasing the volume of industrial output to give a push to GDP. Hence efforts needs to be made to promote industrialization of varied nature in underdeveloped countries like Pakistan.
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Industrialization can be promoted without capital machinery. It is to be imported from economically developed countries. That involves the availability of foreign exchange, which the underdeveloped countries do not possess because of their limited export potential. The poor counties do not have sufficient investment resources because of low saving capacity.
Savings are low which fact justifies getting foreign aid in the form of impeded by the lack of real savings in Pakistan. The saving potential has to be increased if foreign aid is to be avoided. All the same, to has to be increased if foreign aid is to be avoided. All the same, to speed up heavy/light industrialization, Pakistan needs to increase its export potential and to yield more savings for purpose of investment.
Foreign investment is needed in Pakistan. Foreign investor would not like to invest capital in Pakistan as long as political instability prevails. Pakistan must come out of the syndrome of instability, which is the result of a number of factors. The factors generating instability, often precipitating law and order situation, are to be overcome at the national level.
Direct foreign investment is necessary to encourage industrialization in a country like Pakistan. In short, the importance of industrialization in poor countries cannot be underscored. All development plans aim at speedy industrialization in order to increase production and creating employment opportunities to reduce poverty.