Industrialisation (or industrialization) is the process of social and economic change that transforms a human group from an agrarian society into an industrial one. It is a part of a wider modernisation process, where social change and economic development are closely related with technological innovation, particularly with the development of large-scale energy and metallurgy production. It is the extensive organisation of an economy for the purpose of manufacturing.[2]
Industrialisation also introduces a form of philosophical change where people obtain a different attitude towards their perception of nature, and a sociological process of ubiquitous rationalisation.
There is considerable literature on the factors facilitating industrial modernisation and enterprise development.[3] Key positive factors identified by researchers have ranged from favourable political-legal environments for industry and commerce, through abundant natural resources of various kinds, to plentiful supplies of relatively low-cost, skilled and adaptable labour.
As industrial workers incomes rise, markets for consumer goods and services of all kinds tend to expand and provide a further stimulus to industrial investment and economic growth.
The first country to industrialise was the United Kingdom during the Industrial Revolution commencing in the eighteenth century.[4]
By the end of the 20th century, East Asia had become one of the most recently industrialised regions of the world . [5]
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According to the original sector classification of Jean Fourastié, an economy consists of a "Primary sector" of commodity production (farming, livestock breeding, exploitation of mineral resources), a "secondary sector" of manufacturing and processing (as paid work), and a "Tertiary Sector" of service industries. The industrialisation process is historically based on the expansion of the secondary sector in an economy dominated by primary activities.
The first transformation to an industrial economy from an agricultural one is called the Industrial Revolution and took place from the mid 18th to early 19th century in certain areas in Europe and North America; starting in Great Britain , followed by Germany, and France. This now is called the first industrial revolution.[4][6]
The Second Industrial Revolution describes the later changes that came about in the mid 19th century after the invention of steam engine, internal combustion engine, electricity and the construction of canals, railways and electric power lines. The invention of the assembly line gave this phase a boost. [7][8][9]
The lack of an industrial sector in a country can be a handicap in improving the country's economy and power, so governments encourage or enforce industrialisation. On the other hand, the presence of industry in a country does not mean in general that it will bring wealth and prosperity to the people of that country. And third, the presence of an industry in one country can make it more difficult for other countries to develop the same type of industry. This can be seen in the computer software, and internet industries. Started from the U.S.A. around the 1990's these industries seemed to spread over the world. But after a period of monopolisation less than a decade long, the globally leading companies are concentrated in the U.S.A. Their economic power and capacity to dominate the media work against the developing of the same types of industry in other states.
Most pre-industrial economies had standards of living not much above subsistence, among that the majority of the population were focused on producing their means of survival. For example, in medieval Europe, 80% of the labour force was employed in subsistence agriculture.
Some pre-industrial economies, such as classical Athens, had trade and commerce as significant factors, so native Greeks could enjoy wealth far beyond a sustenance standard of living through the use of slavery. Famines were frequent in most pre-industrial societies, although some, such as the Netherlands and England of the seventeenth and eighteenth centuries, the Italian city states of the fifteenth century, the medieval Islamic Caliphate, and the ancient Greek and Roman civilisations were able to escape the famine cycle through increasing trade and commercialisation of the agricultural sector. It is estimated that during the seventeenth century Netherlands imported nearly 70% of its grain supply and in the fifth century BC Athens imported three quarters of its total food supply.
Industrialisation through innovation in manufacturing processes first started with the Industrial Revolution in the north-west and Midlands of England in the eighteenth century.[11] It spread to Europe and North America in the nineteenth
In the eighteenth and nineteenth centuries, the United Kingdom experienced a massive increase in agricultural productivity known as the British Agricultural Revolution, which enabled an unprecedented population growth, freeing a significant percentage of the workforce from farming, and helping to drive the Industrial Revolution.
Due to the limited amount of arable land and the overwhelming efficiency of mechanised farming, the increased population could not be dedicated to agriculture. New agricultural techniques allowed a single peasant to feed more workers than previously; however, these techniques also increased the demand for machines and other hardwares, which had traditionally been provided by the urban artisans. Artisans, collectively called bourgeoisie, employed rural exodus workers to increase their output and meet the country's needs.
The growth of their business coupled with the lack of experience of the new workers pushed a rationalisation and standardisation of the duties the in workshops, thus leading to a division of labour, that is, a primitive form of Fordism. The process of creating a good was divided into simple tasks, each one of them being gradually mechanised in order to boost productivity and thus increase income.
The accumulation of capital allowed investments in the conception and application of new technologies, enabling the industrialisation process to continue to evolve. The industrialisation process formed a class of industrial workers who had more money to spend than their agricultural cousins. They spent this on items such as tobacco and sugar, creating new mass markets that stimulated more investment as merchants sought to exploit them.[12]
The mechanisation of production spread to the countries surrounding England geographically in Europe such as France and and to British settler colonies, helping to make those areas the wealthiest, and shaping what is now known as the Western world.
Some economic historians argue that the possession of so-called ‘exploitation colonies’ eased the accumulation of capital to the countries that possessed them, speeding up their development. The consequence was that the subject country integrated a bigger economic system in a subaltern position, emulating the countryside, which demands manufactured goods and offers raw materials, while the colonial power stressed its urban posture, providing goods and importing food. A classical example of this mechanism is said to be the triangular trade, which involved England, southern United States and western Africa. Critics argue that this polarity still affects the world, and has deeply retarded industrialisation of what is now known as the Third World.
Some have stressed the importance of natural or financial resources that Britain received from its many overseas colonies or that profits from the British slave trade between Africa and the Caribbean helped fuel industrial investment.
After the Convention of Kanagawa issued by Commodore Matthew C. Perry forced Japan to open the ports of Shimoda and Hakodate to American trade, the Japanese government realised that drastic reforms were necessary to stave off Western influence. The Tokugawa shogunate abolished the feudal system. The government instituted military reforms to modernise the Japanese army and also constructed the base for industrialisation. In the 1870s, the Meiji government vigorously promoted technological and industrial development that eventually changed Japan to a powerful modern country.
In a similar way, Russia suffered during the Allied intervention in the Russian Civil War. The Soviet Union's centrally controlled economy decided to invest a big part of its resources to enhance its industrial production and infrastructures to assure its survival, thus becoming a world superpower.[13]
During the Cold war, the other European socialist countries, organised under the Comecon framework, followed the same developing scheme, albeit with a less emphasis on heavy industry.
Southern European countries such as Spain or Italy saw a moderate industrialisation during the 1950s-1970s, caused by a healthy integration of the European economy, though their level of development, as well as those of Socialist European Countries, do not match the more advanced standards of other European countries like Germany.[14][15]
A similar state-led developing programme was pursued in virtually all the Third World countries during the Cold War, including the socialist ones, but especially in Sub-Saharan Africa after the decolonisation period. The primary scope of those projects was to achieve self-sufficiency through the local production of previously imported goods, the mechanisation of agriculture and the spread of education and health care. However, all those experiences failed bitterly due to a lack of realism: most countries did not have a pre-industrial bourgeoisie able to carry on a capitalistic development or even a stable and peaceful state. Those aborted experiences left huge debts toward western countries and fuelled public corruption.
Oil-rich countries saw similar failures in their economic choices. An EIA report stated that OPEC member nations were projected to earn a net amount of $1.251 trillion in 2008 from their oil exports.[16] Because oil is both important and expensive, regions that had big reserves of oil had huge liquidity incomes. However, this was rarely followed by economic development. Experience shows that local elites were unable to re-invest the petrodollars obtained through oil export, and currency is wasted in luxury goods.[17]
This is particularly evident in the Persian Gulf states, where the per capita income is comparable to those of western nations, but where no industrialisation has started. Apart from two little countries (Bahrain and the United Arab Emirates), Arab states have not diversified their economies, and no replacement for the upcoming end of oil reserves is envisaged.[18]
Apart from Japan, where industrialisation began in the late 19th century, a different pattern of industrialisation followed in East Asia. One of the fastest rates of industrialisation occurred in the late 20th century across four countries known as the Asian tigers thanks to the existence of stable governments and well structured societies, strategic locations, heavy foreign investments, a low cost skilled and motivated workforce, a competitive exchange rate, and low custom duties.
In the case of South Korea, the largest of the four Asian tigers, a very fast paced industrialisation took place as it quickly moved away from the manufacturing of value added goods in the 1950s and 60s into the more advanced steel, shipbuilding and automobile industry in the 1970s and 80s, focusing on the high-tech and service industry in the 1990s and 2000s. As a result, South Korea became a major economic power.
This starting model was afterwards successfully copied in other larger Eastern and Southern Asian countries, including communist ones. The success of this phenomenon led to a huge wave of offshoring – i.e., Western factories or Tertiary Sector corporations choosing to move their activities to countries where the workforce was less expensive and less collectively organised.
China and India, while roughly following this development pattern, made adaptations in line with their own histories and cultures, their major size and importance in the world, and the geo-political ambitions of their governments (etc.).
Currently, China's government is actively investing in expanding its own infrastructures and securing the required energy and raw materials supply channels, is supporting its exports by financing the United States balance payment deficit through the purchase of US treasury bonds, and is strengthening its military in order to endorse a major geopolitical role.
Meanwhile, India's government is investing in economic sectors such as bioengineering, nuclear technology, pharmaceutics, informatics, and technologically-oriented higher education, exceeding its needs, with the goal of creating several specialisation poles able to conquer foreign markets.
Both China and India, particularly the Chinese, have also started to make significant investments in other developing countries, making them significant players in today's world economy.
In recent decades, a few countries in Latin America, Asia, and Africa, such as Turkey, South Africa, Malaysia, Philippines, Mexico, Costa Rica, and El Salvador have experienced substantial industrial growth, fueled by exporting to countries that have bigger economies: the United States, China, India and the EU. They are sometimes called newly industrialised countries.
Despite this trend being artificially influenced by the oil price increases since 2003, the phenomenon is not entirely new nor totally speculative (for instance see: Maquiladora).
Japan and Russia both were successful in the fact that they imitated many other societies giving them flexibility. Yet they both had very little in common before the 19th century. Japan was isolated from the world with its ongoing traditions and forms of centralised government. Russia featured a more strong centralised government under the emperor. Both would soon to discover that westernisation and industrialism were expanding and their own ways would not hold up against the new changing world of industrialisation. In the late 19th century the force for them to being industrializing would become even more prevalent for the success of their nation in this new growing societies.
The concentration of labour into factories has brought about the rise of large towns to serve and house the factory workers.
Workers have to leave their family in order to come to work in the towns and cities where the industries are found.
The family structure changes with industrialisation. The sociologist Talcott Parsons noted that in pre-industrial societies there is an extended family structure spanning many generations who probably remained in the same location for generations. In industrialised societies the nuclear family, consisting of only of parents and their growing children, predominates. Families and children reaching adulthood are more mobile and tend to relocate to where jobs exist. Extended family bonds become more tenuous. [19]
China in 2010 became the worlds largest manufacturer, ending the United States run for over a century, the value of China manufacturing output in 2010 was $1.995 Trillion Dollars or 19.8% of the worldwide total, edging out the United States which accounted for 19.4% worth $1.952 Trillion Dollars.
Currently the "international development community" (World Bank, OECD, many United Nations departments, and some other organisations) endorses development policies like water purification or primary education. The community does not recognise traditional industrialisation policies as being adequate to the Third World or beneficial in the longer term, with the perception that it could only create inefficient local industries unable to compete in the free-trade dominated political order which it has erected.
The relationship between economic growth, employment and poverty reduction is complex. Higher productivity is argued to be leading to lower employment (see jobless recovery).[20] There are differences across sectors, whereby manufacturing is less able that the tertiary sector to accommodate both increased productivity and employment opportunities; over 40% of the world's employees are "working poor" whose incomes fail to keep themselves and their families above the $2 a day poverty line.[20] There is also a phenomenon of deindustrialisation, such as in the former USSR countries' transition to market economies, and the agriculture sector often is the key sector in absorbing the resultant unemployment.[20]