Proto-industrialisation (also spelled proto-industrialization) is a phase in the development of modern industrial economies that preceded, and created conditions for, the establishment of fully industrial societies. Proto-industrialization was marked by the increasing involvement of agrarian families in market-oriented craft production, mainly through the putting-out system organized by merchant capitalists. It was a decentralised method of production which was controlled by merchants and the goods were produced by a vast number of producers located in different places unlike the industrialised era in which the production became centralised.
Initially using surplus labor available during slow periods of the agricultural seasons, proto-industrialization led to specialization in both industrial production as well as commercial agricultural production. This allowed reciprocal trade favored by regional economies of scale. It resulted in accumulation of capital and the acquisition of entrepreneurial skills by merchant capitalists, which facilitated the development of large-scale, capital-intensive production methods in the full industrialization phase that followed.
Proto-industrialization sparked social changes in traditional agrarian societies that would become more marked during full industrialization, such as greater independence of women and children who gained a means of income separate from the family subsistence farm. During this phase of Industrialization, machines were not used. They were not even invented at that time. People could only use their hands or any hand made material to produce required goods.