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Distinctive features of industrialization: Problem and prospects of
industrialization in developing countries under the hegemony of
WTO/GATT
Industrialization is the process of overall change in circumstances accompanying
a society's movement population and resources from farm production to
manufacturing production and associated services as ell as by hich industrial
capacity is created!
Denition:
"#he general process by hich economics and societies in hich agriculture and
the production of handicrafts predominate become transformed into economics
and societies here manufacturing and related e$tractive industries are central!%
&'ary and 'ary, 1((0)30*+!
"#he term industrialization is meant to denote a phase in economic development
in hich capital and labor resources shift both relatively and absolutely from
agricultural activities into industry, especially manufacturing!%&'ohn ,ornall,
1(-.)3-/+!
"#his term refers to sustained economic groth 0oing the application of
inanimate sources of poer to mechanized production! Industrialization too1
initially the form of factory production, later spreading to agriculture and
services! ,ompared ith reindustrialized organization, it has involved division of
labor, ne social relations of production beteen oners of capital, managers
and or1ers2!% &3enguin, 2000)17-+!
#hus, industrialization is the process by hich agricultural and production of
handicrafts based economy is turned into manufacture and industry based
economy on the basis of science and technology introducing a ne social
relation!
Types of industrialization:
Industrialization is of to types)
1! Import 4ubstitute Industrialization) 5y the increase of on country6s
production industrialization may be accelerated!
2! 7$port 8riented Industrialization) 3roduction more than self9consumption
is 1ey principles of e$port oriented industrialization!
Distinctive features of industrialization:
1+ :arge scale production instead of small scale)
2+ 3roduction centered on mainly machines and factories)
3+ Industry based economy instead of agriculture)
*+ ;age9basis labor in production process)
.+ Division of labor and specialization of <ob)
/+ ,ompetitive and free mar1et)
7+ =rbanization)
-+ >odernization)
(+ ?igh rate of investment)
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10+ ,hanging social organization)
11+ #echnology dependency society)
12+ Industrialization is considered as a means to alleviate poverty and
to reduce unemployment)
1+ >anufacturing sectors of production)
3! It is a process of technical and social change hich continually increases
society6s capacity to produce a ide range of goods)
2+ #ertiary industries are the service industries! #hese include retailing,
holesaling, transport, public administration, and the professions, such as
la)
3+ Auaternary industries) ,onsultancy services and research organizations
are generally mar1et oriented)
*+ 7lectronic communication permits sift contact and the easy transmission
of data)
.+ #he transition to an economy based on the large9scale, machine9assisted
production of goods by a concentrated, usually urban, population of
or1ers)
/+ #he development of science and technology)
7+ 3olitical modernization)
-+ #he most commonly used indicators are)
#he percentage of the labor force employed in the industrial and
services sectors compared ith primary production!
>anufacturing output as a proportion of gross national product
&B@3+!
(+ ?oever, other criteria such as levels of investment, the e$tent of
urbanization, level of literacy, etc! may be used as more general indicators
of industrialization)
10+ >any industries located in the emerging cities)
11+ 3eople are attracted to these centers by the lure of or1)
12+ Cs heavy industry thrived and manufacturing and transport
technologies improved)
13+ Industrial regions are developed developed)
1*+ #he adoption of innovations such as the telegraph, the telephone,
the electric light, and the refrigerator, along ith petroleum products)D
1.+ Industrialization has been accompanied by a change in
employment)
1/+ #he introduction of mass9production techniEues has resulted in the
groth of component industries)
Trends of industrialization in third !orld countries li"e #angladesh:
In 5angladesh having a mi$ed economy, industrialization began largely four or
Fve decades ago hich mainly folloed import substitute industrialization and
the idea of free mar1et policy! Cfter the independence of 5angladesh several
reforms of industrial sector have been made in diGerent times! 4ome ma<or
features of industrialization in 5angladesh)
1+ Denationalization of Industry) Bradually, govt! sectors have become non9
govt! as the ma<or as ma<or industrial sector!
2+ 7$port 8riented Industrialization) Development of orld mar1et centered
competitive industry!
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3+ Hole of Bovt! 4ector) Cs the industrial sector of 5angladesh has not acEuired
all Eualities of complete competition, it has been admitted the role of Bovt!
to accelerate industrialization process besides non9governmental initiatives!
*+ Ioreign Investment) DiGerent encouraging initiatives have been ta1en for
suJcient foreign investment for the purpose of rapid industrialization!
.+ 4mall and ,ottage Industry) 5angladesh industrial policy has emphasized on
the small and cottage industry and ta1en the policy of its e$tension because
it may reinforce a large amount of manpoer!
/+ ,ompetition for Industry) #he important feature of 5angladesh industrial
policy is to establish a orld mar1et centered s1illed and competitive
industrial sector!
$ole of foreign capital in industrialization of our country:
#hough the role of foreign capital is sometimes Euestionable, it has great
importance for accelerating rapid industrialization in many developing countries
li1e 5angladesh! It can play the folloing roles)
1+ #o create employment!
2+ #o ma1e access of resources!
3+ #o create attachment to international mar1et!
*+ #o ma1e access of technology and s1illness!
.+ #o create balance of e$change!
Problems of industrialization in developing countries:
Problems that impedes swift industrialization in developing countries:
1+ ?istorical 5ac1ground) :i1e any other third orld countries 5angladesh has
been dominated and ruled by colonial poer! Ior this reason, though in
1(th and early 20th century estern countries as being freEuently
e$perienced industrialization process, it as not available in 5angladesh
in that sense!
2+ Cgro9based 7conomy) 5angladesh e$periences a agro9based economy and
most of the people of our country are directly or indirectly involved in
agriculture! 5ut, they are not ell familiar ith modern technology and
they do not consume suJcient technological 1noledge!
3+ :ac1 of 7ntrepreneurship) 7ntrepreneurs are those ho start or organize
commercial enterprise, especially one involving Fnancial ris1! 5ut there is
a lac1 of s1illed entrepreneur as ell as capital investment for accelerating
*+ :ac1 of >odern #echnological Knoledge) >odern industrialization mostly
depends on s1illed management and highly technical 1noledge! @ely
industrialized countries such as, >alaysia, ,hina, has e$perienced
industrialization due their seeping industrial plan and policy! 5ut in
5angladesh there is no eGective plan and policy to accelerate the process!
.+ =ns1illed >anpoer) >ost of the third orld countries li1e 5angladesh are
densely populated and their population has not been turned into
population resources! 5angladesh has e$perienced a literacy rate of /.L
but a larger proportion of this are uns1illed! 4o, this is another hindrance
of industrialization in our country!
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/+ 4mall 4ize of >ar1et) Hapid groth of >ar1et is an important pre9reEuisite
of industrialization hich is very much conducive for the increase of
production! 5ut this strategy is Euite diGerent in 5angladesh!
7+ :ac1 of Infrastructural Iacilities) >ultiple infrastructural facilities is
important for facilitating ma1etization of produced commodity, collecting
ra materials rapid inter9communication ith mar1et process and so on!
5ut our country provides lo infrastructural facilities!
-+ :ac1 of ,apital) Investment is the precondition of industrialization and
capital is essential for investment! 5angladesh li1e other developing
countries suGers from huge lac1 of capital because it is one of the poorest
countries of the orld!
(+ 4tructural ;ea1ness of 5an1ing 4ystem!
10+ InsuJcient @atural Hesources) 4uJcient natural resources are one of the
preconditions of industrialization! #hough 5angladesh has e$perienced
huge natural gas as fuel, there is suJcient lac1 of other natural resources!
11+ 3olitical Instability) #his is one of the stri1ing features of most of third
orld countries li1e 5angladesh! Hapid changing industrial policy, ?artal,
:oc1out and instable political environment are the ma<or obstacle of
industrialization in 5angladesh!
12+ :abor Dissatisfaction) #here are many labor organizations in our country
hose main role is to negotiate beteen or1ers and oners but because
of their immense involvement into instable politics they play negative role!
13+ 4ubscribing) It is one of the ma<or obstacles of industrialization in third
orld countries! >ost of the politicians encouraged this practice due to
their huge e$pense of electoral purpose! #he permanent representative of
;orld 5an1 claimed, during 2001 election, there has e$pensed 20
thousands crore t1! and a larger proportion of this money come from
subscribing and corruption!
1*+ 5ureaucratic #angle) #he bureaucracy of most of the third countries is not
development oriented! Ior e$ample, in 5angladesh it consumes 7. days
for approving a e$change pro<ect! 4o, 5ureaucratic comple$ities and
corruption is also ma<or obstacle in our country!
Other problems:
1! Mery minimum number of users of industrial sector!
2! 3oor telecommunication infrastructure ith limited F$ed9line access!
3! ?igh price of computer and hardare) #he per capita income of our people is
less than =4N300! 5ut in order to buy a computer it is needed =4N.00 and for
this reason, it is beyond the capacity for a villager to buy it!
*! :ac1 of technically eJcient personnel!
.! :ac1 of investment in industrial sector!
/! 4mall number of s1illed labor!
7! :imitations of supportive legal system 4uch as, e$change controls, protection
of telecommunication monopolies, restrictive trade practice and prohibitionsD
-! Cbsence of la and order!
(! 3eople6s mindset and very slo and e$pensive Internet services for industrial
development!
10!7nterprise managers6 lac1 of initiative and leadership in ta1ing advantage of
industrial development!
11!5ureaucratic comple$itiesD and
12!:ac1 of aareness at government level of industrial development issues!
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13!;or1ing capital has consistently remained as the ma<or bottlenec1s to
industrial groth in 5angladesh!
1*!7lectricity problem is also ran1ed close to credit as a serious problem at
present and in the past! =navailability andOor high price of ra material, poor
la and order conditions and legal barriers are cited as serious problems, but
not as highly as ,redit and poer, poor la and order conditions!
Problems created by persisting industrialization in developing countries:
#he negative conseEuences of industrialization are sometimes more apparent in
developing countries than in countries ith established industrial structures!
>odern large9scale industrialization schemes commonly reEuire a parallel
development of energy sources! In the case of hydroelectric plants, substantial
numbers of rural communities may be displaced, since large areas may be
0ooded to create the necessary ater reserves! In all developing countries,
hatever their level of development, there are long9term problems associated
ith industry! 7nvironmental safeguards may be overloo1ed, leading to serious
problems of air, land, and ater pollution!
8ne of the orst incidents occurred in >inamata, 'apan, here mercury residues
from nearby chemical plants contaminated the ater of >inamata 5ay, ere
ingested by Fsh, and then entered the human food chain to cause death and
illness for up to 30 years after the event! Cnother notorious e$ample as
5hopal, India, here a lea1 of poisonous gas 1illed thousands of people and
blinded or otherise in<ured many others!
#he eGects of industrial aste, thermal pollution from poer stations,
atmospheric fallout containing high levels of lead, oil spilled form ships, and
radioactive materials from nuclear poer stations is increasing day by day! 4o,
there are various negative impacts of industrialization especially in third orld
countries hich are given belo)
1+ 7conomic ,risis and =nemployment)
2+ Industrial Disputes and Cccidents)
3+ 3roblems of ;or1ers)
*+ Decline of Hural Industry)
.+ ,lass ,on0ict)
/+ ,rime and Immorality)
7+ ,ultural :ag)
-+ ,hanges in Malue)
(+ Iamily Disorganization)
10+ ?ousing 3roblem)
11+ :oss of social #ie)
12+ 4ocial Instability)
13+ ?ealth 3roblem)
1*+ Cll 1inds of 3ollution)
1.+ 7nvironmental Degradation)
1/+ 3roblem of ;aste >anagement)
17+ ,hange of social 4tructure)
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1-+ Increase of 'uvenile DelinEuency)
1(+ Increase of ,hild :abor)
20+ corruption, poor governance, and lac1 of rule of la
Prospects of industrialization in developing countries:
%& Developing countries are secure platform of cheap labor and ra materials
'& Iemale labour is available especially in manufacturing industries Developing
countries at loer cost
(& >ost developing countries regard industrialization as a positive development
)& #hey are capable of generating rapid ealth,
*& #hey have industrial base to safeguard their economies from 0uctuations in
the mar1et price for their on specialized product!
+& ,hile, one of the 3aciFc Him countries, is a case in point! Its economy has
gron by up to 10 per cent per year since 1((0! 4uccess has been diversiFed
ithin ,hile's traditional resource9based industries of mining, forestry, Fshing,
and agriculture, coupled ith a strong drive to increase e$ports!
,& #rade ith 'apan and 4outh Korea doubled beteen 1(-7 and 1((0,
-& @e mar1ets have opened up ith #aian, ,hina, ?ong Kong, 4ingapore, and
>alaysia!
.& #raditional dependence of most developing countries on copper has been
reduced!
%/& >anufacturing has been less succeeded,
%%& C large number of overseas Frms are no locating in developing countries
%'& Mast 3roduction) Cs a result of industrialization there is a production on
large scale mainly for the purpose of e$ports!
%(& Broth of #rade) 8n account of vast production there is unparallel groth
in trade and commerce! #he foreign trade has also tremendous rise!
%)& Hise in 4tandard of :iving) ,ertain rise in living standard has become
common due to industrialization!
%*& Development of ,ommunication and #ransportation 4ystem) 4ocio9
economic development of any country mostly depends on the ,ommunication
and #ransportation system of that country! 4o, developed ,ommunication and
#ransportation 4ystem is the pre9reEuisite of socio9economic development!
%+& Introduction of easy e$change system and proper system of commodity
mar1etization!
%,& ,reation of s1illed labor force! Industrialization is very much eGective to
create s1illed labor force by hich a country can achieve huge remittance
income!
%-& Clleviation of =nemployment 3roblem) 7specially in 5angladesh here
unemployment is a ma<or social problem, industrialization plays vital role to
remove this!
%.& Cchievement of Ioreign currency) Industrialization accelerates vast
production hich is very much eGective for e$porting and by hich foreign
currency is achieved!
'/& 4table 7conomic 4tructure) Instability is the ma<or hindrance of
industrialization! 4o, industrialization creates stable economic structure!
'%& 5alance of 7$change in Ioreign #rade) Industrialization is the ma<or ay to
balance e$change by the groth of e$port and the reduction of import!
''& CcEuisition of 4elf9dependency) 7conomic self9dependency is an important
pre9reEuisite of a country6s national development and ithout economic self9
dependency it is Euite impossible to ensure national development!
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'(& Cpplication of successful technology n industry and mechanization of
agriculture!
Prospects of industrialization in #angladesh:
1! information infrastructure,
2! appropriate legal frameor1 and
3! 41illed manpoer e9commerce!
*! @e technology for higher agricultural groth!
.! 3olicy support for agricultural diversiFcation!
/! 7$panding credit access!
7! Increased rural non9farm activities and forging urban9rural lin1s!
-! Hoad, poer and telecommunication) the intervention pac1age!
(! #echnology policy!
10!Hegional and sub9regional solution!
11!3articipatory governance!
Others:
12!#he industrial sector contributes signiFcantly to e$port receiptsD
13!It also provides employment and a mar1et for cash crops! 'ute products for
e$port and cotton te$tiles for domestic consumption predominate!
1*!4ince the early 1(-0s production of ready9made garments for the =4 mar1et
has gron rapidly!
1.!5angladesh is the Ffth largest supplier of cotton apparel to the =nited 4tates,
and it has begun e$porting to ;est 7uropean mar1ets!
1/!4teel industries no meet most of 5angladesh's domestic steel needs!
17!8ther industries include sugar, tea, leather goods, nesprint,
pharmaceuticals, and fertilizer production!
1-!#he government continues to court foreign investment! #o this end, the
=nited 4tates and 5angladesh signed a bilateral investment treaty hich too1
eGect in 1(-(!
1(!5angladesh also has established an e$port processing zone &73P+ in
,hittagong and plans to create additional zones!
20!#he government has oGered special incentives and simpliFed procedures for
potential investors!
21!Introduction of e9commerce!
22! .L annual economic groth!
23!5angladesh6s 200. purchasing poer parity BD3 per capita as N2,130!
2*!#he nation is no nearly self9suJcient in rice production!
2.!>icroFnance institutions have had on development and poverty reduction!
$ecommendations for accelerating industrialization in Developing
countries:
3roper infrastructure development of industryD
Development consciousness about the beneFts of industry to the
manufacturerOvendor6s and customersD
7ncourage medium and small Frms to prepare 5angladesh based industry for
sells their productD
,ustomer aareness about use their on productD
7stablish suJcient number of cyber cafe through private entrepreneursD
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Development of proper educational institution to create eJcient industry and
develop reEuires 1noledge and s1ill by giving computer training and basic
education to the villagersD
Infrastructure development of port, customs and courier service facilities for
industrial development!
#o increase the use of computers and Internet!
3roper ban1ing infrastructure development for industrial issue!
3roper government support for the development of industrial sectors!
;#8OBC## ?egemony)
Beneral Cgreement on #ariGs and #rade &BC##+) It is predecessor of ;#8 hich
as created in 1(*7! #he BC## as the only multilateral instrument governing
international trade from 1(*- until the ;#8 as established in 1((.! It also
disputed settlement and Hevies of governments' trade policies! 5angladesh
achieved BC## membership in 1(72!
#he ;#8 came into being on 'anuary 1, 1((., and is the successor to the
Beneral Cgreement on #ariGs and #rade &BC##+! It6s headEuarter is Beneva!
5angladesh achieved its membership in 1((.! #he ;#8 is responsible)
Ior monitoring national trading policies!
?andling trade disputes and
7nforcing the BC## agreements) to reduce tariGs and other barriers to
international trade and to eliminate discriminatory treatment in international
commerce!
#he ;orld #rade 8rganization deals ith the rules of trade beteen nations at a
global or near9global levelD it is responsible
Ior negotiating and implementing ne trade agreements and
3olicing member countries' adherence to all the ;#8 agreements!
0ormal 1tructure:
Cccording to ;#8 rules, all ;#8 members may participate in all councils,
committees, etc
Highest level: Ministerial Conference
#he topmost decision9ma1ing body of the ;#8 is the >inisterial ,onference,
hich has to meet at least every to years!
Second level: General Council
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3recondition of industrialization) :and) :abor) ,apital) #echnology)
7ntrepreneurship) ,heap and available labor) Ha materials) #ransport
facilities) ,redit facilities) 7nvironment) 4ecurity) >ar1et for products)
5ureaucratization) 3olitical condition) ;aste disposal system
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#he daily or1 of the ministerial conference is handled by three groups of the
Beneral ,ouncil!
Third level: Councils for Trade
#here are three councils)
,ouncil for #rade in Boods
,ouncil for #rade9Helated Cspects of Intellectual 3roperty Hights and
,ouncil for #rade in 4ervices
Cpart from these three councils, si$ other bodies report to the Beneral ,ouncil on
issues such as trade and development, the environment, regional trading
arrangements!
Fourth level: Subsidiary Bodies
#here are subsidiary bodies under each of the three councils)
1! #he Boods ,ouncil) It has 11 committees consisting of all member countries,
dealing ith speciFc sub<ects such as agriculture, mar1et access, subsidies, anti9
dumping measures and so on! ,ommittees include the folloing)
Information #echnology Cgreement &I#C+ ,ommittee
4tate #rading 7nterprises
#e$tiles >onitoring 5ody 9 ,onsists of a chairman and 10 members acting
under it!
Broups dealing ith notiFcations 9 process by hich governments inform
the ;#8 about ne policies and measures in their countries!
2! #he 4ervices ,ouncil) subsidiary under the ,ouncil for #rade in 4ervices hich
deals ith Fnancial services, domestic regulations and other speciFc
commitments!
3! Dispute 4ettlement panels and Cppellate 5ody) subsidiary under the Dispute
4ettlement 5ody to resolve disputes and the Cppellate 5ody to deal ith
appeals!
Other committees:
,ommittees on
#rade and 7nvironment
#rade and Development &4ubcommittee on :east9Developed
,ountries+
Hegional #rade Cgreements
5alance of 3ayments Hestrictions
5udget, Iinance and Cdministration
;or1ing parties on
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Cccession
;or1ing groups on
#rade, debt and Fnance
#rade and technology transfer
2ission3 functions and principles:
Mission /stated goals:
#o improve the elfare of the peoples of its member countries, speciFcally by
loering trade barriers and providing a platform for negotiation of trade!
#o ensure that trade 0os as smoothly, predictably and freely as possible!
Functions:
It oversees the implementation, administration and operation of the covered
agreements!
It provides a forum for negotiations and for settling disputes!
Additional Functions:
#o revie the national trade policies, and
#o ensure the coherence and transparency of trade policies through
surveillance in global economic policy9ma1ing!
Cnother priority of the ;#8 is the assistance of developing, least9developed
and lo9income countries in transition to ad<ust to ;#8 rules and disciplines
through technical cooperation and training!
#he ;#8 is also a center of economic research and analysis) regular
assessments of the global trade picture in its annual publications and
research reports on speciFc topics are produced by the organization!
Iinally, the ;#8 cooperates closely ith the to other components of the
5retton ;oods system, the I>I and the ;orld 5an1!
Principles of the trading system:
#he ;#8 establishes a frameor1 for trade policies! Iive principles are of
particular importance in understanding both the pre91((* BC## and the ;#8)
Nondiscriination: It has to ma<or components) the most favored nation
&>I@+ rule, and the national treatment policy! #he >I@ rule reEuires that a
product made in one member country be treated no less favorably!
Cccording to national treatment, imported and locally9produced goods
should be treated eEually &at least after the foreign goods have entered the
mar1et+!
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!eci"rocity: It re0ects both a desire to limit the scope of free9riding and a
desire to obtain better access to foreign mar1ets!
Binding and enforceable coitents: #he tariG commitments made by
;#8 members establish Qceiling bindingsQ) a country can change its
bindings, but only after negotiating ith its trading partners, hich could
mean compensating them for loss of trade!
Trans"arency: #he ;#8 members are reEuired to publish their trade
regulations, to maintain institutions alloing for the revie of
administrative decisions aGecting trade, to respond to reEuests for
information by other members, and to notify changes in trade policies to
the ;#8! #hese internal transparency reEuirements are supplemented and
facilitated by periodic country9speciFc reports &trade policy revies+!
Safety valves: In speciFc circumstances, governments are able to restrict
trade! #here are three types of provisions in this direction) 1+ the use of
trade measures to attain noneconomic ob<ectivesD 2+ aimed at ensuring
Qfair competitionQ and 3+ intervention in trade for economic reasons!
4riticism:
C considerable body of e$pert literature believes that globally free trade
produced by ;?8 indicates that becoming richer, hile the poor are getting
poorer!
;#8 has a systematic bias toard rich countries and >ultinational
,orporation6s harms smaller countries hich have less negotiation poer!
Developing countries have not beneFted from the ;#8 Cgreements because
mar1et access in industry has not improved!
8ther critics claim that the issues of labor and environment are steadfastly
ignored in ;#8
8ther critics have characterized the decision ma1ing in the ;#8 as
complicated, ineGective, unrepresentative and non9inclusive, and they have
proposed the establishment of a small, informal steering committee that can
be delegated responsibility for developing consensus on trade issues among
the member countries!
#he #hird ;orld @etor1 has called the ;#8 Qthe most non9transparent of
international organizationsQ, because Qthe vast ma<ority of developing
countries have very little real say in the ;#8 systemQ!
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