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Lesson Note

Subject: Economics
Topic: Concept Of Industrialization

Lesson Objectives : by the end of the lesson, the learners should be able to:

  1. Define the terms firm, industry, location of industry;
  2. Mention and explain the types of industry;
  3. State factors influencing the location of an industry;
  4. State the reasons for the concentration of industries in urban centres;
  5. State the reasons for siting industries in rural areas in Nigeria;
  6. State the reasons for government participation in the location of industries in Nigeria.

Lesson Summary


Definition of a Firm and Industry

A firm is the basic unit within which factors of production are organised for the purpose of producing wealth. A firm is an entity which specialises in the production and distribution of goods under one administration or management. Examples of firms are Unilever Nig. Plc, Tanco Nig. Ltd, Texaco Nig. Ltd.
An industry, on the other hand, is defined as a group of firms producing similar products and under separate administration or management. In other words, an industry includes a collection of different firms which produce similar goods under separate management. For example, in the petroleum industry, we have different firms like Oando, Texaco, Total, Mobil etc. All these forms are under different management but all produce similar products.

Types of Industry

1. Manufacturing industry: A manufacturing industry operates at the secondary production level. These are industries which can convert raw materials to produce finished goods, using special machines and equipment. Examples of manufacturing industries are: the textile industry, which produces clothing materials; plastic industry, which converts rubbernto tyres, plastic chairs, tables, spoons, etc.
2. Mining industry: This industry is concerned with the extraction of mineral resources from the soil by special devices. Mining is a primary production. Products like crude oil, gold, diamond, iron ore, tin, columbite, etc are derived from their natural states by mining.
3. Construction industry: This industry is concerned with the assembling of different components in order to get a finished product. Examples of construction industries are car assembly plants, boat or ship building, aircraft construction, road construction etc.
4. Processing industry: This industry is concerned with the conversion of some raw materials into finished products that can be used directly to satisfy human wants. For example, the beverage industry converts raw materials like coca to Bournvita, Pronto, Ovaltine etc.
5. Transport industry: Transport industry is concerned with the movement oof passengers and goods from one place to another. The movement of passengers or goods could be done by land, sea and air. Examples of firms in the transport industry are Virgin Nigeria, Tonad Motors Ltd.
6. Power and energy industry: This industry is concerned with the generation, transmission and distribution of electricity. An example of a firm in this industry is the Power Holding Company Plc.


Location of Industry

Location of Industry may be defined as simply as the citing or establishment of firm or industry in a particular place. An industry may be established either by individuals or government , either for economic or political reasons. In locating an Industry in a particular area, one must bear in mind that the cost of production must be at the lowest level in order to ensure the continued existence of such an industry.

Factors Influencing The Location Of An Industry

Many factors are considered before an industry is located in an area. These factors include:
1. Proximity to source of raising materials: Cement producing industries should be located close to sources of raw materials to reduce cost of transportation.
Perishable goods like fruits, palm oil industries, etc should also be located near their raw materials.
2. Nearness to market: There should be ready market for the products of any industry to be sited in a place. Fragile goods like glass, bulky goods like cement and other perishable goods should be located near the market.
Nearness to market reduces the cost or transportation and meets high demand by consumers.
Such industries located or directed towards the market are called market-demand industries.
3. Availability of capital: There should be enough capital to purchase industrial input before and after setting up industries.
Entrepreneurs should have access to loans. Fixed capital should also be easily acquired. Industries which use heavy machines or which require large capital for their operations are called capital-intensive industries.
4. Nearness to source of power: There should be ready and dependable source of power. Source of power could be electricity, coal, thermal, petroleum products etc.
5. Availability of labour: There should be high quality skilled labour. There should also be enough unskilled labour. Industries which require large labour force for their operations are called labour intensive industries.
6. Adequate transport network: Transport is required essentially to move raw materials to industrial sites. Transport is also required to convey finished goods to the market or areas of consumption and use. Transport could be by road ( cars, worries, buses, trucks etc), by sea ( boats, ship) or by air (aeroplane).
7. Political stability: A stable government encourages industrial growth. Political stability also attracts foreign investors. Communal wars and conflicts do not favour industrial growth.
8. Favourable climate: There should be favourable climatic conditions for industries to grow. A favourable climate is also required for some agricultural firms to thrive.
9. External economies or the location of other forms: Firms are often set up near others in order to take advantage of external economies.

Reasons For Government Participation In The Location Of Industries In Nigeria

i. To raise the standard of living: This is one of the reasons government participates in the location of industries. When such industries are located, goods are made available and the people get employment and earn income hence their standard of living will be raised or improved.
ii. Provision of standard goods: Industries so located are capable of producing standard goods thereby preventing the proliferation of low quality goods.
iii. Equitable spread of development: Government tries to locate industries in different parts of the country in order to ensure even development.
iv. Provision of employment opportunities: Government also participates in the location of industries in order to generate employment opportunities for the people when such industries are located.
v. Political consideration: Government can also influence the location of certain industries for political reasons, especially for the purpose of winning election.
vi. For economic development: Industries which are equitably distributed round the country do ensure rapid economic development.
vii. For strategic reasons: Government can also influence the location of certain industries for strategic reasons e.g industries that manufacture arms and ammunition must be protected from competition.

How West African Countries can Promote Indigenous Industries

West African countries can promote indigenous industries by:
1. Greater reliance on domestic raw materials: West African countries should have a greater reliance in sourcing domestic raw materials for their industries.
2. Research and application of research results: They should also embark on intensive research works and the results should be applied for industrial growth.
3. Availability of finance: Finance or capital should be made available for indigenous industrial promoters.
4. Development of skills: There should be more development of entrepreneurial and management skills for efficient industrial development.
5. Political stability: There should be relative political stability to ensure continuous growth of industries.
6. Better work attitude: Labour or workers should put on a better work attitude aimed at achieving better results.
7. Development and expansion of market: There should be proper development and expansion of market for locally made products.
8. High level of productivity: There should be a high level of productivity that will lead to higher level of savings and greater capital formation.

9. Improved social and economic infrastructures: There should be improved social and economic infrastructures, e.g electricity, seaport, airport, telecommunications, etc such that can boost industrial growth.

Reasons for the Concentration of Industries in Urban Centres

Reasons why many industries are located or concentrated in urban centres include:
i. Large market: The presence of high population in urban centres provides a wide market for industrial products.
ii. Availability of labour: The high population also provides both skilled and unskilled labour for the industries.
iii. Good transportation network: Urban countries are provided with well developed transport network like roads, railways, airport, etc.
iv. Nearness to seaport and airports: This also contributes to the siting of industries in urban centres.
v. Availability of finance: Easy access to loans from banks located in cities also contributes to the concentration of industries in the cities.
vi. Presence of infrastructural facilities: The presence of electricity, pipe borne water, telephone, etc also contributes to the concentration of industries in urban centres.

Reasons for Siting Industries in Rural Areas In Nigeria

i. Development of rural areas: The siting of industries will lead to the development of rural areas.
ii. To discourage rural-urban migration: When industries are located in rural areas, it will go a long way in discouraging the movement of people from rural areas to urban centres.
iii. Provision of employment: Industries so established in rural areas will provide employment for skilled and unskilled labour in rural areas.
iv. Increased production of goods: Industries that are located in rural areas will increase the availability of goods to the rural populace.
v. Increased earnings for rural people: The rural people so employed in industries are able to earn more salaries from their places of work.
vi. Encourages urban-rural migration: The siting of industries in rural areas will also attract the movement of people from the cities to the rural areas, thereby decongesting the cities.

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Take a quick test for this lesson

  1. Define the terms firm, industry, location of industry.
  2. Mention and explain the types of industry.
  3. State factors influencing the location of an industry.
  4. State the reasons for the concentration of industries in urban centres.
  5. State the reasons for siting industries in rural areas in Nigeria.
  6. State the reasons for government participation in the location of industries in Nigeria.

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