Welcome! Our Economics lessons Continues! Do have a great moment studying with us!
Topic: Localization of Industries
Lesson Objectives: by the end of the lesson, the learners should be able to:
- Define the term industrialization;
- Identify and discuss the role played by industrialization in the economic development of their nation;
- State the problems or challenges faced by industrialization in west Africa;
- Suggests possible Solutions To The Problems Of Industrial Development In West Africa;
- Points out the various Strategies that can be used by the government of a nation in setting up industrialisation.
Industrialisation can simply be defined as the process of transferring an economy based on extractive activities into one based on manufacturing. In other words, industrialisation refers to the process by which an economy based on agriculture, fishing, lumbering, mining etc is transformed into one based on industries. Industrialisation requires the establishment of many firms which are capable of producing goods and services.
Role of Industrialisation in Economic Development of a Nation
Industrialisation or the industrial sector contributes greatly to the economic development of nations in the following ways;
i. Increase in gross national product (GNP): The industrial sector, through its operations like payment of taxes, increases the earnings accruable to the nation.
ii. Employment opportunities: Industries provide employment (jobs) for many people
iii. Stimulation of other sectors: The industrial section stimulates the growth of other sectors like agriculture, mining, lumbering, etc.
iv. Technological development: Industrialisation lead to the development of technology in the country.
v. Infrastructural development: The establishment of an Industry in a place stimulates the development of infrastructural facilities like roads, telephone, electricity, pipe borne water etc.
vi. Diversification of the economy: The industrial sector helps different countries to prevent over – dependence on only one product like Nigeria’s present over-dependence on crude oil. If Nigeria can invest in the industrial sector, her economy will in time be diversified.
vii. Conservation of foreign exchange: Industrialisation has led to the conservation of foreign exchange which would have been used for improving goods now produced locally.
viii. Improving standard of living: Industrialisation also leads to the Improvement or raising of the standard of living of the people through production of goods that are cheap and affordable.
Problems of Industrialisation or Industrial Growth in West Africa
The following factors hinder, limit or are responsible for the relatively low level of industrial growth and development in West Africa.
i. Shortage of raw materials: Lack of sufficient raw materials available to industries hinders large scale production.
ii. Insufficient capital: Access to finance or loan is very difficult and this tends to limit industrial development.
iii. High degree of foreign dependence: Most products made in West Africa are of low quality when compared with those in developed countries. Hence, people prefer or depend on foreign goods.
iv. Poor quality of industrial labour: West Africa has a large pool of illiterate population that provides the personnel for our industries. This affects efficiency and quality of product.
v. Inadequate power supply: There are frequent disruptions of power supply in industrial areas and many areas do not even have power supply.
vi. Competition with foreign goods: Because of the high quality of foreign goods, goods produced by our local industries are usually not patronised.
vii. Shortage of entrepreneurs: Owing to lack of capital, loan facilities and other factors, reliable investors are not common.
viii. Poor management: Corruption, embezzlement and negligence of duty are very common in West Africa countries and these are indicators of poor management.
Solutions To The Problems Of Industrial Development In West Africa
i. Acquisition of skill: Skills required for industrial operations should be acquired by people through regular training.
ii. Good governance policies: There should be good government policies to encourage and protect local industries.
iii. Active government participation: There should be active government participation in industrial development, i.e co-ownership of industries.
iv. Incentives to local industries: There should be incentives to local industries, e.g tax holiday, interest-free loans, subsidies etc.
v. Creation of industrial zones: This will also provide a conducive environment with all the infrastructural facilities for the industries.
vi. Establishment of industrial banks: Industrial and other development banks should be set up to provide loans to industrialists.
vii. Stable government: There should be stable government in order to attract foreign investors.
viii. Local sourcing of raw materials: There should be exploitation of raw materials locally for industries.
Ways Or Methods By Which Government Can Encourage Industrialisation In Nigeria
The federal government has adopted the following ways or methods of encouraging industrialisation in Nigeria.
1. Tax concessions to pioneer industries: The federal government gives tax concession to pioneer industries for a specified number of years during which the industry will not pay tax.
2. Protection of infant industries: The government protects infant industries through high import duties, outright ban or placement of quotas on imported commodities which compete with those of home industries.
3. Establishment of Industrial estates: The government should also establish industrial estates and thus reduce the problem of locating industries in urban areas.
4. Establishment of financial institutions: The government has established financial institutions to aid private enterprises, e.g Nigeria Bank for Commerce and Industry and Nigerian Industrial Bank.
5. Establishment of higher institutions: The government has also established universities and colleges of technology with the aim of developing human resources.
6. Relaxation of industrial laws: Government should also contribute towards Industrialisation by relaxing some industrial laws such as the indigenization policy.
7. Formulate of development plans: Nigeria also undertakes development plans aimed at controlling resource allocation.
8. Improvement in agriculture: Government has also ensured that there is improvement in agriculture to increase the supply of food and raw materials for industries.
Strategies of Industrialisation
Many strategies have been adopted by the government aimed at achieving industrial development in Nigeria. These strategies include:
i. Import-substitution strategy: The import-substitution strategy involves deliberate attempt by government aimed at encouraging the growth of industries within the country which produce goods and services which would otherwise have been imported.
ii. Export promotion strategy: Export promotion strategy is also a deliberate government policy aimed at encouraging the production of commodities for export. Government can do this through the granting of tax concessions, reducing export duty, finding a realistic exchange rate, providing assistance on export costing and pricing, organisation of trade fairs to expose home-made goods to other countries, etc.
iii. Small scale and large scale development strategy: Government can also encourage the development of small and large scale industries with the aim of developing the industrial sector of the economy. The small scale industries under the ‘small scale industrial scheme’s encourage the establishment of such industries in rural areas in order to provide employment to the rural people and prevent rural-urban migration.
Done studying? View previous lessons in economics
Take a quick test for this lesson
- Define the term industrialization.
- Identify and discuss the role played by industrialization in the economic development of their nation.
- What are the problems or challenges faced by industrialization in west Africa?
- Suggests possible Solutions to the problems of industrial development in West Africa;
- What are the Strategies that can be used by the government of a nation in setting up industrialisation?
Do stay connected to itsmyschoollibrary.com for more educational contents.