Role of Industrialization in Emerging Economy

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Industrialization is capital earning state which set to develop the economic and social process and discovers all new creation which is efficient way for warning the value. The more efficient way are lumped together under the label called the secondary sector or industrialization, which means producing goods or product selling at market, that process include the secondary sector or industrialization. The industrialization light up in the seventeenth century, where England came up with new concept and new process of development which called the Industrial revolution, this period was new phase for the emerging countries, where the revolution has begun under the British monarch, and they set up different industry in different location. Using this revolution the economist observed two economic changes in their state; one is swift in singular changes and second swift is protracted cumulative changes. Through these economic changes the country one side faced growth and development, on the other hand, the humanitarian crisis, but the industrial revolution stand on peak where many other countries adopted this revolution to have the growth and have the continuous market relation with the consumer or people.

Industrialization plays vital role in the process of economic development in the emerging markets. In such economic countries it holds key responsibility to alter the low growth and producing a solution to adopt it and make a change on it. Through accelerating rate of growth in industrialization it create more employment and thus it helps in poverty alleviation, as solution for generating the economic growth the industrialization work like that. So, the Industrialization is a process, which work as input to produce the goods and as a result the price and finished product will be the output, as process the industrialization is invariably been the outcome or accompaniment of economic development. In certain less developed countries the economist argued that the scope of industrial development is high and the country or state need to adopt it, while adopting it the wide range of consumer choice, increase productivity and standard of living, creates industrial skills, promotes innovation and technological development, promotes capital formation through higher wages and diverts surplus from labour to modern industry.

Economic development through industrialization is sought, therefore, “not only as a means of strengthening the nation but also, as a means of bringing about a shift of power within the under developed nations”. (Gerschenkron, 1962). Industrialization has now becomes the need of Lower Development countries (LDCs) leaning towards economic development. In fact, it is widely observed that almost all underdeveloped countries are trying to industrialize as fast as possible.

This paper deals with the industrialization and its role with certain economic factors, and this paper talks about the example in relation to the emerging economy and as relation with the industry.

Role of Industrialization

As the industrial revolution as began the process of growth and development started to emerge, a contribution to state or country started to evolve on the economic field. The different market was set up, with finished product on their (consumers) hands, the process begun through the industry. The industry as backbone the state started to contribute more and share a large it’s on Gross Domestic Product (GDP) and with high volume of employment in secondary sector, as this state concern as more on developed ones.

On the other hand, the main role and function for setting up the industry is to increase the demand and to maintain massification of growth in manufacturing sector. Central to the process of demand diversification and massification is the growth of the manufacturing sector. Manufacturing industry and firms are the key providers of finished goods and increased variety within any economy. People’s daily lives have been radically transformed by successive waves of technological revolutions, all initiated in the industrial sector. These waves significantly increased the set of goods available for consumers and continue to do so today.

An increase in discretionary income leads to diversification of demand away from necessities towards other goods, creating new opportunities for the emergence of new sectors. As income grows, necessities are more easily satisfied, and part of the new income discretionary income is allocated to other types of expenditure. When demand for a new product increases to a sufficient scale, it spurs manufacturing firms to engage in production of the product. Investment shifts towards the emerging sectors increasing variety in the economy and improving the nominal income of those workers and entrepreneurs directly and indirectly involved in the new production

Industrialization and Employment

The manufacturing sector has been regarded by various scholars as an important source of good quality jobs. Bivens (2003), for example, writes that “…manufacturing has historically been a primary source for middle-class jobs characterized by decent wages and benefits, especially for workers without a college degree” (Alejandro Lavopa and Adam Szirmai , 2012). In a similar vein, Tregenna (2008) identifies various reasons why manufacturing jobs may be regarded as more desirable than jobs in other sectors of the economy. In her words, “Blue-collar manufacturing jobs generally tend to be better paid and to develop higher levels of skills than equivalent jobs in the rest of the economy. Employment security in manufacturing tends to be superior to that in agriculture or services, and there is lower scope for and actual trends towards actualization, outsourcing and other forms of atypical employment (at least domestically). Manufacturing is also easier to unionize than is agriculture and many services sectors, making manufacturing an important mainstay of trade union organizations (Alejandro Lavopa and Adam Szirmai , 2012).”

One should distinguish between the direct creation of jobs in manufacturing and the jobs indirectly created in other sectors. In advanced economies manufacturing employment is shrinking in absolute terms. In most developing countries manufacturing employment is still increasing, but there are important differences between countries. Employment creation is most marked in Asian economies. In China and to a lesser extent India there are huge increases in the numbers of persons employed in manufacturing.

Manufacturing industries provide good opportunities for capital accumulation, which in turn, is one of the sources of economic growth:

  • Labor productivity in manufacturing tends to be higher than in many other sectors. Expansion of manufacturing in low-income economies provides opportunities for static and dynamic productivity gains.
  • Manufacturing industries provide opportunities to exploit economies of scale and achieve productivity gains through learning-by-doing dynamics.

Growth in manufacturing output also creates new jobs in other sectors of the economy due to induced effects, both in demand and supply. Induced impacts are external effects of investments in manufacturing, other than the linkage effects discussed in the previous section. From the demand side, the net increases in incomes received by the workers in the jobs directly or indirectly created through investment in manufacturing will be re-spent, generating Keynesian type multiplier effects in the economy that will, in turn, contribute to higher demand, additional employment and –eventually– additional income for the poor. From the supply side, manufacturing is seen as playing a special role as engine of growth of the total economy, especially through knowledge spillover effects. By stimulating growth in this way, manufacturing would have additional impacts on overall employment and poverty alleviation (Alejandro Lavopa and Adam Szirmai , 2012).

Industrialization and Trade

The industrial revolution as began the new industry was setup from that the transport and communication made easier, through that the trade emerge, as industrial state or country exported its finished goods in the market and it made easier to communicate with consumers. Economic development is not a smooth process of many developing countries catching up with the industrialized countries. Rather, starting from a situation where a rich and a poor group of countries coexist, the models outline mechanisms that make industrialization spread in waves from country to country causing a few countries to make a rapid transition from the poor to the rich club.

Interaction between Consumer demands and Industrial demand

The main role of industrialization is to know the customer’s demands and their area of interest, as per that the industry makes and designs the finished product as per the customer satisfaction and as per their needs and wants. The interaction in the global market has expanded where customer’s choice made direct link. To have direct relation with customers and the industry the interaction over the global market made certain positive criteria, as asking from the public or customers itself as form of feedback through that the company or firm designs the finished product as per the customer’s choice, so the interaction of the customer now made easier. Through the change in market price over demand and supply the tastes of consumer also determine and it also changes.

For a new manufactured good to be introduced to the market, demand is needed. A high initial price and few applications render good accessible only to high-income households. As the sector consolidates and gains scale, prices fall, making the good affordable to more consumers. With enough demand in place, the good becomes mass consumed and allowing for further exploitation of scale economies, the entry of new firms, greater competition and further declines in prices. This interactive process between demand and supply enables the diffusion of new, better and ever cheaper goods for consumers alongside the expansion and development of new industrial sectors and related providers.

On the demand side, increases in income alter consumption patterns, shifting household demand from food towards manufactured goods and services, and creating demand for new manufactured products in a country. Increased demand for new products to a sufficient level of scale gives an impetus to the start of their domestic production. How fast a new product diffuses in a country depends on country- and product-specific factors. As a country’s income level is one of the key factors, countries with higher economic growth tend to experience faster diffusion. However, even countries at a similar income level might differ in their diffusion of the same product owing to differences in the distribution of income, because countries with high income inequality might have fewer households at an income needed to buy the product. On the supply side, as domestic firm’s manufacturing new products accumulate production experience, the initial high production costs usually go down gradually.

Greater economies of scale from the expansion of the domestic market and of export opportunities, improvements in production-related infrastructure, and government policy incentives can all contribute to the take-off of the new industry and making new products. Increasing quality and cost competitiveness can further expand domestic production and make the products affordable for more households (Industrial Development Report , 2018). This further stimulates higher production volume, productivity increases and price reductions, and such success will induce firms to increase product variety so as to meet the varying needs of customers and capture new markets.

Two emerging Economy


Vietnam is deeply committed to global and regional integration and no one doubts the seriousness of this commitment. Vietnam has already taken many steps to realize this goal, including the completion of the AFTA process, the conclusion of the bilateral trade agreement with the United States, intense negotiation for WTO accession, and preparation for other free trade areas (FTAs). Work is also progressing in the legal area as the government doubles its effort to create or amend a large number of laws for consistency with international practices. All this is highly commendable. Free-market advocates may argue that, once the economy is open and free, the market mechanism will activate the ingenuity of the Vietnamese people and the national economy will grow and become more efficient.

This argument is too naïve, as the majority of Vietnamese policy makers already know. The fact is that the balance of power between large advanced economies and latecomer developing countries is lopsided. Vietnamese firms involved in compete squarely with Toyota, Panasonic, LG or Intel in the global market. Instead, they must work with these multinational corporations (MNCs) to improve their abilities and become crucial suppliers in their global value chain (Fujimoto, 2006). A good policy is needed to encourage and support this effort.

For this reason, Vietnam’s industrial policy in the 21st century must be new and different from those of other countries in the past. It must reflect the fact that even newcomers must open up very fast. Globalization is inevitable, and Vietnam must position itself to become a meaningful player in the global arena, making sure that its contribution to East Asia and the world will rise over time.


Taiwan is another significant exporter of manufactured goods. The Taiwanese economy may be characterized as a “competitive small country” on a par with the Netherlands. Taiwan, because of its complicated history in the 20th century, and because of its geographical location at the intersection of America-China-Japan-ASEAN axes, has had strong economic links with the U.S., Japan, and mainland China. Taiwanese export oriented firms tend to be good at making the most of their overseas linkages in building their organizational capabilities. Where the products are modular and technology-intensive (e.g., digital network goods), Taiwanese specialized producers tend to create networks with American firms. Where the products are integral (e.g., the automobile), Architecture-based Comparative Advantage in Japan and Asia Taiwanese firms tend to link with Japanese production networks (Fujimoto, 2006). Thus, their strength resides in the versatility of quickly moving between modular and integral architectures.

This two country highly involve in making electronic products as finished product they sell into the market and certain products were exported to make the finished product. So as example this two countries emerge as developed and developing country.


The emergence of industrial revolution made certain things easier, as it keeps on expanded the industry also expanded and the people’s choice also differs and changed, it’s all due to adoption of the products or finished product what the people use. In this paper the different role as explained each role as link with the industry. As to look into the employment factor the industry opened up the vast employment as country move further as process of growth and development also improve and through the GDP and HDI also improve. Hence, employment consider as main factor that determine in the HDI value of the country.

On the other hand the trade is the important factor for the developing countries, it is clear that developing countries face a dynamic global economy. Thus, if they are to make the most of their opportunities, it is desirable that they redirect their industrial policy in accordance with changing world trade and economic patterns so as to capitalize on the product as well as international technological transfer.

Works Cited

  1. Alejandro Lavopa and Adam Szirmai . (2012). Industrialization,  employment and poverty. UNU-MERIT Working Papers, 16.
  2. (2018). Demand for Manufacturing: Driving Inclusive and Sustainable Industrial Development. United Nations Industrial Development Organization.
  3. Fujimoto, K. O. (2006). Industrialization of Developing Countries: Analyses by Japanese Economists. National Graduate Institute for Policy Studies Manufacturing Management Research Center. Retrieved August 2019, from http://www3.grips.ac.jp/~21coe/j/index.html
  4. Gerschenkron, A. (1962). Economic Backwardness in Historical Perspective. Cambridge: Belknap Press of Harvard University Press.

Cite this paper

Role of Industrialization in Emerging Economy. (2021, Jan 22). Retrieved from https://samploon.com/role-of-industrialization-in-emerging-economy/

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