Download Industrial Development Strategies

 Many theories about how to begin economic development.
 However, countries generally choose among the following;
Market planning or Central planning
Agglomeration or Dispersion
Import Substitution or Export Promotion
Basic Needs or Megaproject
 As industrialization advances, countries may choose different
strategies based on domestic and international conditions.
 Also, some countries will mix strategies in their development
program.
Market Planning and Central
Planning
 One choice facing developing countries is whether to
use a market system, a centrally planned system, or
some combination of the two.
Market Planning
 Manufacturers decide what to produce, how much to
produce and where to sell it according to their views of
market (consumer) demand.
 The cost of production, the demand for goods and
consumers’ willingness and ability to pay for goods
determine cost and production.
Central Planning
 Manufacturers are told what and how much to
produce and where to sell it according to a government
planning board which allocates budget.
 These government decisions are based on the
capabilities and needs of the national economy.
 Few countries remain committed to a wholly centrally
planned economy.
 However, many countries use a combination of market
and central planning.
 These countries use a mix to ensure the interests of the
nation are considered in the running of the economy.
http://logodesignconsultant.co
m/blog/government-agencylogos/
http://www.wayoftherail.com/2009/03/19/viarail/via-rail-upgrades-track-station-near-ottawa/
http://logodesignconsultant.com/blog/government-agency-logos/
http://www.taktikadesign.com/blog/tag/energy/
http://logodesignconsultant.co
m/blog/government-agencylogos/
Agglomeration and Dispersion
 Market economies tend to favour agglomeration early
in industrial development. Dispersion often becomes
favoured as development progresses.
 A centrally planned economy is able to favour either
agglomeration or dispersion at any stage.
http://www.cambridge.org/aus/c
atalogue/catalogue.asp?isbn=978
0521805247
http://www.uwec.edu/geography/Ivogeler/w188/border/maquil.htm
http://infranetlab.org/blog/2010/05/bordereconomies-the-maquiladora-exportlandscape/
Agglomeration
 Advantages are in the savings of the nearness of industries to one
another.
 Transportation and infrastructure costs minimized, trained labour is
gathered together, and investment is more easily attracted.
 Economies of scale, mean some newly industrialized economies have
seen rapid growth, usually in capital cities or port areas.
 These grow rapidly and attract the rural poor. Growth may lead to
overcrowding, pollution, high prices, and a declining quality of life.
 Eventually problems outweigh benefits and dispersion becomes
favoured.
Dispersion
 Spread industrial development throughout the non-
core areas of the nation, called the periphery.
 Requires equal distribution of industrial support
services, transportation, education and other
infrastructural aspects.
 Reducing the advantages of the core so the periphery
can compete providing jobs and raising living
standards, which limits flow of migrants to cities.
Import Substitution and Export
Promotion
http://ecosquared.wordpress.com/2011/01/30/the-war-on-work-part-2/
http://www.whatsonxiamen.com/news14782.html
Import Substitution
 Local industries substitute domestic products for imported goods.
 Targets are low technology products, where labour and raw materials
are inexpensive and product is of low cost. Textiles, clothing, footwear,
processed foods, furniture and household goods.
 These are the basis for industrial growth as population learns labour
and management skills, and entrepreneurship is encouraged.
 Trade barriers may protect from foreign competition. These make the
local product more attractive to the consumer, but…to much protection
discourages growth as there is no reason to improve product or
manufacturing techniques.
Export Promotion
 Encourages industries to produce goods for international sale.
 World Bank reports that export promotion generally fared better
in industrial growth.
 Risks exist since exports are vulnerable to international markets.
 When US economy is growing it buys lots of goods from abroad.
However, during recession it buys fewer goods.
 The economy of the exporting country is tied to the state of the
American and other foreign economies.
Basic Needs and Megaprojects
http://www.britannica.com/EBchecked/media/106363/Itaipu-Dam-on-the-Parana-River-at-the-border-of
Basic Needs
 Industries serve the local population by creating jobs,
housing, clothing, and domestic products.
 Usually are part of mixed development strategies.
 Local population receives training basic to their existence.
 This approach creates a productive, independent, literate,
and employed population, but requires long-term
commitment to reach these goals
Megaprojects
 Giant projects such as hydro-electricity dams, railway
construction, international airports etc…
 Benefits are mostly in infrastructure since the project
usually meets a national need.
 Successful projects typically require a large population
base, and some smaller countries without the population
base or the infrastructure now own idle or underused
facilities.
 Furthermore, jobs are often provided for small group and
income distribution becomes more unbalanced.