Introduction to the Industrial Sector
Importance of Industrial Sector in Economic Development or Industrial Development Plays a Vital Role in the Economics
The industrial sector is of great importance for the economic development of a country. It is a historical fact that countries with strong industrial sectors have shown more economic growth and development. The industrial sector has shown improvement in national income and promoted the living standard of the population.
Industrial development plays a pivotal role in economic uplift. It raises the productive capacity of the people and creates ever-increasing employment opportunities. The people can thus have more goods and services, such as leisure and better health, which were denied to previous generations.
Industrial development reduces dependence on agricultural exports to earn badly-needed foreign exchange. An industrialized nation is always economically stronger and thus capable of defending itself against any aggression.
Definition of Industrial Sector
“Industry refers to that sector of economy which is related to the manufacturing and production of different products”
Main Industries in Pakistan
Following are the main industries of our country:
- Textile Industry
- Sports Industry
- Sugar Industry
- Cement Industry
- Fertilizer Industry
- Basic Facts and Figures
The growth rate of industrial sector for the year 2009-2010 remained 4.9% The industrial sector contribution to GDP (Gross Domestic Product) for the year 2009-2010 Remained 18.5%
The industrial sector is the second largest sector of our economy.
At the time of independence, we had only 34 Industrial Units.
- Industrial Sector of Pakistan
The industrial sector is the second largest individual sector of the economy, accounting for 24% of the GDP. The activity in the manufacturing sector is comprised of large, medium, and small-scale. The industrial Production growth rate during 2005 remained at 6%. The large-scale manufacturing growth rate is 19.9%.
Most of the present economic problems in Pakistan are ultimately linked to the slow pace of industrial development. Rapid industrialization is considered by the economic elite as the sovereign remedy to put our economy on a sound footing.
The importance of the industrial sector in Pakistan or Role of the industrial sector in economic Development
- Increase in National Income:
The industrial sector also contributes to the gross domestic product (GDP) of country According to 2004-05, the contribution of the industrial sector to GDP was 18.3 Percent. So in this way, this sector increases the national GDP.
The development of the industrial sector means more investment, employment, and production. An increase in production will increase the national income. If we study the history of economic development, we find that the growth in national income and per capita income has been accompanied by a relative decline in their dependence on agriculture. At present, the share of the industrial sector in GDP is 6.8%.
- Higher standard of Living
Industrialization helps increase the value of output per worker. The income of the labor, due to higher productivity. The rise in income raises the living standards of the people.
- Economic Stability:
The industrial sector also helps the government stabilize prices in the country. When goods are available in sufficient quantity, there is no change in the price of these items.
Industrialization is the best way to provide economic stability to a country. A nation that depends on the production and export of raw materials alone cannot achieve rapid growth.
- Improvement in balance of payments
The industrial sector earns a good amount of foreign exchange for the country, which is used for repairing national debt investing in machinery, etc.
Industrialization brings structural changes to the pattern of foreign trade in the country. It helps increase the export of manufactured goods and thus earns foreign exchange. On the other hand, processing raw materials at home curtails the import of goods and thereby helps conserve foreign exchange.
- Agricultural Development
The industrial sector is also important and helpful in agricultural development. Because it provides fertilizers pesticides, seeds, machinery, etc, agricultural sector promotes agricultural development
Industrialization provides machinery like tractors, thrashers, harvesters, bulldozers, aerial spray etc.. to be used in the farm sector. The increased use of modern inputs has increased the yield of crops per hectare. The increase in the income of the farmers has given boost to economic development in the country.
- More Exports
The industrial sector plays very important role in increasing exports of country. The major exports of our industrial sector are
- Textile Items
- Sports Goods
- Leather. Etc
- Increase in Employment
The industrial sector provides employment for the majority of the population. This sector provides employment for both skilled and unskilled labor. According to one estimate, more than 50% of the total labor force is employed in industry.
Pakistan is a developing country, and its population growth rate was 1.573% in 2011. but the rate of increase in G.N.P. is relatively low, therefore, there is general unemployment (25 %) in 2009, and disguised unemployment is increase in the agriculture sector. A developed industrial sector can absorb millions of unemployed people, which will increase not only the income level but also the standard of living.
- Modern Defense
Modem defense cannot be put on a sound footing unless its basic needs are met from within the country itself, and these basic needs are mainly supplied by modem industry, In the present times, it has become more important as we are surrounded by enemies.
- Stimulates progress of other industries
The development of one industry leads to the development and expansion of other industries. For instance.. The construction of a transistor radio plant develops the small battery industry (backward linkage). The construction of milk processing plants adds to its line of production of ice cream. Cone cream plants, etc…
- Promotes Specialization
Industrialization promotes the specialization of labor. The division of work increases the marginal value product of labor. The income of worker in the industrial sector is therefore, higher than that of a worker in agricultural sector.
- Increased savings and Investment
Industrialization increases the income of workers. It enhances their capacity to save. The voluntary savings stimulate industrial growth and, by cumulative effect, lead to further expansion of industry.
- Large scope for Technological progress
Industrialization provides greater scope for on-the-job training and technological progress. The use of advanced technology increases the scale of production, reduces the cost of production. improves the quality of the product and helps widen the market.
Increase in government revenue
The industrial sector increases revenue of Government because it pays different types of taxes to government, like
- Excise Duty
- Custom Duty
- Corporate Tax
- Sales Tax
Industrialization increases the supply of goods for both internal and external markets. The export of goods provides foreign exchange. The customs excise duties and other taxes levied on the production of goods increase the revenue.
- Easy to control Industrial Activity
Industrial activity, compared to agricultural activity, is easy to control. The industrial production can be expanded or cut down according to the price, cost, and demand of the product.
Reduction in the Rate of population Growth
Industrialization leads to the migration of surplus labor from the farm sector to industries mostly situated in urban centers. In cities, improved facilities for sanitation and health care are available. People, through the adoption of family planning measures, reduce the rate of population growth.
- Diversification of Economy
Industrialization eliminates dependence on agriculture alone. By exporting finished and industrial goods, we can earn a lot of money as compared to exporting raw materials.
- Import Substitutes
With a developed industrial sector, we cannot only produce substitutes for imported goods but also export them to other countries. Therefore, dependence on other countries and deficits in the balance of trade and balance of payments can be decreased, and we may be able to save foreign exchange.
- Extension of Market
The extension of the market depends on the quantity of demand. There is a demand for finished products within and outside the country. With an increase in industrial production, we can supply goods to far-off places and other countries and extend markets, which may help in economic development.
- Increase in Rate of Economic Development
Agriculture, minerals, transport and communication trade, and other sectors of the economy mainly depend on the industrial sector. A developed industrial sector means the development and economic welfare of individuals.
- Change in people’s Attitude
In an agrarian country, people in general are illiterate. Customary, traditional, and backward-looking industrial thinking starts running on the path of development.
- Political Stability
On the international market, those countries are enjoying higher living standards than we have industrially developed. They not only receive higher prices for their exports and earn foreign exchange, but their financial and political conditions also become more stable.
- Increase in social welfare
The industrial sector also plays a great role in social welfare; this sector meets different needs of society, like the food and fiber requirements of the population.
Industrial development increases the revenue of the government, which is spent on the welfare of people. New roads, dams, buildings, and parks are constructed.
- Use of Raw Material
Due to industrialization in Pakistan, cotton and sugarcane are now used in domestic industries. It has increased the income of the people, and there is no need to export the raw material.
- Reduces Imports
Imports into a country can be reduced by establishing industries for those goods that are being imported from other countries. in this way, national foreign exchange services can be saved.
- Scale of Production
Increased Production will expand the scale of production, with the result that the cost of production will decrease and the profit will increase for the business people.
- Efficiency of labor
Industries will make people hardworking, which will go a long way to increasing their efficiency.
- National Defense Requirement
The industrial sector also meets national Defense requirements. Defense is a very important requirement of every country. The industrial sector provides modern arms and other equipment for defense.
- Conclusion of Importance of Industrial Sector
From the above discussion, it is clear that, without doubt, the industrial sector has much importance for economic development. Without the industrial sector, no country can make progress in this modern world.
What are the causes of Industrial backwardness in Pakistan?
The causes of industrial backwardness in Pakistan are different types and natures. These problems can be solved with sincere efforts of governments
- SME, s Promotion
Our country is a developing country, and we should establish small and medium enterprises (SME) Instead of large industries because we have less finance to run large scale industries.
- Optimum Diversification
We should establish every type of industry in every line so that we will be able to produce every product in our country, and in this way we can maximize Imports.
- Labor-intensive industries
Our Country should establish labor intensive industries instead of capital intensive industries because we have cheap labor and a shortage of capital.
- Use Foreign AID
The government should obtain maximum foreign AID to compensate for the low rate of saving so that maximum investment will take place in the country.
- Tax Concessions
Governments should charge Minimum taxes to industrialists. So that they may not be discounted, maximum tax concessions should be given to businessmen.
- Industrial Cities and Loons
The government should establish maximum industrial cities and zones where every facility should be provided to industrialists easily and at low rates.
- Offer a peaceful environment.
Government should maintain law and order in the country so that security of life and property will be given to businesses, and they will be comfortable and ready to invest in the country.
- National Saving Promotion
Governments Should Promote saving Culture in the Country by introducing different attractive schemes to the public.
- Optimum Credit Facility
Government should provide maximum credit facility to businessman so that they will be able to meet there all financial needs and carry on their business.
- Foreign Investment promotion
Governments should attract foreign investment by giving maximum facilities to foreign investments. In this way deficiency of investment can be made up.
If the above steps are taken by the government sincerely, at the proper time, and with full commitment. The maximum number of problems in the industrial sector will be solved.