Ehrlich, of developing countries which does not

Ehrlich, 1995 on initial view there seems to be apositive correlation between growth and industrialization there is data ofdeveloping countries which does not show any direct relation. The increase inoutput is driven by aggregate demand in developing counties and by export indeveloped countries. Industrlisation is supposed to be important engine ofgrowth according Kaldor 1957, Marshall, Young. The importance of manufacturingindustry lies in the dissemination of technology that is related tomanufacturing industry. Time series data in this paper of U.S shows that astime passes productivity increases in terms of labour productivity andproduction skills.Shapiro, 2007 explains the role of industrial policythat will be as an instrument to expedite the process of industrlisation. Theimportance of policy lies in the fact that there is an assumption of market failure.

  In perspective, it can be said that, if manufacturing industriesare “escalator industries” for economic development (Rodrik 2013; Szirmai andVerspagen, 2015; Foster-McGregor and Verspagen, 2016; Marconi et al., 2016) andthe acquisition of production capabilities in an increasing range of goods ?i.e. the opposite of the sectoral concentration here documented ? is crucialfor a sustainable growth to be achieved (Haussmann et al.

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, 2011).Adam Szirmai has analyzed the roleof manufacturing as a driver of growth in developing countries in the period(1950-2005). The working hypothesis put forward to the test is an econometricmodel is that correlation between levels of GDP per capita and shares ofmanufacturing results from the causal relationship between industrializationand growth. The main theoretical and empirical arguments supporting thishypothesis are.

(1)Productivity is higher in the manufacturing sector than inagricultural sector(2)Special opportunities for capital accumulation is possiblein manufacturing sector(3)Economies of scale is offered by manufacturingsector(4)The strong linkage and spillover effects in manufacturing than inagricultural and mining. As per capita income rise the share of agriculturalexpenditure declines and demand for manufactured goods increases (Engels law).The main findings of the paper is that there is a moderate positive relationimpact of manufacturing on growth in line with the engine of growth hypothesis,in case agriculture and services no such impact was found in same period.Szirmai, 2009 measures the engine of growth hypothesis indeveloping countries. Here it is supposed to be manufacturing industry. Thestatistical evidence is not always supporting the theory hence we cannotgeneralize the theory to practicality.

The assumption on which Kaldor’s modelis based indicates that the intricate construct of developing countries isdifferent from developed countries. The share of manufacturing has increasedoverall in 63 developing taken for analysis in this paper. The increase hasjust been of 4 %. Again, when countries are considered in groups that are notseparately the unique policy that a country is following is not takenseparately. Assumption on which Kaldor’s model is based is that increase inshare of manufacturing sector leads to increase in per capita income which inturn leads to increase in aggregate demand (Keynesian in nature).

 Ashoka Parthasarathi (2005) highlights the role ofkhadi and village industries in order to boost the rural industrializationprogramme. Author has argued how Khadi and village industries commission inIndia has failed to effectively linkup with research and development as well aswith technology supplies involved in India’s rural industrialization programme.Author has made a comparison between Indian programme and Chinas Sparkprogramme approved by Chinese government in 1986 for the promotion of rural economicdevelopment by relying on science and technology. A distinctive feature of thespark programme was the close and deep involvement of the provincial researchand development council both as generators of technology and techniquesrelevant to commercially utilization of wide variety of the natural resourcesof province concerned. During the period 1986-2001, the spark programme hasconducted1,20,000  demonstration projectsof which 11,300 were at national level covering more than 85 percent of citiesand towns.

The concept of townships in china was another big achievement afterthe spark programme fulfilling the aim to development of ruralindustrialization. There were 21 million townships enterprises with 127 millionemployees, generating 2720 billion Yuan (US$ 328 billion) in 2000.Authorfurther laid stress to learn from the Chinese experience and implement similarkind of policies in India. The role of bio-technology was also highlightedwhich will not only boost agriculture but for high productivity growth ofmedicinal and aromatic plants and for producing industrial products such ashigh value chemicals.

Lastly, author argues that the need of large network ofpromotional agencies coordinated by department of small scale industries (SSI)and Agro and Rural industries (ARI) supervised by high level Ruralindustrialization development board (RIDB). The RDIB should encourage a largenumber of the NGO,s covering all the parts of the country to initiate theextension , demonstration  and trainingfunctions on rural technology based growth.Adam Szirmai has analyzed the roleof manufacturing as a driver of growth in developing countries in the period(1950-2005). The working hypothesis put forward to the test is an econometricmodel is that correlation between levels of GDP per capita and shares ofmanufacturing results from the causal relationship between industrializationand growth. The main theoretical and empirical arguments supporting thishypothesis are.(1)Productivity is higher in themanufacturing sector than in agricultural sector(2)Special opportunities forcapital accumulation is possible in manufacturing sector(3)Economies of scaleis offered by manufacturing sector(4)The strong linkage and spillover effectsin manufacturing than in agricultural and mining. As per capita income rise theshare of agricultural expenditure declines and demand for manufactured goodsincreases (Engels law). The main findings of the paper is that there is amoderate positive relation impact of manufacturing on growth in line with theengine of growth hypothesis, in case agriculture and services no such impactwas found in same period.

Dellasand Koubi (2001) argue that the industrialization of labour is the main engineof growth during the early stages of economic development. They emphasize theeffects of investment on the composition of the labour force; and unlike recentclaims pointing to industrialization via equipment investment, they suggestthat employment industrialization policies may hold the key to success in thedeveloping countries. Dilipkumar (1988) argues that the pressing concernfor creation of productive employment opportunities in developing countriesrequires an employment-oriented industrlisation strategy which involvessimultaneously both employment objective and industrial development objectiveis an interrelated way. Onwards, merits of an employment-oriented developmentwith labor –intensive industrlisation contributes to decline of unemployment,poverty alleviation and income inequality alongside economic growth throughgeneration of more productive and adequately enumerated jobs.

Employmentopportunities will be both for skilled and unskilled unemployed labor force.Both the industries and agriculture sectors are mutually interdependent andcomplementary. Hence, the development should go hand in hand in both sectors.

Agriculture will provide unskilled labor force, raw materials to industries andwill create demand for industrial production likewise industry will help toraise the production in agriculture through the supply of agricultural inputsand implements. The contentious decline in the agricultural sector inBangladesh, landlessness, inequality in land ownership ultimately leads to moreand more attention for the development of industrlisation. Huge attention wasgiven to industrialization process through the employment orientedindustrialization strategy may bring economic growth. Two main hypotheses wereconsidered here subjected to empirical tests.1.

      Whetherrelatively efficient labor intensive industries can increase both labourabsorption and output at same time.2.      Whethermarket demand for labor intensive manufactured products has an implication onemployment on both employment and output.1.

7   Theoretical Framework            Every branch of knowledge isconstructed with well-built and powerful theoretical background. The subjectswithout theoretical background will have to face much critics and its existencewill be more problematic. In Economics the theory is much important because toexplain, to predict, to frame policies, to judge economic performance, and as atool to measure economic phenomena the theories is using in large extend. Inresearch, the theoretical background will provide the existing knowledge onselected field of study.

Thus theoretical background will pave the way toconstruct the idea based on the finding of the study, that whether the study isactually supporting the existing theories or it brings new facts of knowledgein the branch of subject. The vast theoreticaland empirical arguments in favor of industrlisation in economic development canbe summarized as follows: Simon Kuznets (1973) has definedeconomic growth as long term rise in capacity to supply increasingly diverseeconomic goods and services to people. This growing capacity is based oninstitutional, ideological adjustments and advancing technology. Kuznets hashighlighted six main characteristics for modern economic growth.

These sixcharacteristics if fulfilled can lead a country towards development.High per capita product and ofpopulation in the developed countries, the rate of increase in productivitye.g., output per unit of all inputs. The third and the most importantcharacteristics is the rate of structural transformation means shift away fromagricultural to non agricultural activities and from industry to services. Thisshift will lead to corresponding change in the occupational status of labour.

The fourth one is urbanization and secularization. Fifth the economicallydeveloped country with good roads and transport has the propensity to link withthe rest of world. Sixth and last characteristics are spread of modern economicgrowth. Kuznets had also highlighted the role of science as a basis ofadvancing technology. The main argument is that there is a significantinterrelationship between all six characteristics. The overall aim of theauthor was to sketch the major characteristics of modern economic growth whichhas been described by author through six major characteristics of economicgrowth. Lewis starts the theory with the argument that theclassical theory of perfectly elastic supply of labour at a subsistence wagehold true in the case of number of underdeveloped countries. The subsistencewage is determined by the minimum earning required for subsistence and thecapitalists wage will be 30% more than the subsistence wage.

Lewis believesthat the capital formation depends upon capital surplus. The marginalproductivity of labour in the capitalist sector is higher than the capitalistwage, this result in capitalist surplus. This surplus is reinvested in newcapital assets. There will be a transfer of labour from the subsistence sectorto capitalist sector. Capital formation takes place and as a consequenceemployment and economic development takes place. This process continues tillthe labour ratio rises and the supply of labour become inelastic and thesurplus labour disappears.

Lewis believe that if technical progress is capitalsaving, it may be considered as an increment in capital and if it is a laboursaving, it may be considered as an increment in the marginal productivity oflabour. He says that the capital is not only created from the profit but alsothrough the bank credit. In underdeveloped economy, rich in resource and lackof capital the credit creation from banks also have the same effect of capitalformation from profit. Lewis accepts the role of state that it can accumulatecapital even faster than the capitalists and also can tax the subsistencesector. Lewis also states that there will be an end to the growth process. As aresult of capital 74 accumulation, if there is no surplus labour is present orhigher increase in the real wage that decreases the profit of capitalists leadsto end the economic growth. Gerschenkron (1962) explains that all nations wereonce backward.

He accepts that the industrialization is the base of economicgrowth. To move from traditional to modern industrial economy Gerschenkronsuggest a great spurt is needed. But he criticizes Rostow’s view that theexistence of necessary pre condition for industrialization. To prove this hesays for a great spurt of industrialization, the advanced nations start firststage of development with the factory in the organizational lead, moderatelybackward country with banks and extreme backward with government. Here is nopre condition for industrialization and one precondition may substitute byother precondition. Pre condition may be even created during the course ofindustrialization. To reduce foreign competition in backward countries, theyestablish techniques, import substitution and use of capital intensivetechniques because of low level skilled laborers. Thus the borrowed technologyis one of the prime factors of high speed economic development in backwardeconomies.

He says the great spurt of industrialization will take place only ifthe five pre requisites were full filled and they are (1) old frame ofagriculture should be abolished or increase in production (2) an influentialmodern elite should be created (3) provision for material social overheadcapital (4) value system in favor of economic change (5) an effectiveentrepreneurship.

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