The initial structural transformation
Initiating the industrialization processAfter studying this chapter, you should understand:
|• the need for industrialization as a means to accelerate the pace of economic development;|
|• the nature of the structural transformation from primary production to secondary and tertiary production;|
|• the structural changes which easy import substitution industrialization can help to initiate as the first stage of industrialization and which are part of the structural transformation aimed at altering future path dependence;|
|• the static and potential dynamic welfare effects of infant industry tariffs;|
|• the role that development banks, financing, and other government initiatives can play in supporting the first efforts at industrialization; and|
|• the potential benefits and potential dangers of pursuing an import substitution industrialization strategy.|
Introduction: an industrialization imperative?
Achieving an adequate level of economic growth and development appears to be inextricably intertwined with the level of industrialization of an economy. One chronicler of the nature of structural change in the development process has written that the issue is not whether industrialization is necessary for development but only "when and in what manner it will take place" (Syrquin 1988:218).
The structural transformation that accompanies the process of industrialization alters not only the physical landscape of nations via urbanization, internal labor migration and the establishment of a complex of, typically, urban business enterprises. It also alters many of the cultural, social, and other institutional arrangements that have stamped a particular society and made it what it is to that point in time. With industrialization, nations become more homogeneous in terms of what is consumed, what is read, what is seen on the television and at the cinema, and what is learned in schools and in universities. Of course, many cultural differences remain even after industrialization since they arise from distinct historical experiences woven into the fabric of individual societies in their language, literature, law, folklore, music, cuisine, and a variety of embedded and shared attitudes, perspectives and practices.
Industrialization and development provide unmistakable benefits to society, but sacrifices also are required, as is true whenever choices must be made. One