Rural Industrialization - Imperative for Solving Employment Problem

By Khan, Rao Abdul Rauf | Economic Review, July 1995 | Go to article overview

Rural Industrialization - Imperative for Solving Employment Problem


Khan, Rao Abdul Rauf, Economic Review


The core of the cause of poverty as conceived by the leading economists is the absence of assets among a considerable large number of people. The fact is that the present system of land distribution has to be brought at moderate level with well defined and meaningful land tenure system in order to reduce the level of destitution. It is infact the germs of inequality that results in poverty which in turn accentuates inequality. The land reform introduced in peace meal formerly has enough loopholes which has to march through. The numerous ameliorative measures adopted recently as they are merely adding assets to those who have them already. The only hope of array lies in bringing a real national renaissance where rich and powerful gives up a part of their wealth and most of their power so that the poor get the real freedom to organize themselves and fight against their exploitation. We in reality have made a commendable headway in technological development which is now being put to made wider use for agricultural growth and for various agro-based industries. The present democratic regime has considered as key element in the strategy for tackling effectively the problem of rural employment through accelerating the tempo of rural industrialisation. The problem of rural and unemployment is indeed both massive and complex. There are no easy ways in which it can be tackled. No strategy will give the desirable results unless long range perspective plan under economic decision is formulated. The overall development strategy ought to be so designed that it promotes a vigorous growth of the economy which can generate stronger trickle down effects, combining it with carefully worked out target oriented programmes.

Its Significance and Technology Front

In a developing country with abundant manpower, rural industrialization has a pivotal role to play in the development strategy. Small rural enterprises have certain distinct advantages in higher labour intensity, processing locally available raw materials and meeting consumers needs and at the same time act as breeding grounds for modern entrepreneurs. The efficiency of small rural enterprises can be proved by standard production isoguant through a simplified model issuing only capital and labour. The persistence of small enterprises in developing countries (DCs) and LDCs is a positive proof they have something inherent and basic in them and they operate successfully.

One of the most perplexing problems facing a number of developing countries is that of unemployment. Industrialization, it is generally thought, has not done its share to absorb labour. It appears that the technology which is used early in the industrialization process is capital intensive, borrowed from the advanced countries. In the opinion of many, a part of the answer to the unemployment problem is to turn to "Intermediate technology" technology that involves less capital and more labour than that in general use in more advanced countries. If the businessman behaves like an "economic man" as explained by Lous T. Wells in his article Economic Man and Engineering Man he should according to traditional wisdom choose an intermediate or a labour intensive technology when operating in a less developed country with low wage rates and high capital costs. By choosing appropriately, he will minimize his costs of production and simultaneously raise employment.

A number of development economists and other specialists are reaching the conclusion that the use of technologies developed for conditions in the industrialized, high wage nations, may often retard the growth of industrial out put and employment in developing countries. Modern labour-saving machinery can be wasteful of scarce capital resources, and will generate less employment than more labour intensive alternatives. It has been customary to classify technologies as high (i.e. capital intensive) low (i.e. labour intensive), and intermediate. Some have advocated the adoption of 'intermediate technology" as a general solution for developing countries. …

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Rural Industrialization - Imperative for Solving Employment Problem
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