Industrialization – the period of transformation from an agricultural economy to an urban economy of mass production – has accompanied every period of sustained growth in gross domestic product (GDP) per capita in recorded history. Less than 20% of the world’s population lives in industrialized countries, yet they represent over 70% of global production. The transition from agrarian to industrial society is not always smooth, but it is a necessary step to escape the abject poverty found in less developed countries (LDCs).

Industrialization

The first period of industrialization took place in Britain between 1760 and 1860. Historians disagree on the exact nature and causes of this first industrial revolution, but it marked the first period of aggravating economic growth in the world history. Industrialization reached the United States at the beginning of the 19th century and finally spread to most of Western Europe by the end of the century.

There are two widely accepted dimensions of industrialization: a change in the types of predominant labor activity (from agriculture to manufacturing) and the productive level of economic output. This process includes a general trend towards urbanization of populations and the development of new industries.

Effects of industrialization

Economic and historical research has shown overwhelmingly that industrialization is linked to increased education, longer life expectancy, growth of individual and national incomes, and improved overall quality of life.

For example, as Britain industrialized, total national income increased by over 600% from 1801 to 1901. By 1850, workers in the United States and Great Britain earned on average 11 times more than workers in non-industrialized countries.

These effects have been shown to be permanent and cumulative. In 2000, per capita income in fully industrialized countries was 52 times that of non-industrial countries. Industrialization disrupts and displaces traditional labor, encouraging workers towards more valuable and productive activity that comes with better capital goods.

Hong Kong industrialization

No industrialization has perhaps been as rapid, unexpected and transformational as that which took place in Hong Kong between 1950 and 2000. In less than two generations, the small Asian territory has grown into one of the richest populations. of the world.

Hong Kong is only 1,000 square kilometers. There is a lack of land and natural resources from major industrial powers such as the United States and Germany. Its period of industrialization began with textile exports. Foreign companies became increasingly drawn to doing business in Hong Kong, where taxation was low, no minimum wage law existed, and there were no tariffs or subsidies for international trade.

In 1961, the British governor of Hong Kong, Sir John James Cowperthwaite, instituted a policy of positive hands-offism in the former colony. Between 1961 and 1990, the average GDP growth rate in Hong Kong was between 9% and 10%. The lowest five-year growth rate, from 1966 to 1971, was still 7.6% per year.

Industrialization in Hong Kong has been accompanied by a large number of small and medium-sized enterprises. Despite the Hong Kong government’s lack of pro-industrialization policies, investment venture capital has poured into Hong Kong from outside, but not from China, which has imposed an embargo on trade with its neighbor. In 2020, Hong Kong’s average annual income was around $ 56,643. In 1960, before industrialization, it barely exceeded $ 3,245 in 2020 dollars.

Future growth

The growth of the world economy will come mainly from developing countries, as they have yet to industrialize and have the capacity to do so over time. In January 2020, the International Monetary Fund (IMF) presented its global outlook for 2020, and the biggest growth figures came from developing countries.

The IMF predicted that economic growth in the United States would be 2%, in the euro area 1.3%, in the United Kingdom 1.4% and Japan 0.7%. This can be contrasted with the expected economic growth for developing countries, which is expected to be 5.8% in India, 6% in China, 2.5% in developing Europe, 3.5% in sub-Saharan Africa and 2.8% in the Middle East and Central Africa. Asia.

All the growth rates of the developing regions of the world are higher than those of the developed countries. As these countries have room to industrialize, they will continue to grow towards the modernity of the currently developed countries.

The bottom line

The Industrial Revolution had a huge impact on the world, increasing production more efficiently and improving the quality of life for people in industrialized countries. As developing countries are not fully industrialized, they will continue to benefit, resulting in high levels of growth and better overall conditions for their populations.