SMU MBA ASSIGNMENTS

Industry is any work that is undertaken for economic gain and that promotes employment. The word may be applied to a wide range of activities, from farming to manufacturing to tourism. It encompasses production at any scale, from the local–sometimes known as cottage industry–to the multinational or transnational.

the transition to an economy based on the large-scale, machine-assisted production of goods by a concentrated, usually urban, population of workers. Manufacturing, which literally means “making by hand”, has come to describe mechanical production in factories, mills, and other industrial plants.

The Continuing Industrial Revolution

The experience of some of the world’s oldest and largest industrial economies demonstrates the stages of industrialization. In the pre-industrial economies of the United Kingdom and the countries of Northern Europe, most activity was directed towards commerce, concentrating on trading with countries in their empires. Some people still lived at a subsistence level, concentrating on the production of food. Technology was comparatively primitive, and any crafting of wood and metal goods was generally done to support farming, trade, or to provide hardware for everyday use. Long-distance transportation of goods was rare. Market towns acted as trading centres for the exchange of foodstuffs and other local products. Natural events, such as crop failures induced by weather or disease, could easily upset the pattern of economic activity. The opportunity to accumulate capital to fund economic growth and generate more wealth was limited.

Large-scale industrialization in the US was based largely on the European model. By the end of the 19th century, the United States had surpassed the UK in the production of iron and steel. The abundance of raw materials, a rapidly growing population, and the adoption of innovations such as the telegraph, the telephone, the electric light, and the refrigerator, along with petroleum products, provided the basis for a boom in manufacturing. Industry spread from its original centre in the northeast of the country towards the Great Lakes and the Ohio Valley creating a powerful and prosperous manufacturing belt stretching from the East Coast to the Midwest.

Since the end of World War II, the relative significance of manufacturing in the economies of Europe and the US has declined, and its importance in the economies of East Asia has risen. Japanese manufacturing, in particular, had a worldwide impact in a very short time, and other Asian economies have followed Japan’s lead. The renewal of its industrial plants after World War II gave Japan the advantage of modern production facilities. Since the mid-1950s, Japanese industrial output has grown at an annual rate of at least 6 per cent, and the country is now a world leader in shipbuilding as well as one of the principal producers of electronic components and appliances, scientific equipment, motor vehicles, steel, chemicals, and synthetic fibres.

Japan’s manufactured goods are noted for their high quality, which is due to the use of advanced technology in the production process. Increasingly, Japanese-designed products are being made at different locations around the world. In the UK, the number of Japanese-owned factories rose from just one in 1972 to approximately 220 by 1991. Japanese car manufacturers have increased their production capacity in the UK and the US and have succeeded in their attempt to gain a greater market share while avoiding import limits and penalties. This strategy depends on building modern manufacturing plants and agreeing to use local raw materials and labour.

Although 75 per cent of world production is concentrated in the US, western Europe, and Japan, other countries are emerging as manufacturing centres. Some are newly industrialized countries (NICs) that emphasise exports because of small internal markets. Others are actively industrializing, developing industrial capacity in response to the needs of a large and growing internal market. The leaders of the NICs are Taiwan, South Korea, Hong Kong, and Singapore, which manufacture and export textiles, clothing, and electronic consumer products such as computers, microwave ovens, and televisions. Known collectively as the Four Tigers or Four Dragons, these countries have experienced overall economic growth at an average annual rate of 10 per cent over the last 25 years. Their output of manufactured products rose by 28 per cent in this same period. The high level of export has dramatically influenced world manufacturing and trade patterns. About three-quarters of these exports are now purchased in the US and western Europe, whose own industries have contracted as a result.

In the future, industrialization is likely to increase most in the countries that are regarded as economically less developed (ELDCs), such as Brazil, China, and India. These countries have large internal markets and a growing middle class, amongst which the demand for consumer goods is rising. At the same time, they are seeking to emulate the Tiger economies by exporting manufactured products to the developed countries of the world, where the importance of manufacturing is declining.

The Brazilian economy is now the eighth largest in the world, and much of its growth has been due to industrialization. In the mid-1960s, primary products accounted for 80 per cent of Brazil’s exports, with coffee worth about half of the total value. By 1989, manufactured goods accounted for 72 per cent of exports, and coffee had dropped to only 4 per cent of the total. Several measures reflect the rapid change. Of the economically active population, 13 per cent worked in industry in 1960, 18 per cent in 1970, and 23 per cent by 1990. The percentage of gross domestic product (GDP) accounted for by industry rose from 25 to 34 per cent between 1960 and 1994. Brazil has traditionally sent its products to markets in the US and the countries of the European Union (EU), but in the last 20 years, it has aggressively sought to increase exports to Japan and the oil-rich countries of Middle East.

China is another emerging industrial power determined to strengthen its manufacturing base both by supplying its huge domestic market and by sending its products abroad. Industrial output increased by 12 per cent each year between 1980 and 1990. The production of consumer goods accounted for half of the total, largely to satisfy the internal demand for televisions, washing machines, and refrigerators. China’s approach has been to set up Special Economic Zones (SEZs), especially along the coast, where cities such as Shanghai are encouraged to trade with the outside world. Economic growth has been unprecedented, although it remains concentrated in small pockets. Nevertheless, plans are afoot to establish SEZs across the country. Another indicator of China’s explosive growth is the extent to which foreign firms are being invited to locate in the country. In regaining control over Hong Kong in 1997, China has acquired a ready-made Tiger economy.

The post-industrialized society is marked by an increased valuation of knowledge. This itself is unsurprising, having been foreshadowed in Daniel Bell’s presumption as to how economic employment patterns will evolve in such societies. He asserts employment will grow faster in the tertiary (and quaternary) sector relative to employment in the primary and secondary sector and that the tertiary (and quaternary) sectors will take precedence in the economy. This will continue to occur such that the “impact of the expert” will expand and power will be monopolized by knowledge

2. How does the deregulated industry increase the services requirements?