Monday December 04, 2023

Impact of industrial operations on economy of Pakistan

November 20, 2019

Industrialization plays a vital role in the economic development of underdeveloped countries. As the historical record shows, the developed countries of the world broke the vicious cycle of poverty by industrializing, rather than focusing on agricultural or the production of national resources.

Currently, Pakistan, as a developing country, wants to achieve a higher standard of living for its people. For this reason, it is pursuing policies that support privatization and deregulation of the economy.

Industry plays a complex role in economic development, but these are some of its most important effects.

Industrialization allows countries to make optimal use of their scarce resources. It increases the quantity and quality of goods manufactured in that company, which makes a larger contribution to gross national product (GNP).

In an industrialized society, workers' labor is worth more. In addition, because of higher productivity, individual income increases. This rise in income raises the standard of living for ordinary people.

A nation that depends on the production and export of raw material alone cannot achieve a rapid rate of economic growth. The restricted and fluctuating demand for agricultural products and raw materials—along with the uncertainties of nature itself—hampers economic progress and leads to an unstable economy. Industrialization is the best way of providing economic stability.

Industrialization changes the pattern of foreign trade in the country. It increases the export of manufactured goods, which are more profitable in foreign exchange. But at the same time, processing the raw material at home curtails the import of goods, thereby helping to conserve foreign exchange. The export-orientation and import-substitution effects of industrialization help to improve the balance of payments. In Pakistan in particular, the exports of semi-manufactured and manufactured goods resulted in favorable trade. Industrialization provides increased employment opportunities in small- and large-scale industries. In an industrial economy, industry absorbs underemployed and unemployed workers from the agricultural sector, thereby increasing the income of the community.

Industrialization promotes specialized labor. This division of work increases the marginal value product of labor. In other words, specialized labor is more profitable. The income of a worker in the industrial sector will be higher on average than that of a worker in the agricultural sector.