• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Should countries industrialise in order to develop? What is the role of capital market development in the process?

Extracts from this document...

Introduction

´╗┐Should countries industrialise in order to develop? What is the role of capital market development in the process? Introduction Industrialisation is one of the main economic development themes. Many historical facts show clearly the close link between economic development and industrialisation. The world's major advanced industrialised countries completed their industrial revolutions in the nineteenth century. Industrialisation was initially a spontaneous social phenomenon which began in the 1760s in Britain. Large-scale industrial activities, such as machine production, challenged the existing traditional mode of production and a small local market. Meanwhile, the development of capital accumulation and industrialisation of science and technology laid the foundations of industrialisation. Since the 20th century, and especially after World War II, industrialisation has become a major economic development goal in developing countries. Developing countries learned from the experience of western industrialised countries and adopted a series of economic development strategies so that some developing countries, especially Asian countries, had great economic growth in the 1960s. Industrialisation has not only had a huge impact on the economy but also had a huge impact on urbanisation and social life. The first part of this paper reviews some basic concepts of industrialisation, then reviews Lewis? famous Dual Economy Model and its turning point in early research and related arguments on the role of capital markets during industrialisation. In the second section, some empirical and theoretical evidence in favour of implementing industrialisation strategies for development, including some worldwide data, is presented. Chinas? successful industrialisation experience using Lewis? dual economy model is contrasted with African?s urbanisation without industrialisation. The results of this indicate that industrialisation is an important process for a country?s development, and capital markets provide fuel for this process. ...read more.

Middle

For developing countries, there is a lack in capital accumulation in perfect marketsï¼low level of wealth and limited capital marketsï¼but an abundance of labour (low labour costs and low supply elasticity). With the main function of finance, resource-collocation, risk-pricing and institutional innovation, capital markets are an important mechanism for industrialisation. Macroscopically, capital markets promote the adjustment of industrial structure, regional structure and improve the rural financing environment facilitating rural industrialisation. Microcosmically, capital markets finance capitalists with the required capital to promote technological innovation and transition. With capital markets, capitalists may be able to reinvest to seek maximum returns, countries may also benefit from investments to develop industry and infrastructure. From the experience of developed countries, a well-developed capital market tends to attract more foreign capital through investment securities. This implies that a well-developed capital market is an important prerequisite for developing countries to use foreign investment rationally to industrialise and make the transition from developing to developed. Furthermore, for the agricultural sector, faced with the absence of a well-developed capital market, small farmers may not able to gain access to finance and credit so they cannot use capital intensive or advanced technologies for the industrialisation of agriculture. Thus, to shift from agriculture to industry, it is important for developing countries to address the capital accumulation of the capital market imperfections. 1. Evidence 2.1 Empirical and theoretical arguments for developed countries and developing countries Thanks to the Industrial Revolution, Britain, Germany, the United States and Japan experienced rapid economic growth. Many economists have studied the role of industrialisation, and there is ample, powerful supporting evidence. ...read more.

Conclusion

Industrialisation in developing countries is the main catalyst to start economic development, but this should be rapid industrialisation. Increased soil erosion and desertification, causes environmental pollution and a broken ecological balance. For developing countries, it is important not whether to industrialise, but how to achieve industrialisation. Words: 2579 Reference Atkinson, R. D., Stewart, L. A., Andres, S. M., & Ezell, S. J. (2012). Worse than the Great Depression: What Experts Are Missing About American Chandra, R. (2003). Industrialization and development in the Third World. Routledge. Das, M., & N'Diaye, M. P. M. (2013). Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point? (No. 13-26). International Monetary Fund. Jedwab, R. (2013). Urbanization without structural transformation: Evidence from consumption cities in Africa. George Washington University, Washington, DC. Processed. Kwan, C.H., 2007, “China Shifts from Labor Surplus to Labor Shortage: Challenges and Opportunities in a New Stage of Development,” RIETI. Lewis, W. A. (1954). Economic development with unlimited supplies of labour. The manchester school, 22(2), 139-191. Manufacturing Decline. Washington, DC: Information Technology and Innovation Foundation. McMillan, M. S., & Rodrik, D. (2011). Globalization, structural change and productivity growth (No. w17143). National Bureau of Economic Research. Minami, R. (1968). The turning point in the Japanese economy. The Quarterly Journal of Economics, 380-402. MooâKi, B. A. I. (1982). The turning point in the Korean economy. The Developing Economies, 20(2), 117-140. Ranis, G., & Fei, J. C. (1961). A theory of economic development. The American Economic Review, 533-565. Ray, D. (1998). Development economics. Princeton University Press. Rodrik, D. (2004). Industrial policy for the twenty-first century. Szirmai, A. (2012). Industrialisation as an engine of growth in developing countries, 1950–2005. Structural Change and Economic Dynamics, 23(4), 406-420. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Political & International Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Political & International Economics essays

  1. Economic growth in China

    percent of the total project sand 72.6 percent of the total capital investment. In the contrast, the manufacturing sector just covered 48 percent and 15.1 percent of the total respectively. Among the investment in the non-manufacturing sectors, the investment in the service industry occupied the highest ratio, which reached the US$ 320 million.

  2. Business Environments - Labour Market and GDP Development in the UK

    All EU member states were forced to deflate their economies to keep pace with low-inflation West Germany. Another reason for the downturn is the failure of Labour's labour market policy in the late 1960s. Their market reform ("In Place of Strife")

  1. Unions have played a significant role in workforce history, have they outlived their purpose ...

    Compared to the Boomers, Gen-Xers face different dilemmas. Often they resent the Boomers, whom they view as arrogant, self-absorbed, and responsible for the drug culture, the deficit, environmental debacles, and bad schools (Green, 2001). Brought up in uncertain times, frequently by single parents, Gen-Xers tend to be practical, independent, and successful.

  2. Describe the Positive and Negative Effects of Globalisation on China

    In this situation, China?s entry into the WTO with secured sectors like automobiles, steel industries, machineries and telecommunications, enforce a greater control on these firms in order to face the competition with multinational companies. However, there were a lot of restrictions to the opening-up sectors in the protocol accepted by China for its succession into WTO.

  1. Chinese investments in Africa

    It has also advocated for Africa?s various reform-oriented institutions, such as the New Partnership for Africa?s Development (NEPAD) and the African Union. Through major meetings or ?summit diplomacy?, Beijing is trying to mold a long-term economic cooperation with Africa. Indeed, in 2000, the first forum on China-Africa Cooperation (FOCAC)

  2. With the rise of manufactured exports from developing countries, a new movement opposed to ...

    It is natural process that countries rich in labour focus on the labour-intensive goods production like manufacturing and countries rich on capital focus on the goods which are capital-intensive. Here we come to what is called Foreign direct investment or FDI of which we know two kinds.

  1. The Theory of Human Capital: Egypt and the USA examined.

    that he will receive is bigger than the present value of the direct and indirect costs of attending college. The theory can also be applied for employers? decisions to invest in their employees. Obviously, the employers would only invest in the employees? human capital if the present value of their

  2. The establishment of the World Trade Organisation has led to a significant reduction in ...

    in a Heckscher?Ohlin model). In other words, the U.S. consumers have to pay a lot more than just keep labor income from declining in free trade. How about terms of trade (TOT) effects of this tariff? There will be none as the U.S.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work