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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.

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