Development Studies

MSc. Development Studies                                                                           

topic:  

What are the main characteristics of industrial development in developing societies since the Second World War? 

By: Khinh Sony Lee Ngo
Faculty of Social Science, South Bank University, London, , January 2000.         

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1. Introduction

     To begin with a definition: industrialisation is the process by which a non-industrialised country becomes an industrialised one. It is the general process by which economies and societies in which agriculture and the production of handicrafts predominate become transformed into economics and societies where manufacturing and related extractive industries are central (Jary, D & Jary, J, 1995). In other words, the extensive development of organised economic activity for the purpose of manufacture. Industrialisation is characterised by the transformation of primarily agrarian economy into a more specialised, capital-intensive economy. Thus industrialisation can mean simply an increased percentage of GDP (Gross Domestic Products) from industrial sector outputs, or, more fundamentally, a process by which production in the industrial sector becomes increasingly important compared with agricultural production; and a general change of scale, concentration towards the use of advanced technology and a complex division of labour in production with associated change in social structure and organisation.

Now I then move on to examine and discuss the main characteristics of industrial development in developing societies since the Second World War:

    The vast majority of developing countries or the so-called ‘Third World’ are agrarian societies in economic, social and cultural outlook. Agriculture, both subsistence and commercial, forms the principal economic activity in terms of the occupational distribution of the labour force, if not in terms of proportionate contributions to the gross national product. Farming is not only an occupation; it is a way of life for most people in Asia, Africa and Latin America. Nevertheless, the structure of agrarian systems and patterns of land ownership show great differences between, for example Latin America and Africa, but with Asian agrarian systems somewhat closer to those of Latin America in terms of patterns of land and ownership. However, there are substantial cultural differences which modify these similarities between Latin America and Asia.

It is in the relative importance of the manufacturing and service sectors that can describe the widest variation among developing nations. Most Latin American countries, having a longer history of independence and, in general, higher level of nation income than African and Asian nations, process more advanced industrial sectors. But in the 1970s and 1980s such countries such as Taiwan, South Korea, Hong Kong, Brazil and Singapore greatly accelerated the growth of their manufacturing outputs and are rapidly becoming industrialised states (Todaro, 1992). In terms of size India and China as two of the largest manufacturing sectors in the Third World, but this is nevertheless small in relation to its enormous rural population.

     The conventional grouping ‘developing countries’ is very heterogeneous, covering countries with very different population sizes, income levels, resource endowments, and political and social cultures. However, most developing countries are committed to transforming or changing their rural-based agricultural economies to urban-based industrial ones. There may be differences in level of industrialisation they wish to achieve, the speed at which they wish to industrialize, or in their industrialisation strategies, but nearly all of them are strongly committed to their goal of industrialisation.

Developing countries desire industrialisation because they realise that it is inextricably linked to development and that, historically, industrialisation has been the only path to development. Countries that are classed today as developed have all gone through an industrial revolution. Indeed, there is almost no country that one would be prepared to call ‘developed’ that has not gone through an industrial transformation

2. The historical dimensions of Third World industrialisation

     However, the current economic, social and political situation of developing countries cannot be properly understood without an adequate understanding of its historical background. Contemporary successes and failure of the Third World are deeply rooted in the historical evolution of these societies. Furthermore, the forces that shaped the Third World are still active, and they are powerful impediment to its fuller development.

A historical appreciation of the Third World is especially important because of the great chasm that divides it from the more wealthy, developed and industrialised countries is a relatively recent phenomenon. Many people, not exposed to history, are apt to forget this as they develop stereotypes of the Third World as poor, technologically backward and culturally inferior societies. The truth is that, until the onslaught of European Imperialism, these societies were culturally vibrant, economically wealthy and technologically advanced, in many cases more advanced than Europe itself. Specific cases can be singled out: the Aztec and Inca civilization of the Americas, India, China, Egypt, and the Muslim civilization that stretched from southern Spain to the Indian Ocean (Chandra, 1992).

While Europe was far behind some of these societies, it was Europe that evolved from feudalism to capitalism. This development was nascent in China and India, but these societies were never able fully to evolve to capitalism. The evolution of capitalism in Europe enabled it to develop an industrial, technological and intellectual base that was lacking in other societies. Capitalism also led to the industrial revolution in Britain in the late eighteenth and early nineteenth centuries, and this industrial revolution needed Germany and the United States. The industrial revolution needed overseas outlets for investment, overseas sources for it raw materials and overseas markets for its manufactured goods, and led to the overseas expansion of Europe. At the same time, this overseas expansion contributed to the success of the industrial revolution itself.

3. The Evolution of Developing Countries Industrial Policies

*Export processing Zones (EPZs)

** Import Substitution Orientation (IOS)

4. The Developing Countries Industrialisation

     Nonetheless, industrialisation in the developing countries is not a completely new phenomenon. In some countries it dates back to the early part of the twentieth century. Two world wars and the Great Depression, which disrupted international trade and the supply of manufactured goods from the industrial countries, boosted industrialisation in some parts of the Third World. Nevertheless, at the end of the Second World War most of the Third World, apart from Latin America, was still under the control of the colonial powers and remained predominantly agricultural.

     Yet, the process of industrialisation has varied greatly from region to region in the Third World, depending on the differences in the overall impact of colonialism and imperialism on their economies and societies, and more specifically on the volume and diversity of modern industry, modern infrastructure, skilled manpower and higher education from the early 1950s in Latin America and Asia, and the early 1960s in Africa. These reference points may appear somewhat by chance, but they have a certain validity: although most Latin American countries had already acquired formal political independence by the second haft of the nineteenth century, and in some of them, like Argentina, Brazil, Chile and Mexico, the process of industrialisation and modern infrastructure-building had gathered some momentum by the early 1930s. It was certainly not by accident that industrialisation had occurred in the 1930s in Latin America, but rather it was in response to the profound crisis of capitalism in the 1930s in Western Europe and the United States “the Great Depression” and the ensuing Second World War (1939-1945) cut down the resources and markets necessary for an expansion of industry and infrastructure in Latin America no less than in other regions of the Third World. Industrialisation and the response to the drastic fall in the region’s agricultural and mineral export earnings and the need for tighter control on imports. After the Second World War it became the central feature of development strategies industrialisation. Not surprisingly, after the experience of the Great Depression ‘export pessimism’ reigned and the prospects for increasing exports to the industrialised countries seemed bleak. If the Latin American were to grow, it was argued, they would have to produce manufactured goods (Jenkins, 1992)

     For the most countries of Developing World, many of them former colonial territories were independent after the Second World War, saw themselves as markedly different from the nations of Europe and North America in two central ways; – They were ‘poorer’ and ‘less’ industrialised; The way forward, in planning their own destinies, seemed to many to be the machine, the factory and the power station. Industrialisation was the way to a secure and less dependent future, to the creation of wealth and the removal of poverty.

     With decolonisation, newly independent countries in Africa and Asia took a similar view, and industrialisation spread. Specialisation in agriculture materials was identified with colonialism and backwardness; industrialisation with increased economic activity, productivity and increased standards of living. The need for political independence provided a further impetus to industrialisation.

     However, the initial optimism concerning both the possibilities and potential results of industrialisation proved exaggerated. The technological lead of the advanced industrialised meant that the new industries being set up in the developing countries had to be protected from competition from imports. It also meant that they were unable to compete in world markets with manufactured goods from developed countries, so that exports, which had played such an important part were experiences in the industrial revolution period in Western Europe, did not play a leading role. This form of industrialisation of developing countries replacing imported manufactured goods with locally produced goods came to be known as import substitution.

5. Import Substitution Industrialisation and Protectionism

     The drive for industrialisation in developing countries began with import-substitution industrialisation (ISI). Almost every developing country, including those now regarded as models of successful industrialisers, such as Brazil, Singapore and South Korea, used this strategy. ISI involved the local production of previously imported manufactured goods. Industrialisation in developing countries was given impetus by the breakdown in international trade during the Second World War, which necessitated some industrialisation in the colonies, by the depression of the 1930s in developed countries, and by the fluctuating or deteriorating prices of agricultural commodities (Chandra, 1992).

     There were many reasons why did developing countries adopt an import-substituting industrialisation strategy rather than producing for export; - First, post-colonial societies were acutely conscious of depending too much on their previous colonial powers; they wish to become self-sufficient. The ISI theories appeared to offer them the chance to reduce their dependence on developed countries by relying on domestic markets and building an indigenous technological capacity; - Second, export production was not feasible then because of the inability of developing countries to compete with established producers; - Third, and according to Chandra, ISI allowed developing countries to foster the growth of industrial activities by national entrepreneurs; - an export-oriented strategy would have necessarily involved extensive foreign ownership in manufacturing. In order to nurture industries, developing countries provided high levels of protection to domestic manufacturing; these included tariffs on overseas goods and licensing, with imports being allowed only to supplement domestic production. Protection accorded to industry was further enhanced through tough screening of foreign investment, thus limiting competition.

     Most developing countries were primary producers and the export of primary products was their major, often only, source of exchange needed to energize economic development. The import of manufactured goods from abroad not only limited this opportunity but also could, and often did, lead to crises in the balance of payments. Two concerted actions were open to countries in such situations. First industrial could be set up to produce goods at home replace some of those imported and, second, tariffs quotas and other measures taken, could be implemented to keep out a wide range of “non-essential” manufactured goods and at the same time protect the infant home industries. This need for protection has often been increased in developing countries because they have over-valued their currencies. This meant the imports appeared as particularly low-cost competitor to home products. It continued to be the case of all imported commodities not covered by the protective measures. These could include raw materials and components used in the manufacture of “inessential industries” and so their use would be encouraged. (Griffin and Enos, 1970), who take a jaundiced view of the efficacy of import-substitution, point out that in such situations home industries developed production techniques based upon imported materials with the result that a greater use is made of imported inputs. Protecting the balance of payments may result in both the development of “inessential industries” – (that is industries which are considered of low priority either in laying the foundations of economic development or characterised by a low industrial linkage propensity) and a greater use of imports. So while the output of home-produced goods increases, being based upon imports it uses exchange revenue and does much to defeat the purpose of import-substitution. They argue that most new industrial ventures in developing countries are markedly less efficient than their counterpart in the Industrial World. In consequence the ratio of inputs to outputs is greater and their use of the imported raw materials much more extravagant. The net result is that, in money terms, the import-substitution effect is very low (see also in Bernstein, 1973). There is another possible consequence. Devoting a great amount of investment capital to the import-substituting consumer goods industries means less is available to establish capital goods industries. If these basic industries does not exist or cannot expand, they are able neither to serve the import-substitute industries nor initiate the establishment of any others. Capital goods have, therefore, to be imported and increase still further import costs. It is true of course, that this investment in imported capital goods will, in the long run, help sustain output. Indeed it can be argue that is preferable to invest in capital goods industries and in manufacturing designed to produce competitive exports rather than to encourage a large domestic demand for consumer goods which, since it cannot be met adequately from home industries, will maintain a taste for imported items.

     In 1950s a large proportion of developing countries chose the path of import-substituting industrialisation and protectionism. Behind tariff barriers they further assisted the new home industries by granting them tax exemption and providing capital loan at low interest rates. In some countries the state was directly involved, in others private enterprises and in most a mix of the two. Protectionism it was felt would allow the new industries, with their inexperienced management and workforce, to establish themselves securely, iron out difficulties and become increasingly efficient so that they could eventually withstand the competition. This approach was adopted both by countries following the consumer-goods approach and by those taking the basic-industries road. Its effectiveness in allowing the development of efficiency proved to be far from unqualified success (Griffin and Enos, 1970). For example, according to Griffin and Enos, country like Ghana where in 1964, twenty-two out of thirty-one state industries not only failed to make a profit but achieved massive losses, and from country like Chile where the privately owned motor vehicle industry in the 1960s was grossly inefficient in it use of resources and from Pakistan where inefficiency was present in a large proportion of industries (Islam, 1967). The evidence appears to indicate a greater tendency to inefficiency in the consumer-goods sectors. It should be pointed out, however, that initial inefficiencies are to be expected; The question is the extent to which they are unduly prolonged by excessive protection. Continuing inefficiency and hence high unit costs together with an over-valued currency acts as a positive disincentive to the export of manufactures. The following analysed cited by Chenery (1979) demonstrated the negative effect of import-substitution policy:

Over the time these policies lead to relatively low levels of exports, diversion of resources from agriculture, and ultimately a slowdown in the growth of industry and of Gross National Product (GNP) as the possibilities for import substitution are progressively exhausted. Because of this market limit, the strategy of inward-looking development usually succeeds in eliminating the specialisation in primary production but not in achieving manufactured exports (Chenery, 1979).

     Clearly, the discrimination in favour of import substitution and against exports did not permit the development of manufactured exports in countries engaging in second-stage import substitution behind high protection. There were also adverse developments in primary exports as low prices for producers and consumers reduced the exportable surplus by discouraging production and encouraging consumption. In fact, rather than improvements in the external terms of trade that were supposed to result, turning the internal terms of trade against primary activities market shares were especially pronounced in cereals, meat, oilseeds, and nonferrous metals, benefiting developed countries, in particular, the United States, Canada, and Australia (Balassa, 1981)

     And according to Balassa, in several developing countries, the cost of protection is estimated to have reached 6-7 % of GNP. At the same time, there is evidence that the rate of growth of total factor productivity was lower in countries engaging in second-stage import substitution than in the industrial countries.

6. Industrialisation and structure change: Outward-Oriented Industrial Development Strategies

     The slowdown in economic growth that eventually resulted from the pursuit of an inward-oriented development strategy led to policy reform in several of the developing countries which were undertaken in the mid-sixties in Argentina, Brazil and Colombia, and in subsequent years in Mexico. The reforms generally involved providing subsidies to manufactured exports, reducing import protection, applying a system of ‘crawling pegs’, adopting positive real interest rates, and introducing greater realism in the pricing of public utilities (Balassa, 1981).

     Apart from the lack of biased against exports, countries applying outward-oriented development strategies generally had positive real interest rates, adopted realistic price for public utilities, reduced inter-industry differences in incentives, and provided for automaticity and stability in the incentive system. On the whole, these countries minimized price distortions and relied on the market mechanism for efficient resource allocation and rapid economic growth. An outward-oriented strategy also has been pursued in Korea, Singapore and Taiwan.

     Nevertheless, with the adoption of the ‘crawling peg’, the policy reform undertaken in the four Latin American countries imparted considerable stability to the incentive system. Also, discrimination against exports and against primary activities was reduced to a considerable extent which such discrimination persisted in countries that continued to apply policies of import substitution during the period until the oil crisis of 1973. Such was the case in India, Chile, and Uruguay (Balassa, 1981).

     In India, the introduction of selected export subsidies in the mid-sixties was far overshadowed by the continued use of import prohibitions and the controls imposed on investment; subsidies were also subject to complex regulations and discretionary decisions making. Chile traditionally had the highest level of import protection in Latin America and, after brief experimentation with import liberalization, import restriction were re-imposed in the early seventies. Protection levels were also high in Uruguay and little effort was made to promote export.

7. Export-oriented Industrialisation

     Nevertheless, import-substitution industrialisation led to rapid increases in industrial production in most developing countries as both local and foreign entrepreneurs took advantage of government financial incentives and market protection. However, ISI led to the creation of high-cost industrial because small domestic markets mean full economies of scale could not be realised. Initially, this was not the major problem because basic food and consumer goods had large markets, but it became a major problem as countries tried to proceed to the second round of import substitution involving more specialized goods, which needed large markets for efficient production. Costs also increased because of the absence of competition both from local producers and imports. In addition, ISI was seen to have failed to reduce external dependence, since in many instances raw materials were imported. More importantly, firms in developing countries had brought or licensed technology from developed countries. Finally, the heavy involvement of the state, particularly through state-owned enterprises SOEs, was proving to be a major drain on resources (Chandra, 1992). All these reasons have led to the adoption of export oriented industrial policies, particularly since the early 1960s, a small number of developing countries began successfully to produce industrial goods for export. Among the first to do so were the East Asian Newly Industrialising Countries (NICs): Hong Kong, Taiwan, Singapore and South Korea. With the exception of Hong Kong, these had all undergone some import-substituting industrialisation in the 1950s, but shifted the balance toward export promotion in the 1960s (Jenkins, 1992).

     In the late 1960s a number of other developing countries began to give more emphasis to export promotion, without abandoning the policy of import substitution and the protection given to domestic producers. In particular, a number of Latin American countries, including Brazil, as well as other Asian countries began giving incentives to manufactured exports at this time.

     In many developing countries growth of national income and manufacturing output since 1960 has been high by most standards of comparison; whether in relation to historical rates in these countries before 1960, in relation to rates currently achieved by developed economies, or in relation to the growth performance of the developed economies at earlier stages of their industrialisation. (Table 1, below) gives the growth of manufacturing production in developing countries, and developed countries for two periods after 1963. The impact of first oil shock is apparent since in both groups growth is lower after 1973, but in both periods developing countries achieved higher rate of growth of manufacturing; 8% per year 1963-73, and just under 5% 1973-83. It should be noted that at no stage in the 19^th and early-twentieth centuries did manufacturing output in any developed industrialised countries grow by around 8% per year for any sustained period (Bairoch, 1975). It is only in relation to the industrialised Centrally Planned Economies that the growth of developing countries appears less impressive:

Table 1: Annual average growth of manufacturing production by economic grouping:

Sources: United Nations Industrial Development Organisation (UNIDO) (1984), p. 8.

     However, as (Figure 1, below) indicates, the developing countries share of World industrial production remain roughly constant at about 10% until the later 1960s. It then showed an upward trend until 1980, increasing to more than 13%. Finally in the 1980 the share levelled off or even declined slightly after 1982 under the impact of the debt crisis.

     There is a similar pattern in the share of developing countries in exports of manufactured goods with an even more pronounced increase in share in the 1970s than for production. Unlike the case of production, the developing countries share of manufactured exports continue to increase even after 1982, and as a result, exceeded its share of world industrial production for the first time in 1983. This no doubt reflected the increased pressure on debtor countries to expand exports in order to service their debts, despite the relatively slow growth of world trade.

Figure 1: Third World share in World manufacturing value-added (MVA) and manufactured exports.

MVA is the value of sale minus the value of purchases of material inputs in manufacturing.

     One can also add a further qualification: that developing countries still remain very far from self-sufficient in manufactures. In the early 1980s, with the exception of South Korea, even the industrially successful NICs imported more manufactured goods from the developed economies than they exported to them. For developing countries as a group the trade deficit is far wider, with import of manufactures from developed economies nearly four times manufactured exports to these countries (UNIDO, 1985)

     Therefore, the general conclusion remains that from the available data it appears that significant degree of industrialisation has taken place in many developing countries since the 1960, although few as yet can be seen as “Industrialised”. Success in industrialisation has been distributed unevenly between countries, and in most instances in the short period of growth has not been enough to transform social and economic conditions within these countries. Most studies on poverty, for example, indicate a rising absolute number of people living in poverty since 1960, although their share in total population may have fallen (Adelman, 1986).

8. The level and structure of industrial development of developing countries – to the uneven of World’s industrial development

      No aspect of development planning in the developing World has been as widely adopted and persistent as industrialisation. Nearly all governments in developing countries, whether large or small, are fully committed to at least a certain levels and a degree of industrialisation to meet more adequately the rapidly rising aspirations of their burgeoning population. As the follow will demonstrates, while considerable progress has been made in developing world industrialisation, success has graced only a few countries, and the vast majority have made hardly any progress. For that I go on to examine the level of industrial development in to two ways:

a)     The first is to examine the importance of manufacturing production in terms of Gross Domestic Product (GDP) (see Table 2, below)

Table 2. The share of the manufacturing sector in GDP of developing countries

     Two main points emerge from this table: - First, manufacturing still constitutes only small part of the national economy for most developing countries; and, - second, there has not been a major change in the importance of manufacturing in the GDP of the developing countries from 1963 to 1983, in fact, the proportion changing by only 1.9 percentage points. By way of comparison, it should note that, in 1983, manufacturing in developed market economies contributed 25% of GDP. Clearly, therefore, that there has been little structural change in the economies of developing countries as a whole since the 1960-83.

   b) The second, equally important, index of developing countries industrial development is its share of global manufacturing value added and trade, which demonstrated in (figure 2, below): Developing countries still account for a very small proportion of world manufacturing production: it shows only 11.6 per cent in 1984 (GATT, 1988).   

     From the (figure 4, above): - It is clear that, although the developing countries share of global trade in manufactures remains small (a bit more than 14 per cent in 1987), there has been a rapid improvement in its manufacturing trading position: a change of 219 per cent between 1963 and 1987, albeit on small base (GATT, 1988).

     This difference in the manufacturing trade performance of developing countries and their share of global manufacturing value added is interesting – it points to the tendency among the developing countries toward export-oriented industrialisation – the over all industrial production in developing countries is not expanding much faster than in industrialised capitalist and centrally planned economies, but these countries are exporting more of their production (Chandra, 1992).

9. Regional Industrialisation - the uneven of industrial development in developing countries.

    As mentioned earlier in this essay, the conventional grouping “developing countries” is very heterogeneous, covering countries with very different population sizes, income levels and political and social cultures. In addition, the developing World comprises a diverse group of countries with different resource endowments, comparative advantages, international alliances and linkages. It is not surprising, then, that there have been marked contrasts in the performance of developing countries in industrialisation. (Table 3, 4, 5) below portray spatial diversity in manufacturing in the developing countries:

Source: World Bank (1987) World Development Report 1987, New York, Oxford University Press for the World Bank.

     As we can see, the very major contrast between the manufacturing performance of middle-income countries and low-income countries is that: The middle-income countries have consistently performed better in manufacturing production and exports. Not only this, but also that, the gap between the manufacturing performance of middle-and low-income countries has been widening. For example, whereas in 1965 the share of world manufacturing value added of the two groups was roughly equal, in 1985 the middle-income countries’ share was more than twice that of the low-income countries.

     Within the later, the least developed countries “tropical Africa” (in table 4, below) for example, have done particularly worse: their share of world manufacturing value added has remained unchanged in the last 25 years since 1960s, in fact, even it seem to be that its going to ‘shrink’ further.

Source: United Nations Conference on Trade and Development (UNCTAD) (1988) Protectionism and Structural Adjustment: Problems of Protectionism and Adjustment, New York, UNCTAD.

       (Table 5, above) bring about the regional contrast in industrialisation in developing countries: it showed that the industrial expansion since the Second World War and especially since 1960s has not been even across the whole of the Third World. However, it has been largely concentrated in a small group of newly industrialising countries NICs in Latin America (Brazil and Mexico) and the four tigers in Asia (Hong Kong, Singapore, Taiwan and South Korea). These together accounted for the whole of the increase in the Third World’s share of industrial output between the middle-1960s and the mid-1980s. The NICs also accounted for the entire increase in it share of manufactured exports during this period (OECD, 1988). In order words, the share of developing countries other than the NICs in World industrial production and in manufactured exports has actually fallen since the middle 1960s (see figure below).

10. Conclusion - Industrialisation and Underdevelopment - Developing Countries – Types of Problem Region

     Most, perhaps three-quarters, of the world’s population still lives in what are called the ‘developing’ countries. By this we mean countries in which by far the greater part of the people are desperately poor, their poverty generally being associated with some kind of farming carried on by traditional methods, far removed from modern techniques, and often in difficult climates, on difficult soils, and with small amounts of land in relation to the numbers of people trying to get a living from it (Brown & Burrows, 1979)

     Despite more than a second half of the twentieth century of industrial development since the end of the Second World War, today poverty is on the rise in developing countries, and as we are now in entering into the 21^st century, the condition of developing countries are:

Not only have consumption levels been too low to meet basic needs for more than a billion people, their growth has often been slow and interrupted by setbacks. In 70 countries with nearly a billion people consumption to day is lower than it was 25 years ago. It cannot be raised without accelerating economic growth – but growth has been failing many poor people and poor countries. Despite the spectacular growth of incomes for many people in Asia, only 21 developing countries worldwide achieved growth in GDP per capita of at least 3% each year between 1995 and 1997 – the rate needed to set a frame for reducing poverty.

(UNDP - Human Development Report, 1998 p.7)

     Many economic development experts (both modernisation and dependency theorists), politicians, and large segments of the general public became accustomed after 1945 to think of the world economically divided into two: There were industrialised societies and there were others – Underdeveloped or developing. A society either had it or did not. Other terms came into play. “Third World” was initially a Cold War concept which was coined by the Chinese during the later 1950s (Bhagavan, 1990) to identify societies that were neither permanently aligned with the West (capitalist democracy or the First World, which the economic, political and military alliances led by the United States America) or with the Soviet bloc (communism – the Second World), but because most of the Third World countries were also not completely industrialised, the term survived the Cold War and mean simply underdeveloped. In fact it is designed to identify the collective term for the countries of Africa, Asia and Latin America whose populations are poor, who agriculture, industry and infrastructure are backward, and where illiteracy, malnutrition, child mortality and ill-health are widespread, in comparison with the first and the second world. Finally, in the 1980s and the 1990s the North – South dualism became popular: The “North” mean industrial, the “South” mainly the non-industrial Southern Hemisphere but also North Hemisphere nations, like those on the Indian subcontinent, where great poverty persisted and industrialisation seemed to lag (Stearns, 1993).

       The dualistic distinction accurately described on definable gap: Some part of the world had experienced an industrial revolution or, like South Korea with the Aid of the United States America because of its importance geography location and due to it unique position (Nemani, 1999) were clearly in the process of experiencing one, and some parts had not.

South Korea was given preferential treatment by the USA and Japan, whose capital and technology streamed into South Korea during the 1960s and 1970s, laying the base for rapid industrialisation. In addition, successive US government actively promoted the import of South Korean goods into the US, allowing unrestricted and free entry.

                                                                                              (Bhagavan, 1990 p.89)

 Industrialise countries had, by definition, more manufacturing, more advanced technology, and (except for Eastern Europe) higher living standards on average than less industrial ones. Beyond this real but rather gross distinction, however, the “Third World” label was almost completely misleading in implying some uniform, barely changing condition for the majority of the world’s population that lived in “non-industrial” economies. Ironically, the distinction would have been considerably more valid in the two previous phases of the world industrial history, when a large number of societies developed very little factory industry of their own and seemed helpless to launch of process of significant change save insofar as this was forced on them by established industrial powers (Stearns, 1993) through the process of imperialism and colonialism in the past and advantages through the uneven of the “World System” (Rojas, 1998) as we know today: Bretton Woods institution, IMF, GATT, Uruguay Round, WTO, the Paris Club, London Club, etc… for these are political and economical industrial instruments which help them to become significant wealthy developed and industrialised which we in today called the ‘North’.

     The result as we can see in today at the end of the twentieth century, a glance at the distribution of world industry will immediately reveal the gap between the developed world and the Third World. “The developed capitalist countries, with a sixth of the world’s population, account for 64 per cent of the world manufacturing industry and consume more than haft the world’s energy. The Third World with almost four-fifths of the world’s people, produces only 14 per cent of its manufactures and consume only a quarter of world energy” (UNIDO, 1990).

     This division between an industrial centre and a less developed hinterland has characterised the world economy for over two hundred years, since the first industrial revolution in Britain in the late eighteenth century. For many development thinkers, this was seen as a mutually beneficial relationship whereby different countries specialised in producing those commodities which they were relatively good at producing, and everyone gained. Others however have emphasised the unequal relationship between centre and periphery by which the industrial countries were able to obtain the lion’s share of the benefits from international trade. For them this international division of labour was associated with colonialism and neo-colonialism which blocked the industrialisation of the periphery. 

     The emergence of the Third World, as colonies in Africa and Asia gained their independence after the Second World War, led to concerted efforts at industrialisation in the periphery. However, as the figure quoted above indicate, industrial production continues to be highly concentrated in the traditional industrial centres. Political independence has not transformed the international division of labour. At the same time, rapid industrial development has occurred in certain newly industrialising countries (NICs). Nevertheless, the countries of the developing world possess in varying degrees the factors of industrial production, raw materials, labour, energy resources and capital. These relative factor endowments will condition the form which their development path, including industrialisation, takes. These endowments will have been influenced by their particular historical experience, including colonialism. The many countries Developing World differ from each other not only in their natural resource endowments but also in their size, their access to capital from outside the country and in their political ideologies, social goals and attitudes to economic and social planning. The consequent opportunities, and problems, will thus vary considerably for industrialisation as for agricultural development and the second haft of the twentieth century have illustrated this./.

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