What Is Industrialization?

Industrialization

Investopedia / NoNo Flores

What Is Industrialization?

Industrialization is the process of transforming the economy of a nation or region from a focus on agriculture to a reliance on manufacturing. Mechanized methods of mass production are an essential component of this transition.

The positive characteristics of industrialization include economic growth, a more efficient division of labor, and a growth spurt in technological innovation.

Key Takeaways

  • Industrialization is a transformation away from an agricultural- or resource-based economy, toward an economy based on mechanized manufacturing.
  • Industrialization is usually associated with a greater average income and improved living standards.
  • Early industrialization occurred in Europe and North America during the 18th and 19th centuries, and later in other parts of the world.
  • Numerous strategies for industrialization have been pursued over time, with varying levels of success.
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Industrialization

Understanding Industrialization

Industrialization can be driven by a combination of factors including government policy, labor-saving inventions, entrepreneurial ambitions, and a demand for goods and services. It has profound implications for the population, causing a wave of migration from small farms to cities and towns where jobs can be found.

The most dramatic example in recent history is that of China, where government policy changes in the late 20th century led to the nation's transition from an economy based on subsistence farming to a global manufacturing powerhouse.

The Industrial Revolution

In the western world, Industrialization is most commonly associated with the Industrial Revolution in Europe that began in the late 18th century and the subsequent burst of industrialization in the U.S. through the 19th century.

In Europe, the era was characterized by a surge in local manufacturing of goods for export, made possible by a growing population of consumers. Great Britain played an outsized role in the process through technological innovations such as steam-powered machinery.

Industrialization quickly spread to the United States, the epicenter of laissez-faire capitalism. Inventions including the cotton mill and steam power made possible the establishment of mill towns such as Lowell, MA, and Pawtucket, RI.

Later Periods of Industrialization

World War II created an unprecedented demand for certain manufactured goods, leading to a buildup of production capacity. Post-war prosperity provided further catalysts that kept capacity utilization high and stimulated further growth.

Innovation, specialization, and wealth creation were the causes and effects of industrialization in this period.

The Asian Tigers

The late 20th century was marked by rapid industrialization in other parts of the world, notably Asia. The Asian Tigers (Hong Kong, South Korea, Taiwan, and Singapore) all participated in economic growth based on manufacturing for global customers.

China experienced its own industrial revolution after moving away from a strict communist model.

Effects of Industrialization

The innovations of the 19th century allowed for the mass production of commercial goods. As manufacturing activities grew, transportation, finance, and communications industries all expanded to support the new production capacity.

It also led to increased labor specialization and allowed cities to support larger populations, motivating a rapid demographic shift. People left rural areas in large numbers, seeking jobs in budding industries.

The Industrial Revolution led to unprecedented expansion in wealth and financial well-being for some. A larger middle class emerged as consumer demand for more goods and services grew and business creation boomed to feed the demand.

Modes of Industrialization

Different strategies and methods of industrialization have been followed over time, with varying degrees of success.

The Industrial Revolution in Europe and the United States initially took place under mercantilist and protectionist government policies that fostered the early growth of industry. These later adopted a laissez-faire or free-market approach that encouraged foreign trade, providing new outlets for industrial output.

In the post-Second World War era, developing nations across Latin America and Africa adopted a strategy of import-substituting industrialization, which involved protectionist barriers to trade coupled with direct subsidization or nationalization of domestic industries.

Nearly at the same time, parts of Europe and several East Asian economies pursued an alternative strategy of export-led growth. This strategy emphasized the deliberate pursuit of foreign trade to build exporting industries and depended in part on maintaining a weak currency to make exports more attractive to foreign buyers.

In general, export-led growth has outperformed import-substituting industrialization.

Socialist Industrialization

The socialist nations of the 20th century repeatedly embarked on centrally planned programs of industrialization. These include the first and second five-year plans in the Soviet Union and the Great Leap Forward in China.

While these efforts did re-orient the respective economies toward a more industrial base and an increase in output of industrial commodities, they were also accompanied by harsh government repression, deteriorating living and working conditions for workers, and even widespread starvation.

Examples of Industrialization

Industrialization is dependent on growth and innovation in at least four industries.

Manufacturing

Industrialization began with the invention of machines that greatly increased the manufacture of goods.

One such invention was the cotton gin, patented by Eli Whitney in 1794. Whether hand-cranked or steam-powered, the machine made it possible to greatly increase the speed with which cotton fluff could be separated from its seeds before being woven into cloth.

Another was the spinning jenny, a contraption that could multiply the number of spindles that a single spinner could handle at the same time to weave cotton or wool.

Perhaps the key invention of them all was the steam engine, an improved version of which was invented by Scottish engineer James Watt in 1763. Coal-powered steam engines drove the Industrial Revolution.

Mining

Many of the great inventions of the 19th century were developed to serve the mining industry.

  • The first working steam engine was devised to help remove flood water from coal and tin mines, where they often disrupted production.
  • The first use for the steam-powered locomotive was to transport ore from mines.
  • Dynamite was patented in 1867 and was first used to blow up rocks that obstructed mining activities.

Transportation

The 19th century was a period of unparalleled innovation in ways to transport goods from and to marketplaces. Among them:

  • The steam locomotive. The prototype, known as Stephenson's Rocket and introduced in 1829, served for the next 150 years as a template for the production of vehicles to haul raw materials and finished products.
  • The steamboat. The transport of goods and people was greatly expanded and speeded up with the introduction of the steamboat, which adapted steam technology to river craft.

Retailing

Before contactless payments and self-service checkouts, there were innovations in retailing that were designed to appeal to 19th century shoppers.

  • The department store. The first "store for everything" was John Wanamaker's, a six-story retail wonderland that rose in the heart of Philadelphia in 1887.
  • The Sears catalog. It wasn't the first catalog but it was the first to reach practically every consumer in America with a vast range of goods, from children's clothing to prefabricated houses.

How Does Industrialization Impact Society?

Industrialization creates jobs that draw people from farms and villages to cities where manufacturing takes place. However hard those jobs were, they were often preferable to the precarious existence of a small farming family.

The result is a new generation of urban consumers. Businesses of all kinds spring up to provide goods and services to these consumers. Over time, a larger middle class of artisans and shopkeepers emerges.

A large working class also emerges, and conditions were often much harsher for them. The evolution of labor unions is a direct result of the conditions faced by the powerless workers of the Industrial Revolution.

What Is Industrial Activity?

Industrial activity is any business process that is necessary to create a manufactured product. The activity may be related to the sourcing, processing, assembly, repair, or dismantling of a manufactured product.

What Is Non-Industrial?

Non-industrial may be most often seen in zoning regulations or discussions regarding zoning regulations.

This is a wide category that may include everything except manufacturing activities and manufacturing sourcing such as mining.

Non-industrial land use includes retail and services businesses, entertainment and recreation sites, parking lots, and residential neighborhoods.

The Bottom Line

For better or worse, industrialization created the modern world as we know it. You would have to search far and wide to find a place on Earth that has not been affected by industrialization, and those places probably will be soon.

The Industrial Revolution in Europe and the United States brought the world into the modern era. Other regions, particularly in Asia, made the transition later. The process continues into the 21st century.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Britannica. "Industrial Revolution."

  2. Library of Congress. "The Industrial Revolution in the United States."

  3. National Archives. "Eli Whitney's Patent for the Cotton Gin."

  4. HistoryHit. "10 Key Inventions During the Industrial Revolution."

  5. Vale. "5 innovations that appeared due to mining."

  6. National Geographic. "Steamboat."

  7. Entrepreneur. "Seven Innovators That Changed Retail Forever."

  8. History. "Labor Movement."

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