What Is Industrialization?

Industrialization is the process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods. Individual manual labor is often replaced by mechanized mass production, and craftsmen are replaced by assembly lines. Characteristics of industrialization include economic growth, more efficient division of labor, and the use of technological innovation to solve problems as opposed to dependency on conditions outside human control.

Key Takeaways

  • Industrialization is a transformation away from an agricultural- or resource-based economy, toward an economy based on mass manufacturing.
  • Industrialization is usually associated with increases in total income and living standards in a society.
  • 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 in different countries over time, with varying levels of success.
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Industrialization

Understanding Industrialization

Industrialization is most commonly associated with the European Industrial Revolution of the late 18th and early 19th centuries. Industrialization also occurred in the United States between the 1880s and the Great Depression. The onset of the Second World War also led to a great deal of industrialization, which resulted in the growth and development of large urban centers and suburbs. Industrialization is an outgrowth of capitalism, and its effects on society are still undetermined to some extent; however, it has resulted in a lower birthrate and a higher average income.

Industrial Revolution

The Industrial Revolution traces its roots to the late 18th century in Britain. Prior to the proliferation of industrial manufacturing facilities, fabrication and processing were generally carried out by hand in people's homes. The steam engine was a key invention, as it allowed for many different types of machinery. Growth of the metals and textiles industries allowed for the mass production of basic personal and commercial goods. As manufacturing activities grew, transportation, finance, and communications industries expanded to support the new productive capacities.

The Industrial Revolution led to unprecedented expansion in wealth and financial well being for some. 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 potential fortunes in budding industries. The revolution quickly spread beyond Britain, with manufacturing centers being established in continental Europe and the United States.

Later Periods of Industrialization

World War II created unprecedented demand for certain manufactured goods, leading to a buildup of productive capacity. After the war, reconstruction in Europe occurred alongside a massive population expansion in North America. This provided further catalysts that kept capacity utilization high and stimulated further growth of industrial activity. Innovation, specialization, and wealth creation were causes and effects of industrialization in this period.

The late 20th century was noteworthy for rapid industrialization in other parts of the world, notably East Asia. The Asian Tigers of Hong Kong, South Korea, Taiwan, and Singapore are well known for economic growth that altered those economies. China famously experienced its own industrial revolution after moving toward a more mixed economy and away from heavy central planning.

Modes of Industrialization

Different strategies and methods of industrialization have been followed at different times and places with varying degrees of success.

The Industrial Revolution in Europe and the United States initially took place under generally mercantilist and protectionist government policies that fostered the early growth of industry but was later associated with a more laissez-faire or free market approach that opened markets to foreign trade as an outlet 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 deliberate pursuit of foreign trade to build exporting industries, and partly depended on maintaining a weak currency to make exports more attractive to foreign buyers. In general, export-led growth has outperformed import substituting industrialization.

Lastly, socialist nations of the 20th century repeatedly embarked on various deliberate, centrally planned programs of industrialization almost entirely independent of either domestic or foreign trade markets. 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. (For related reading, see "Is Industrialization Good for the Economy?")