Benefits of Industrialization

Book Chapter
8 December 2020

Lucian A. Msambichaka, John Kedi Mduma , Onesmo Selejio

Industrialization entails structural transformation of a traditional economy dominated by primary activities into a modern economy where high-productivity activities in manufacturing assume an important role. Invariably this process remains a defining feature of economic development. This definition suggests that economic growth and development requires shifting production factors from low-productivity to high- productivity activities that allow for learning, externalities and higher profits and wages. But this process is not spontaneous or automatic. What countries make matters for growth; and structural change is one of the main drivers and outcomes of development. This chapter argues why a country like Tanzania should embark into industrialization, and that such a shift must be incentivized through proactive and forward-looking industrial policy actions that strengthen organizational capabilities of firms and are important drivers of economic development. The arguments in this chapter are predicated on the growing consensus that a dynamic private sector plays a crucial role in an economic development process as it is an engine of investment, innovation, and growth; and offers an effective way of creating employment, incomes, and prosperity. The benefits of industrialization and development of a manufacturing sector are argued for in the context of new challenges facing industrial policy and integration into global value-chains, the accelerating pace of technological change, youth budge and the risk of jobless growth, adequate systems of industrial financing, etc. The key considerations for making giant steps towards industrialization benefits existing for Tanzania are provided.

Publication reference
Lucian A. Msambichaka, John Kedi Mduma and Onesmo Selejio (2020). "Benefits of Industrialization". Fast-tracking Industrialization in Tanzania: The ‘Must-do’ Actions, Dar es Salaam University Press (DUP),
Publication | 22 March 2021