The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Amiya Kumar Bagchi
Reference work entry


Industrialization is a process. The following are essential characteristics of an unambiguous industrialization process. First, the proportion of the national (or territorial) income derived from manufacturing activities and from secondary industry in general goes up, except perhaps for cyclical interruptions. Secondly, the proportion of the working population engaged in manufacturing and secondary industry in general also shows a rising trend. While these two ratios are increasing, the income per head of the population also goes up except again for temporary interruptions (Datta 1952; Kuznets 1966, 1971; Sutcliffe 1971). There are cases in which the per capita income goes up, income derived from secondary industry per head of the population also goes up, but there may be little growth either in the proportion of income derived from the secondary sector or in the ratio of the working force engaged in that sector. Such cases, except when they are observed for a highly developed country, not only make the unambiguous labelling of the process of development as industrialization difficult; they also pose questions regarding the sustainability of the process that has been observed.

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  • Amiya Kumar Bagchi
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