Introduction

Industrialization is an effective instrument of economic growth and welfare. Manufacturing activity has a high potential for contributing to the process of rapid economic development and economic growth. In fact, the development of a country is taken to be synonymous with industrial development. It is believed that the dynamic progress of an economy ultimately depends on modern industrialization.

Raising People's Incomes:

Industrialization generally provides a firm basis for a rapid and continuous increase in the incomes of the people. This is because unlike agriculture, industries mainly depend upon human efforts rather than on the vagaries of nature. It has been empirically observed that there is a close correspondence between high level of per capita income and industrial development, industrially developed economies have much higher per capita income than the industrially less developed economics. According to the Word Development Report the average per capital income of less developed economies like India is just $1180 while that of developed economies like USA it is$ 46360.

High Potential For Growth:

It has been argued that industrial sector holdsÂ· the key (or a rapid growth of an economy and that if the less developed economies have to grow, they should go for industrialization on a massive scale. This is because manufacturing activity alone has a large potential for growth-Â (a) When industrial expand, they create external economies is the form of reduced costs, and expanded facilities. (b) The demand elasticties of industrial products, both price wise and income wise are very high, so that that with falling prices and rising incomes, demand expands tremendously providing large base for an output expansion.

Meeting-Over-Increasing Demand:

As per capita income increases, the demand for food-items does not increase proportionately but the demand for industrial products increases more that proportionately. This demand can be met by increased industrial production only.