The concept of economic growth and development is pertinent in the context of low income counties such as the Sub Saharan African countries and South Asian nations. These low income countries usually have low life expectancy, weak labour force, poor health care, high birth rates, extreme income inequality, and gross inequity in income distribution. They are further characterized by a weak private sector, high poverty levels, inflation, bloated government expenditure and government corruption.

Economic development is a real process involving real people, real products and the government. So what exactly do the processes of industrialization and modernization mean and what do they accomplish in developing countries?

Simply, industrialization serves the process of modernization, the two processes together constitute economic development.

      Economic development = industrialization + modernization

First let’s understand the meaning of modernization within this context. Modernization is the gradual accumulation of Housing capital, Public infrastructure capital and non-Industrial business capital, which involves the introduction of technology into, and the expansion of, all traditional economic activities in both scope and size. The term ‘modernization’ has a definite and useful meaning to it. It connotes the idea of installation of materials, product machinery and equipment—all supplied from heavy industry, to perform traditional activities in the modern form.

Heavy industry supplies materials such as cement, glass, steel, etc. and machines such as cranes, excavators, bulldozers, etc. for performing construction activity. Heavy industry supplies product machinery such as textile machinery to perform light industry manufacturing of textiles; supplies pulp and papermaking machinery to perform light industry manufacturing of paper and paperboard; supplies power generation machinery such as boilers, turbines and electric generators to enable electricity generation in power plants (utilities); supplies fertilizers and farm machinery to produce agricultural output.

Accordingly, heavy industry serves to modernize the traditional activities of a nation. The product output coming out of a nation’s heavy industry is in and of itself not useful. It is when that product (machinery or equipment) enables men to perform such traditional activities that make it useful and productive; hence the better the product of heavy industry, the better will be the provision and performance of traditional activities including all kinds of services activities. The economy during this process transitions from one that is composed of purely traditional activities to one that involves traditional activities performed with the latest technology and also a novel industry that produces that technology.