Comment: Genesis of Modernization and Economic Development

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Lee Kuan Yew, transformed Singapore in a generation from a low income country to one of the wealthiest. Photo: Wikipedia.

Genesis of Modernization and Economic Development

[Letter From New York]

Part three: from raw materials to manufactured products

This is the third and final part of my essays on development--from hunting and gathering of wild animals and fruits and vegetables to domestication of both and then to their transformation.

In all the three stages, along the way, there was innovation, adaptation, experimentation and collaboration for better results.

For example, the hunters innovated new methods to kill animals in a shorter time. Collaboration was part of that innovation and adaptation.

Climatic changes and demographic pressure resulted in the domestication of wild animals and plants to meet the changing requirements.

In the third part we examine the transformation of agricultural produce and other raw materials into manufactured products and the interlinkages between agriculture and industry.

It was the revolutions in agriculture through innovations and experimentation that provided a base for industrialization. Industries processed agricultural produce like wool into textiles, maize into corn flakes and oil and hides and skins into shoes, bags and garments.

It was the labor released from agriculture in rural areas that fed into urban-based manufacturing enterprises. It was rural-based cottage operations that were converted into urban-based factories in the countries that industrialized.

In return, the urban-based industries produced cheaper and better goods for rural consumers and producers. Innovation and experimentation created forward and backward linkages between agriculture and industry and between rural and urban areas. Commerce and banking played significant roles in this process of economic and commercial activities and interactions.

In many developing countries, this symbiotic relationship was either neglected or rural areas and agriculture were exploited for the benefit of industries and urban areas. Or rural areas focused on the production and export of cheap raw materials in exchange for expensive manufactured products. In cases where import substitution industrialization took place, it caused more problems than it solved largely because it ignored the advantages of exporting manufactured products.

Those countries that failed to establish complementary links between agriculture and industry and production of manufactured products for export markets are stagnating and being left behind like hunters and gatherers who did not shift into the domestication of plants and animals in the earlier epochs.

One principal lesson is clear: change, be it political, social or economic, requires innovation, adaptation, experimentation and collaboration so that in the end everyone benefits.

When change is resisted by those who want to maintain the status quo of power and inequalities or exclusion in areas of human endeavor, ultimately change comes from the forces of resistance. History is full of examples of these rebellions and revolutions. The Magna Carta is a clear example of that effort and outcome.

As the Holiday Season is upon us, let me wish you all the best as we all reflect upon the past, the present, the future, and the transformations they portend.

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