Industrialisation

The emerging significance of developing countries, which gathered momentum after 1980, is beginning to shift the balance of power in the world economy. It could lead to a profound transformation in the next 25 years. This unfolding reality must be situated in the historical perspective of de-industrialisation and industrialisation in the developing world over the past two centuries.

In the mid-18th century, similarities between Europe and Asia were far more significant than the differences. Indeed, demography, technology and institutions were broadly comparable. And, in 1750, Asia, Africa and Latin America accounted for almost three-fourths of manufacturing production in the world economy. Much of it was located in Asia with a concentration in China and India.

Profound influence

The Industrial Revolution in Britain during the late 18th century, which spread to Europe over the next 50 years, exercised a profound influence on the shape of things to come. Yet, in 1820, less than 200 years ago, Asia, Africa and Latin America still accounted for almost two-thirds of the world’s manufacturing production. China and India were the manufacturing hubs that contributed 50 per cent of world industrial production even in 1820.

The revolutionary changes in the methods of manufacturing unleashed by the Industrial Revolution transformed economic life, as industrialisation spread to Europe yielding sharp increases in productivity, output and incomes. It also led to the demise of traditional industries in Asia, particularly in China and India, reducing their skill levels and technological capabilities over time.

Between 1830 and 1913, the share of Asia, Africa and Latin America in world manufacturing production, attributable mostly to Asia, in particular China and India, collapsed from 60 per cent to 7.5 per cent, while the share of Europe, North America and Japan rose from 40 per cent to 92.5 per cent, to stay at these levels until 1950. The industrialisation of Western Europe and the de-industrialisation of Asia during the 19th century were two sides of the same coin.