malvernmugadzikwa
Dr Tinashe Muzamhindo
NO two countries will ever have the same resources or intellectual, political and economic systems.
It is important for a state to identify its leading industries that best place it to enjoy unique competitive advantages over other nations.
The development of leading industries not only determines the priority of resource allocation and national policies but also builds a positive image, which becomes a country’s brand that can indirectly increase a nation’s competitiveness.
Determining the leading industry is based on sectors that absorb the most labour, have the largest share of national output and are capable of developing productive and progressive links with other industries.
The leading industry will play a major role as the prime mover in the economy and its competitive advantage is formed from the uniqueness of its products.
Competitive advantages originate from the abilities of a business to produce or to develop goods and services of superior quality with high efficiency and at lower costs, leading customers to respond with satisfaction.
Industrial growth strategy based on external capital
The attraction of external capital is realised when industrialists’ expectations are met by a country’s local conditions.
Industry falls into four categories — infrastructure-oriented industry; consumer market-oriented industry; labour-oriented industry; and resource-oriented industry.
Infrastructure-oriented industry
This is a type of industry that shows a strong tendency to be located in countries with specific infrastructure, such as a vast industrial area, abundant supply of industrial water or a high-speed traffic network.
This largely depends on imported resources or the mechanical industry that handles large and heavy goods. A typical example is iron and steel manufacturing.
Consumer market-oriented industry
This type of industry tends to be located in countries close to the product market, where there is huge consumption. The market largely varies. It can be categorised into markets requiring an urban function, population, industrial agglomeration and agricultural agglomeration.
Products requiring an urban population are related to knowledge, information and logistics.
Typical industries requiring an urban population are steel processing, publishing, electronic gadget manufacturing and construction. Most products requiring a huge population are those related to food, clothing, shelter, textile goods, furniture, fittings and timber.
Those requiring agricultural agglomeration are livestock feeds, fertiliser and cartons for packaging.
Several African countries are transitioning the structure of their economies from agricultural to manufacturing to promote the development of competitive industries.
Industrial development strategies are formulated to enable the manufacturing industry to foster a strong synergy among small, medium and large industries to carry out their role as a supply chain.
Industrial development strategies are generally divided into two: industrial development strategy through introducing external capital and industrial development strategy through utilising local resources.
The first strategy involves attracting and incentivising enterprises to set up factories in special economic zones that have the necessary infrastructure, traffic systems, water supply and electric power.
Efficient financial, legislative and tax systems are also required.
The second strategy generates value-added products and promotes industry through strategic utilisation of local resources such as minerals, traditional technology, culture and human resources.
Primary industries mainly produce agricultural, forestry and mining goods. Alternatively, they make materials for such production.
Industrial development relies on the use of local resources.
It is not easy to develop a new local industry in a country where people have a negative attitude towards the idea of introducing enterprises from outside.
It is also not possible to attract enterprises to a country where the new local industry is nipped off.
Labour-oriented industries
These have a strong tendency to be located in countries where labour is available at low wage rates. It is also common where a large labour base is available.
Examples of industries requiring a large labour base are steelmaking and mineral processing.
Resource-oriented industry
It is the type of industry that shows a strong tendency to be located in countries with vast mineral resources, agricultural products and forest products.
Typical industries of this type are cement production and agro-processing.
Interrelatedness of industries
Textile industries are attracted by an abundance of the labour force and low wages.
Formation of clusters of labour-intensive industries enables further development of infrastructure and location of related industries like logistics and services, followed by location of processing/assembling industries such as printing, fashion and machinery.
Research and development departments may be established in the factories and the country may progress to the recent trend of an information-oriented society and rapid development of information infrastructure, creating what can be called a “human resource-oriented industry”.
Software development and information service industries are typical examples.
The industry is rarely restricted by any factors, except the human resource and information infrastructure.
Therefore, it can be located anywhere but with predominance in urban areas since highly educated individuals are inclined to desire a high quality of life and modern services.
Dr Tinashe Eric Muzamhindo is the head of the Zimbabwe Institute of Strategic Thinking, which specialises in strategy and advisory. He can be contacted at: [email protected]
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