Viewing page 27 of 82
This transcription has been completed. Contact us with corrections.
48 & 49 [[newspaper clipping]] Wed, June 12, Jlet. Post, 1991 PAGE 4 Rural industrialization vital to economic growth By Tulus Tambunan [[image]] Young workers in a rattan factory in Bodesari village, Cirebon, West Java, process rattan which later is used for making various kinds of furniture. (JP/T. Simawati Gunawan) ROTTERDAM (JP): Many experiences of the Third World countries in the process of rural industrialization provide an excellent area for analysis. This is especially true if one wants to assess which government policies have been effective in their objectives of achieving full and productive employment, and improvement in the standard of living among the population in rural areas. In the 1960s, many of these countries, including Indonesia, hardly had a rural manufacturing sector (nonfarm industrial activities). The emphasis was mostly either on agriculture or on the establishment of large-scale industries in urban areas or in big metropolitan cities. One of the reasons for the lack of industrialization in rural areas was caused by the political direction of that time. In the first years after independence, such as Indonesia's independence during the 1950s and early 1960s, industrialization and economic policy objectives in most Third World countries were primarily geared towards creating domestic large and modern industries. These were concentrated in very few urban areas or cities, [[emphasized]]and pursued a so-called import-substitution industrialization[[/emphasized]] strategy in order to induce high and rapid economic growth, and to create a large surplus of the national balance. All this provides the country with a good prestige toward the Western industrialized counties, and shows them that the new independent Third World countries can do the same or even do much better than their counterparts, the Western countries, and that they can develop by themselves. However, the governments of many Third World countries have experienced that the creation of large-scale, modern projects could no provide a high welfare standard for their own people. Rural backwardness, high unemployment and underemployment, over-population in big cities due to migrations from rural areas to the cities, and high foreign debts must be seen as a direct result of the strategy mentioned above. As a result of this, nonfarm activities, including the creation of labor-intensive and agricultural oriented manufacturing industries, in rural areas in the Third World countries have become an important issue. Since the mid-1970s it can clearly be seen that policy objectives in many Third World countries, eluding Indonesia, have started to prioritize rural development and industrialization. The meaning of rural industrialization includes the development and growth of all economic activities, involving the society as a whole giving every individual in the rural areas an opportunity to increase their income. The process of rural industrialization is not confined to the manufacturing sector only, but also covers agriculture, mining, infrastructure, construction and trade. Although the term industrialization seems to focus on industrialization activities, it should not emphasize industrial growth at the expense of other rural sectors, especially agriculture. Manufacturing and agriculture, especially in counties like Indonesia, India and China, can be two important leading sectors in the process of rural development and industrialization. It is not a question of concentrating resources and government incentives on manufacturing only, or on mining or on agriculture as alternatives. Rather, it mrs be realized that the mutually supportive interactions between all sectors or subsections of the rural economy should receive primary attention in any strategy or any economic development plans. Crucial Interlinkage of one sector or subsection with others are crucial for the promotion of industrialization and the process of development. Since the nature of rural development involves attention to all its sectors, it embraces a wide range of economic activities, including projects to raise agricultural and manufacturing outputs, to expand communications and to improve rural housing and infrastructure. In this multisectoral or subsectoral approach, industrialization is a means or rising productivity and ready incomes in all sectors (and individual workers in each sector) [[emphasized]]by providing forward and backward linkages between various markets for goods, services and factors of production.[[/emphasized]] The increase in per capita real incomes in rural areas is the best means to stop or at least to reduce, the over-flow of people to urban and big cities such as Jakarta and Surabaya in Indonesia. The success of Indonesia in exports depends, to an important extent, on the development and diversification of production in agriculture in particular. It also depends upon development of rural outputs in general, based on the law of comparative advantages. In a more general perspective, rural industrialization with optimal intersectoral links will facilitate social and economic development in rural areas where the majority of the people in the Third World countries live. Therefore, indirectly, rural industrialization become an essential stage for the creation of a strong national economic development and for the provision of a high social welfare for everyone, not only in rural but also in urban areas. However, we have to recognize that with rural development and industrialization, the primary objective is not to increase social welfare in rural areas in absolute terminology only, but it merely to decrease the widening gap, as what is evident now in Indonesia and many other Third World countries, between rural and urban areas, or between villages and metropolitan cities economies. In order to achieve this objective, rural economy cannot market any longer as the basis to service urban economy only. In other words, the classical thought, that agriculture supplies its surplus labor and food to urban industries and society, may not be acceptable any more. Rather, it is now realized more and more that urban and rural economies complement each other within the context of national economic development. In other words, Jakarta cannot survive without support from the economy of the remainder of the country. In turn, this support can only come if the rest of the country also develops. Objective In summary, the creation of highly productive rural employment, the generation of high rural (real) incomes, and the strengthening of the rural sectors, especially manufacturing and agriculture, are the major objectives of development and industrialization in rural economy. Rural development and industrialization is very important, not only for the rural areas themselves by certainly for the urban and big cities as well. It is evident and must be realized that high incidence of poverty and unemployment and other social and environmental problems in many metropolitan cities in the Third World countries, such as Jakarta, Mexico City, Lagos, Lima, Calcutta, and Bangkok are caused by economic backwardness in the surrounding rural areas. The problems in rural areas are also the problems of the big cities, and the solutions are not to be found in rural areas only, or in the big cities only, but in both areas. The factors affecting the process of development and industrialization in rural areas include the patter of interlinkages between the rural sectors or subsectors, the availability of raw materials, local entrepreneurs and other necessary inputs, the policy and strategy adopted by the government, and the linkages between rural and the other areas of the economy. In Indonesia, the majority of the country's population lives in rural areas, not in Jakarta or other big cities. It is therefore important to realize that the 'foundation' for a strong and successful and appropriate economic growth with high social value in Indonesia is indeed in the rural areas. This means that the weakness of rural economy means the weakness of the national economy. The weakness of rural economy will result in the emergence of a number of key economic problems, including the increase in mass poverty and unemployment and the progressive magnification of development and income inequalities among regions. The economic and social role of rural industrialization and development must not be underestimated by the success of overall development in Indonesia. Tulus Tambunan is a research fellow at the Center for Development Planning, Erasmus University, Rotterdam.
Transcription Notes:
spans pages 48 and 49
emphasis is made with a red/pink marker drawn vertically beside the lines
