THE INDUSTRIAL REVOLUTION

TITLE: INDUSTRIAL REVOLUTION NAME: S.V. DE SILVA REGISTRATION NUMBER: 2014/BA/19523 MODULE CODE: ECN 1204 MODULE NAME: WORLD ECONOMIC DEVELOPMENT AND SRI LANKA SEMESTER II DEPARTMENT OF ECONOMICS FACULTY OF ARTS UNIVERSITY OF COLOMBO ACKNOWLEDGEMENT I wish to acknowledge the following individuals for their support extended to me in the compilation of this paper: Professor Sirimal Abeyaratne, Professor Amala De Silva, Rev. Professor W. Wimalaratana of the Economics Department (Faculty of Arts-UOC) for the support and guidance given to me; Mr. Dulip Luckshan Fernando, for his dedicated teaching and advice in guiding me into the sphere of Economics during my Advanced Level; To my colleagues and friends who gave their time and effort in proofreading this manuscript; And to my parents who always supported me in my endeavors. ABSTRACT The world we live in today is a result of the industrial revolution which originated in Britain during the early 18th century. This process originated in the cotton industry and eventually spread to the cottage based manufacturing sectors that existed during that time; leading to great strides in the development of large scale industries through the mechanization of the production process. This provided vast quantities of final products for consumption purposes as well as industrial products which became inputs for other industrial and consumer goods. Some critics assert that the world is still in the industrialization “gear” with digital technology being its principle focus. Thus industrialization is not a revolution per-say but an ongoing process without a proper defining date or a distinct denouement in sight. As long as creativity prevails, the vital feature of innovation – a process driven by the industrial revolution - will continue to persist. This article briefly runs through some of the reasons as to why the industrial revolution took place in Britain and its short term and long term economic effects on British life in general. In the analysis of the consequences of the industrial revolution, focus will be laid on the economic sphere and I intend to provide a brief perspective of the micro-economic and macro-economic dynamics and its implications without explicitly differentiating both. This will be followed by a brief outline of the lessons that developing countries can learn from the industrial revolution of 18-19th century Britain. As the article points out, there are many lessons that developing countries can learn and incorporate, to better integrate its domestic economies towards increased industrialization. Attention will then be given to the specific case study of Sri Lanka and the lessons that it as a developing nation at present can learn from this process. In highlighting the lessons Sri Lanka can learn; I have paid greater attention on the country’s specific needs as well as addressing some of the burdening issues within the industrial sector of the country. Hence, this article firstly, pays attention to the broad aspects that led to the industrial revolution in Britain and its economic impacts. It then moves to direct attention towards the lessons that developing countries across the world can understand and adapt from the industrial revolution in Britain. Lastly, emphasis will be on transcribing the lessons that Sri Lanka can learn from the industrial revolution of Britain, as Sri Lanka is at present, on the path to increasing its level of industrial development. CONTENTS Background Contributory factors Availability of resources in Britain The Agricultural Revolution Innovations Mercantilism created a rich middle class that was ready to spend money on creating large factories Stable political conditions and the presence of colonies Economic consequences Transformation of labor intensive production to capital intensive production Economies of scale and lower cost of production Rise in productivity and increased exportation to colonies Development of towns and cities along with the increased use of money Emergence of a capitalist class Creation of a demand based economy Labor became a commodity; it was bought and sold Lessons for developing countries Attempt to maintain equity in income distribution Urbanization and handling the migrating population Being sensitive to laborer needs and reducing the influence of trade unions Environment pollution Lessons for Sri Lanka Diversifying primary and tertiary production Providing markets for agriculture and services Expand output levels in key industries that export products Apply high quality control mechanisms to ensure that exports are always of good quality Ensuring efficiency wages to a select set of industries that are engaged in exporting goods to foreign countries to ensure that continuity in production remains Ensuring efficient use of nonrenewable resources Utilizing in-exhaustible energy resources in the production process Ensure urbanization without destroying the environment Ensuring that labor exploitation does not take place Conclusions BACKGROUND The Industrial revolution, often referred to as the take-off period in Rostov’s growth model, essentially denotes the transformation of medieval cottage based manufacturing to large scale capitalist industries. This encompasses the replacement of labor intensive production techniques with machine and technology intensive production methods. It not only involved the shift of the manufacturing methods, technology and tools that were utilized but also a shift from a rural based subsistence production format to a urban centered consumer environment led by aggregate demand. The agricultural revolution in Britain had direct impacts on the industrial revolution that followed. In fact, one might say that some of the consequences of the agricultural revolution became the reasons for the industrial revolution in Britain. The agricultural revolution led to the transformation of the small scale subsistence peasant agricultural sector to a capitalist large scale agricultural sector. Some of the reasons for the agricultural revolution such as the enclosure movement (see annex 1 for further information) had direct implications upon the industrial revolution. It freed a lot of excess labor and allowed previous small scale farmers to launch into the unchartered waters of large scale agricultural production. This helped the farmers of large lands to increase their profits, which they reinvested into the economy leading to increased investments and technological inventions. “New tools, fertilizers and harvesting techniques were introduced, resulting in increased productivity and agricultural prosperity…..Geographical specialization of products was (also) established, with south-eastern England specializing in grain, for example, and Scotland or Leicestershire in breeding cattle and sheep” The Industrial Revolution and the changing face of Britain. (n.d.). Retrieved December 24, 2015, from https://www.britishmuseum.org/research/publications/online_research_catalogues/paper_money/paper_money_of_england__wales/the_industrial_revolution.aspx Moreover, inter-village trade did not exist over long distances since roads were often poorly built or at times non-existent. Hence traveling was risky and inconvenient. As a result, products were produced in a small scale to satisfy the basic needs of the village or shire. The need for large scale production of goods arose due to the population increase (a result of the agricultural revolution) in addition to the rising incomes of farmers (due to the enclosure movement started during the agricultural revolution) as well as the establishment of foreign colonies that served as resource – acquiring regions as well as regions for the distribution of the finished industrial product from the home colony. CONTRIBUTORY FACTORS FOR THE INDUSTRIAL REVOLUTION IN BRITAIN. Availability of resources in Britain Essential and indispensible resources were abundant in Britain and these resources were utilized for the industrial revolution. Some of these vital resources were coal, iron ore, (see figure 1 in Annex) lead, copper, tin, limestone and water power. Traditional sources like firewood were also utilized during this period of time. The availability of such resources greatly helped in reducing costs involved in the purchasing of resources and transporting of them from foreign countries; thereby enabling firms to acquire resources that were essential to large scale production with minimum cost. “Coal was not just abundant in Britain–it was cheap, at least in northern and western Britain on or near the coal fields.” C. Allen, R. (2006). The British Industrial Revolution in Global Perspective: How Created The Commerce Industrial Revolution and Modern Economic Growth. Retrieved December 24, 2015, from http://www.nuffield.ox.ac.uk/users/allen/unpublished/econinvent-3.pdf. Before long coal and iron ore became the lifeblood of the Industrial revolution. The metallurgy industries facilitated the production of large scale iron and other element based goods which became inputs for larger industries like ship-building. The availability of such resources also facilitated the creation of new inventions which required the existence of natural resources such as iron and water power. The availability of such resources ensured the sustenance of the initial boost of industrial production. This helped in the production of a surplus output that was exported to earn higher profits. The Agricultural Revolution The Agriculture Revolution led to many groundbreaking methods of farming. Together with the enclosure movement - which required less people using more capital intensive production – agricultural production became more efficient and made more profit for the property owner. Inventions related to agricultural productivity such as the seed drill by Jethro Tull and Lord Townshend’s method of crop rotation that kept the soil nutrients rich for farming all year were important improvements in this regard. Animal breeders bred livestock with certain qualities to make stronger, healthier, fertile animals. For example, only the sheep with the best wool and other important traits would be bred and eventually all the sheep would have these good traits. All these factors led to increased productivity with lesser use of labor inputs, freeing a lot of labor from the agricultural sector. Many farmers were put out of work and had to go to the cities to find employment. There was also a population growth in Great Britain as well and consequently the excess labor force was absorbed by factories that were newly created (See annex 2 for more information on population growth in Britain). Thus factories continued to grow and expand their production base. Adapted from: Yavuz, P. (n.d.). The Industrial Revolution and Consequences. Retrieved December 24, 2015, from https://www.yeditepe.edu.tr/dotAsset/74101.pdf Innovations Innovations were among the key drivers for the industrial revolution. Some historians denote the emergence of innovations from the time of the renaissance but most economists consider new and improved innovations to have started from the agricultural revolution and moved on to the industrial sector with the advent of time. For example the cotton industry; which was the first industry that modernized during this time saw many new inventions being introduced. In the course of the 18th century; James Hargreaves’ Spinning Jenny, Richard Arkwright's Water Frame and Samuel Crompton's Mule (also a spinning machine) played an important role in speeding up the production process and increasing net output and productivity levels. Many of the inventions related to transportation were powered by James Watt's steam engines. Thus, “Each invention spawned new technological developments in related fields.” (n.d.). Retrieved December 24, 2015, from http://www.bbc.co.uk/bitesize/ks3/history/industrial_era/the_industrial_revolution/revision/9 Likewise, “Abraham Darby smelted iron using coke (1709), Henry Cort's puddling process made wrought iron (1784), and Henry Bessemer's Bessemer converter (1856) and the Gilchrist-Thomas process (1879) made steel…..Production of 'pig' iron increased 30-fold in the century 1815‒1914.” Ladenburg, T. (n.d.). Industrial revolution. Retrieved December 24, 2015, from http://www digitalhistory.uh.edu.industrial-revolution.html Innovations and research activities to enhance production levels became the sole focus of many inventors during this time. As more and more capital came to be used in the production process, the production process itself became capital intensive. Labor began to be more specialized in performing specific and fixed tasks in a production line instead of performing multiple tasks in the production of a good. Thus innovations saved time, were more efficient and produced higher quality products resulting in greater profits for the owners of factories. These profits were reinvested in the business to further expand production levels and factories. Innovations related to transport such as the steam boat and steam engine spurred internal trade. Better and improved ship building, with the use of iron and other metals, enabled better access to colonies. Inventions related to roads such as the mechadamization process also greatly helped the facilitation of better internal trade within the country. (See figure 3 in annex) Innovations were not simply part of one industry, be it textile or transport. Innovations were embraced as a wholesome new way of improving the output of different types of goods. As each of the varied industries began to improve on existing inventions and create new inventions the process of industrialization received a great boost. Mercantilism created a rich middle class that was ready to spend money on creating large factories. Mercantilism (see annex 3 for further information on mercantilism) had created a rich middle class that was set on the desire to expand their profits. As the population grew, the middle class saw an opportunity to increase their profits, due to the rapid rise in demands for goods. Thus they increased the use of capital goods to enhance the levels of production. This rich middle class which had emerged with the onset of mercantilism spent their profits on large scale factories which produced goods in large quantities. Indeed, if it were not for these investments, the industrialization process may not have taken place. Thus the presence of this class of individuals who invested in mass production of goods by means of a factory system crucially empowered the birth of the industrial revolution. Stable political conditions and the presence of colonies. During the 17th and 18th century the political condition in Britain was stable and relatively peaceful. There wasn’t any political upheaval as in France or Italy and people in the United Kingdom enjoyed the tranquil environment of a peaceful administration. These stable political conditions made Britain a relative safe-haven for investments in the production and manufacturing field. Labor laws were not as hard and wages were relatively a minor burden to factory owners in comparison to the rest of Europe. Adapted from: Resendez, L., Alvarado, R., & Powers, P. (2012, December 9). Research Paper. Retrieved December 24, 2015, from http://industrialrevolutionnhdproject.weebly.com/research-paper.html Moreover the concept of “Laissez-faire” introduced by Adam Smith encouraged less interference by the government and allowed private investors and factory owners to carry out their production activities relatively unhindered. This system helped the economy of the country grow but harmed the workers because they were paid extremely low wages and had to face appalling working conditions in the factories. The presence of colonies facilitated the industrial revolution because they became sources of raw materials for the British production base. Colonial subservience to their ‘masters’ allowed nations such as Britain to impose their finished products, thereby ensuring that all of their excess production was consumed. Colonial powers also earned a profit by producing goods at lower costs (due to the presence of resource rich colonies) and sold all their goods to the same colonies that lacked the industrial development needed to start industries of their own to satisfy local needs. Thus the presence of colonies was extremely beneficial in the long term industrial development of Britain. ECONOMIC CONSEQUENCES OF THE INDUSTRIAL REVOLUTION ON BRITAIN Transformation of labor intensive production to capital intensive production. Hitherto much of the production of goods in the United Kingdom was based on labor intensive production, generally involving small scale cottage industries. For example a sickle, an implement necessary for agricultural activities was forged in small blacksmiths/forges. As demand for goods increased and population rose, the need for sickles rose to a level above the level that the small blacksmiths could supply. Hence production was carried out in large factories with huge furnaces which involved less labor to produce a higher quantity of sickles in a reduced amount of time. “Making things by hand and getting the materials yourself were time consuming. It took away time from actually making the product, and so it restricted you from making more quantities. This meant you were going to make less money. The creation of the assembly line (by Henry Ford) was (also) a major event in the Industrial Revolution.” Resendez, L., Alvarado, R., & Powers, P. (2012, September 9). Research Paper. Retrieved January 2, 2016, from http://industrialrevolutionnhdproject.weebly.com/research-paper.html This led to increased division of labor and specialization. This feature was common in every industry during this time and it became one of the most significant features of the industrial revolution in Britain and beyond. Economies of scale and lower cost of production. With the increased use of capital goods in the production process economies of scale began to emerge (See annex 4 for information on the term economies of scale). Economies of scale led to the decrease of average cost of production, increased avenues for division of labor, better products catering to expanding markets, higher profits, higher savings and invariably higher investments into the economy. Thus economies of scale led to higher quality products, a higher quantity of products as well as an increased continuity of products onto the market. Moreover, with the passage of time investments began to flow to the primary and tertiary sectors as well, thereby driving a growth in the entire economy. Rise in productivity and increased exports to colonies. The increase in productivity is due to the use of capital goods in the production process as well as the creation of large scale factories. The consequent rise in productivity led to many benefits including the trend towards economies of scale. (See annex figure 4 for rise in productivity from 1780 to 1860) In addition, the existence of colonies allowed Britain to easily access the raw materials that were unavailable in England and sell the final products to the colony. Through this process Britain was able to increase its profit significantly. However, output from the surplus production was given to unknown consumers across regional and national boundaries. Earlier, during the feudal system, the producer had a direct relationship with the consumer but now the relationship changed to one where the producer produces goods for consumers whom he/she has no contact with. Development of towns and cities along with the increased use of money. “The growing volume of energy provided by coal, coke, fire and steam harnessed to speed up production across an ever widening range of manufacturing processes (brewing, printing, spinning, weaving, pumping, smelting, rolling, forging, cutting, grinding) impressed visitor after visitor and gave rise to numerous references to British industry as the ‘Empire of Vulcan’. As travellers, Europeans could hardly fail to appreciate the potential of moving people and freight speedily, cheaply and comfortably by railways - linking city to city, town to countryside and integrating markets.” Riello, G., & K. O’Brien, P. (2004, May 1). Reconstructing the Industrial Revolution: Analyses, Perceptions and Conceptions of Britain’s Precocious Transition to Europe’s First Industrial Society. Retrieved December 24, 2015, from http://www.lse.ac.uk/economicHistory/pdf/WP8404.pdf Pg17 Consequently the development of towns saw increased facilities being centered on specific areas. Towns such as Liverpool, Dover, Manchester and London besides the Thames River saw increased trading activities and higher standards of living but without proper equity in the income distribution. Soon the major towns of England became flooded with middle class individuals looking to settle down and expand their commercial reach to the rest of the world and also with lower class workers who were searching for a bare minimum income to survive. Emergence of a capitalist class One of the negativities of the industrial revolution was the division of society into two clearly demarcated lines of rich and poor. Nevertheless, the emergence of a rich capitalist class had direct positive implications on the development process during this period of time. This class engaged in investing their income towards the creation of large scale factories in order to satisfy the demands of the population and thereby fill a niche market that could no longer be filled by the small scale cottage based industries. Eventually the economy was able to produce and manufacture at a higher level of equilibrium than was previously unattainable. Thus higher production output, higher productivity, and greater incomes led to higher standards of living and increased consumption of consumer luxuries by the rich middle class. Moreover as the rich middle class established their firms and industries in towns and other heavily industrialized areas; the level of efficiency in production rose alongside the rise of infrastructurally developed cities. Creation of a demand based economy. The creation of a demand based economy was also an outcome of the industrial revolution. This was because much of the production activities were at such a great level that business which could not stock their produce for long periods of time were heavily dependent on the existing levels of demand. This demand centered economic production when carried out on a large scale resulted in the economy sometimes facing large booms and depressions. Moreover it also led to international economic dependence. This was due to the reliance that Britain had for the raw materials of their colonies. Figure 6 (in Annex) clearly exemplifies one part of this broad picture. The image denotes the reliance that India had on British exports of finished garment products. Likewise Britain was also dependent on raw cotton imports from both India and the colony of the United States of America. Labor became a commodity; it was bought and sold. During the feudal society labor was connected to land through tradition, custom and law. However the relationship between land and labor shifted during this time. A laborer was relegated to a position whereby he/she became a commodity which was bought and sold by rich factory owners. There was no employment security because; if demand was to shrink then the chances of worker layoffs/downsizing would rise exponentially. This uncertainty also led workers to undersell themselves to guarantee a job in a factory and they often migrated to squalid overpopulated towns. “Between 1500 and 1800, the fraction of the English population living in settlements of more than 10,000 people increased from 7% to 29%. The share of the workforce in agriculture dropped from about 75% to 35%. Only the Low Countries, whose economies were also oriented to international trade, experienced similarly sweeping structural transformations.” . C. Allen, R. (2006). The British Industrial Revolution in Global Perspective: How Created The Commerce Industrial Revolution and Modern Economic Growth. Retrieved December 24, 2015, from http://www.nuffield.ox.ac.uk/users/allen/unpublished/econinvent-3.pdf . pg. 7 Moreover an added disquieting trend was the increase of child laborers during this period. Factory owners were able to provide lower wages and by this means increase their personal profits by employing child laborers. Although this ensured that families received an additional source of income the benefit in relation to the cost of destroying their childhood as well as disrupting their education was greatly detrimental on society in the long term. “The earnings of the workmen in the manufacture are various…..a boy of 10 or 12 years, 2s. 6d. to 3s. a week; a woman from 4s. to 10s. a week, average about 6s.; men from 10s. to 25s. a week, and some much higher; colliers earn yet more. These are immense wages, when it is considered that the whole family is sure of constant steady employment; indeed they are so great that I am inclined to think labour higher at Birmingham than in any other place in Europe: a most curious circumstance for the politician to reflect on, and which shews of how little effect to manufactures is cheap labour, for here is the most flourishing fabric that was perhaps ever known” Arthur Young, Tours in England and Wales: London School of Economics Reprints, XIV, pp. 255-258; in A. Aspinall and E. Anthony Smith, eds., English Historical Documents, XI, 1783-1832, New York: Oxford University Press, 1959, pp. 523-24. These were some of the major economic consequences of the industrial revolution on Britain. LESSONS FOR DEVELOPING COUNTRIES Endeavor to maintain equity in income distribution. The industrial revolution during the 18th and 19th century in Britain has shown both the advantages and disadvantages of rapid development. On one hand it led to higher productivity and increased growth but it also led to rising income disparities between the rich and poor. The squalid life of the poor in unhygienic cramped shanties across the urban landscape denotes the inefficiency in resource allocation and distribution in society. It also symbolizes the unwillingness of the government to take effective measures to address this problem. This issue was not only seen in Britain. As the industrial revolution spread to other European countries this troubling feature started appearing there too. Figure 7 (See Annex), “based on per capita income data estimated…..is one way of illustrating the origins and the diffusion of the industrial revolution. To construct the figure, the countries (or regions) of the world were organized into five groups, ordered by their current per capita income levels. Group I basically, the English-speaking countries—are those in which per capita incomes first exhibited sustained growth. Group II is Japan, isolated only because I want to highlight its remarkable economic history. Group III consists of northwest Europe, the countries that began sustained growth somewhat later than Group I. Group IV is the rest of Europe, together with European-dominated economies in Latin America. Group V contains the rest of Asia and Africa….Reading (Figure 7) from left to right, we can see the emergence over the last two centuries of the (income) inequality........In the first half of the 20th century, and the inequality present in 1900 was simply magnified. The English-speaking countries gained relative to northern Europe, which in turn gained on the rest of Europe and Asia. Notice, too, that per capita income in Group V, the African and Asian countries, remained constant at around $600 up to 1950.” 11 E. Lucas, Jr., R. (2004, May 1). The Industrial Revolution: Past and Future | Federal Reserve Bank of Minneapolis. Retrieved January 2, 2016, from https://www.minneapolisfed.org/publications/the-region/the-industrial-revolution-past-and-future Urbanization and handling of migrating population. “The Industrial Revolution changed material production, wealth, labor patterns and population distribution. Although many rural areas remained farming communities during this time, the lives of people in cities changed drastically. The new industrial labor opportunities caused a population shift from the countryside to the cities. The new factory work led to a need for a strict system of factory discipline. During this time, child labor and the unsafe working conditions rampant in many factories led to reform movements. Population movement began when people living in small farming communities moved to cities. These prospective workers were looking for wage labor in newly developed factories.” 12 Chappine, P. (n.d.). Urbanization & Other Effects of the Industrial Revolution: Social & Economic Impacts. Retrieved December 24, 2015, from http://study.com/academy/lesson/urbanization-and-other-effects-of-the-industrial-revolution.html Most developing nations have not succeeded to handle the population influx to the urban areas of the country. As job opportunities become scarce in rural regions it is natural that most individuals migrate to urban areas in the hope of finding a job and a better standard of living. However, many developing nations which, even today face this growing issue of population movements in the direction of urban areas, have not effectively managed the urbanization process to the best of their capacity. Most new migrants have to accept squalid overcrowded residencies with extremely unhygienic surroundings which pose a significant threat to their health. This factor in the long term has negative effects on their productivity as well. Being sensitive to laborer needs and reducing the influence of trade unions. Trade union activities demanding the rights of the workers emerged during the time of the industrial revolution. These trade unions rose in influence and became more and more politically conscious. In the event of a breaking of their rights, even to a single member, they had the ability to bring production activities to a halt and many a time this was practiced in the late 19th century. In order to avoid such shutdowns and rallies it is important that the factory owners in developing countries provide monetary and non-monetary benefits to workers and make the worker feel part of the company instead of just being a laborer. If laborers feel that they are more secure in their workplace, their dedication towards the company increases, resulting in a more material benefit to the output of the firm. Moreover the tendency of them joining trade unions would decrease. It would also lead to a better relationship between the factory owner and the laborer. Environment pollution. The industrial revolution has been a major reason for the current malady of environment pollution that exists in the world. “By the late 18th century and first part of the 19th century, coal came into large-scale use during the Industrial Revolution. The resulting smog and soot had serious health impacts on the residents of growing urban centers.” 13 Water and Air Pollution. (n.d.). Retrieved December 24, 2015, from http://www.history.com/topics/water-and-air-pollution Starting from the coal and metallurgy industry it spread to other industries as well. Many people did not understand the long term implications of inappropriate, unplanned industrial development. The effects of unplanned industries, improper waste removal methods, inadvertent residence building etc. all contributed to the pollution of the environment. Developing nations still face this issue due to improper planning and other factors which are overlooked. For futher information on South Asia and urbanization see Gunawardene, N. (2015, November 30). Tackling South Asia's 'messy urbanisation' Retrieved December 24, 2015, from http://m.scidev.net/south-asia/cities/analysis-blog/tackling-south-asia-s-messy-urbanisation.html LESSONS FOR SRI LANKA Diversifying primary and tertiary production. In order to keep up with the rapidly diversifying industrial sector the rest of the sectors of the economy would also have to adjust and alter their structure. For example the primary sector should undergo a rapid phase of change such as the fruit growing sector to keep up with better and improved processing in the industrial sector. Likewise, as the manufacturing sector improves the rest of the sectors of the economy would have to keep up with the rate of development. This would create a positive overall impact on Sri Lanka’s growth rate and volume of new innovations. Providing markets for agriculture and services and establishing steadfast political will. The industrial sector could become a market for the agricultural and service sector. For example the rapid industrialization of the bottling, packaging and canning industry would become a great impetus for the development of the agricultural sector. In this regard Sri Lanka has a great deal to do as inter - linkage between sectors of the economy at present is very inadequate. “In Sri Lanka though there was progressive liberalization, industrialization had not been carried out as required and had suffered from endemic political failure. The prolonged war and two insurgencies too had adversely affected industrialization and economic growth…..It must also be mentioned that various industries that were launched such as the Tyre Corporation, Plywood Corporation, Steel Corporation, etc. had also been privatized or shut down due to politicization, mismanagement, etc.” De Silva, L. (2015, September 19). WAY FORWARD – INDUSTRIALIZATION IS A MUST. Retrieved January 5, 2016, from http://www.dailymirror.lk/73045/way-forward-industrialization-is-a-must Expand output levels in key industries that export products. The present level of output produced by industries that export products are not up to the level that they should. For example inconsistencies in output as well as poor quality of finished garments harm our textile industry and do not allow us to maximize our benefits. Our total output is insufficient for us to obtain large market potential and although there is a significant demand for Sri Lankan products abroad, we are not able to sufficiently supply enough. This unfortunately allows foreign consumers to move away from to other foreign substitutes. Therefore we require large investment in order to rapidly expand existing industries as well as invest in new industries to increase the production base and quantity of our industrial yield. Apply high quality control mechanisms to ensure that exports are always of good quality. One of the main issues that Sri Lankan producers face is output that does not adhere to proper quality standards. For example poor quality textile garments result in the declining of the brand quality of Sri Lankan products. Thus the government needs to intervene regularly and guarantee that the Sri Lankan export products are of good quality and abide to foreign quality standards. Ensuring efficiency wages to a select set of industries that are engaged in exporting goods to foreign countries to ensure that continuity in production remains. Efficiency wages often ensure that employees do not leave their job and contribute more willingly and ardently in the performance of their tasks. As continuity of production is an essential requirement for industries that export products; Sri Lanka could attempt to create efficiency wages for those employed in such fields where products are exported in large scale. This would ensure that continuity remains as well as that people would remain in the industry for longer periods of time reducing frictional unemployment. In addition people with greater expertise could be kept in our country without allowing skilled employees to migrate to foreign countries. Ensuring efficient use of non-renewable resources and expanding research and development. Certain resources that are non - renewable should be used in an efficient manner to ensure its maximum utilization in the production process. By utilizing such resources efficiently Sri Lanka could ensure that non-renewable resources are fully used in the production process. Hence issues of scarcity would not dampen our productivity strides if we were to use existing resources efficiently. Also, Sri Lanka has not fully utilized its human resources to create an invention oriented economy and therefore is reliant upon foreign capital goods for much of its needs. If we are to preserve our nonrenewable resources and work towards greater economic growth we must increase investments in research and development activities. Utilizing in-exhaustible energy resources in the production process. Sri Lanka has thus far not fully dabbed into the vast resources of renewable energy that it possesses. Although a small number of wind turbines are positioned in the western and eastern region of our country we are still not maximizing on the winds that blow across our lands. Additionally we have not fully exploited the sunlight that we receive although we are a country located on the equator. Sri Lanka’s location allows it to receive a very heavy portion of sunlight but solar panels are still not used beyond personal domestic purposes. Instead of using coal power which has harmful effects on the environment in the long term, the government should focus on reinforcing and expanding activities to harness the energy that is freely accessible in our country such as increased use of hydro power and more usage of geo - thermal energy. Ensure urbanization without destroying the environment. Although Sri Lanka has significantly developed its urban cities the level of development has been uneven to say the least. Income inequality has resulted in the divergence of society into different groups living in different regions of the same town or city. For the creation of urban settlements much of the natural environment has been altered. Moreover the trees to people ratio has undergone massive changes over the years. Hence Sri Lanka must ensure that it does not develop in essentially economic terms and destroy the country in ecological terms comparable to Britain during the 18th and 19th century but also ensure the safety of natural ecosystems along with its development. Ensuring that labor exploitation does not take place. The existing labor laws have to be amended to ensure that labor conditions are better than they are at present. Although the present state is indeed commendable more must be done to ensure the strict enforcement of these laws. For example in certain factories small children are still used as sweepers and collectors. In the 21st century such practices cannot be tolerated and effective enforcement of existing laws as well as the adoption of more laws should be a prerequisite of the country. The existing labor laws have to be amended to ensure that labor conditions are better than they are at present. Although the present state is indeed commendable more must be done to ensure the strict enforcement of these laws. For example in certain factories small children are still used as sweepers and collectors. In the 21st century such practices cannot be tolerated and effective enforcement of existing laws as well as the adoption of more laws should be a prerequisite of the country. Decreasing focus on import substitution industries and increasing focus on value addition export based industries. Sri Lanka needs to increase value addition to export goods to increase its price abroad, without simply exporting raw materials and less value added goods to foreign countries. “This positive value (addition) will generate local income and if the product or the service in question is sold to foreigners, it would then get sufficient foreign exchange revenue to pay for imports. Hence, the trick which a country should use is that it should produce by using imports a higher proportion of exportable goods and services.” Wijewardena, W. (2016, January 11). Ricardo Hausmann's Strong Message. Retrieved January 11, 2016, from https://www.colombotelegraph.com/index.php/ricardo-hausmanns-strong message/?platform=hootsuite CONCLUSIONS Through this paper I have attempted to briefly outline the reasons for the rise of the industrial revolution in Britain, the economic consequences of it, as well as the lessons that developing countries including Sri Lanka could learn from it. Further to the lessons Sri Lanka can learn, I have also outlined certain policy measures and niche areas that we have failed to address. In observing the developments during the time of the industrial revolution in the 18th and 19th century we can observe both promising changes and negative impacts of it. By analyzing the mistakes and unresolved problems that Britain faced in the post-industrial phase, developing countries such as Sri Lanka could learn how to better integrate the industrial phase of growth into the country. As Sri Lanka has not effectively dealt with the industrial phase of growth and not fully enhanced its industrial base, much more needs to be done in order to better reach an efficient industrial production base. The industrial revolution had a major impact in terms of the individual household as well as on the economy as a whole. Its micro-economic and macro-economic implications can still be felt across the world. Although Sri Lanka has “half-way” passed through this phase of industrialization it has not reached an efficient level of industrial output or productivity and therefore it must utilize this opportunity to embark on a more inclusive, better planned industrialization phase of economic growth. At present many of the states that earlier lagged behind Sri Lanka has seized the opportunity and with efficient leadership and outstanding exertion has boosted its economic growth well above Sri Lanka. In order to continue maintaining its competitiveness and growth momentum Sri Lanka must implement policies that will specifically target its industrial sector and thereby spur industrial contribution to the growth of the country. ANNEXES ANNEX TEXTS The term “Enclosure” is used to explain the process of appropriation and consolidation of former common land owned by landlords, which increased the number of larger and more efficient capitalist farms but, reduced the peasants either to the status of farm laborers or more often displaced them from their lands. Total population at censuses of 1831, 1841, 1851, 1861, and 1871 Year England And Wales Scotland Ireland Total for United Kingdom Males Females Total 1831 1841 1851 1861 1871 13,896,797 15,914,148 17,927,609 20,066,224 22,712,266 2,264,386 2,260,184 2,888,742 3,062,294 3,360,018 7,767,401 8,196,597 6,574,278 5,798,967 5,412,377 11,680,532 13,060,497 13,369,227 14,063,477 15,301,830 12,348,052 13,670,432 14,021,402 14,864,008 16,182,831 24,028,584 26,730,929 27,390,629 28,927,485 31,484,661 Source: William Page, Commerce and Industry, vol. II, (1919), Table I. “Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state. Adam Smith coined the term “mercantile system” to describe the system of political economy that sought to enrich the country by restraining imports and encouraging exports. This system dominated Western European economic thought and policies from the sixteenth to the late eighteenth centuries. The goal of these policies was, supposedly, to achieve a “favorable” balance of trade that would bring gold and silver into the country and also to maintain domestic employment. In contrast to the agricultural system of the physiocrats or the laissez-faire of the nineteenth and early twentieth centuries, the mercantile system served the interests of merchants and producers such as the British East India Company, whose activities were protected or encouraged by the state. The most important economic rationale for mercantilism in the sixteenth century was the consolidation of the regional power centers of the feudal era by large, competitive nation-states. Other contributing factors were the establishment of colonies outside Europe; the growth of European commerce and industry relative to agriculture; the increase in the volume and breadth of trade; and the increase in the use of metallic monetary systems, particularly gold and silver, relative to barter transactions. During the mercantilist period, military conflict between nation-states was both more frequent and more extensive than at any other time in history. The armies and navies of the main protagonists were no longer temporary forces raised to address a specific threat or objective, but were full-time professional forces. Each government’s primary economic objective was to command a sufficient quantity of hard currency to support a military that would deter attacks by other countries and aid its own territorial expansion. Most of the mercantilist policies were the outgrowth of the relationship between the governments of the nation-states and their mercantile classes. In exchange for paying levies and taxes to support the armies of the nation-states, the mercantile classes induced governments to enact policies that would protect their business interests against foreign competition. Source: LaHaye, L. (2008). Retrieved December 24, 2015, from http://www.econlib.org/library/EnMercantilism.html “Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies. Economies of scale can be classified into two main types: Internal – arising from within the company; and External – arising from extraneous factors such as industry size.” Source: Economies Of Scale Definition | Investopedia. (2003, November 18). Retrieved December 24, 2015, from http://www.investopedia.com/terms/e/economiesofscale.asp ANNEX FIGURES Figure 1 Source: Rex Pope, ed. Atlas of British Social and Economic History since 1700, London Routledge 1989 pg. 45 Figure 2 Source: (n.d.). Retrieved December 24, 2015, from http://www.bbc.co.uk/staticarchive/567b08b41218cdc1b7df0d0e168a31cf45432d54.png Figure: 3 Source: Simon Ville, “Transport,” Roderick Floud and Paul Johnson, the Cambridge Economic History of Modern Britain, Vol. I, Industrialization, Cambridge: Cambridge University Press, 2004, pp.305-06. Figure 4 Source Bates, W. (n.d.). Was the industrial revolution mainly about the growth of manufacturing industry? Retrieved December 24, 2015, from http://indo-nesia.blogspot.com/feeds/posts/default?orderby=updated Figure 5 Source: Bates, W. (n.d.). Was the industrial revolution mainly about the growth of manufacturing industry? Retrieved December 24, 2015, from http://indo-nesia.blogspot.com/feeds/posts/default?orderby=updated Figure 6 Source: M. Koot, P. (n.d.). Aspects of the Industrial Revolution in Britain. Retrieved December 24, 2015, from http://www1.umassd.edu/ir/resources/metalandmining/ Figure 7 Source : (n.d.). Retrieved December 24, 2015, from https://www.minneapolisfed.org/~/media/images/pubs/region/04-05/figure3.gif?la=en REFERENCES (n.d.). Retrieved December 24, 2015, from http://www.bbc.co.uk/bitesize/ks3/history/industrial_era/the_industrial_revolution/revision/9/ Arthur Young, Tours in England and Wales: London School of Economics Reprints, XIV, pp. 255-258; in A. Aspinall and E. Anthony Smith, eds., English Historical Documents, XI, 1783-1832, New York: Oxford University Press, 1959, pp. 523-24. C. Allen, R. (2006). The British Industrial Revolution in Global Perspective: How Created The Commerce Industrial Revolution and Modern Economic Growth. Retrieved December 24, 2015, from http://www.nuffield.ox.ac.uk/users/allen/unpublished/econinvent-3.pdf. Chappine, P. (n.d.). Urbanization & Other Effects of the Industrial Revolution: Social & Economic Impacts. 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