Why industrial growth is slow in developing nations?

Industrial growth is one of the vital requirements for any developing nation. Developing nations offer lucrative options to the industrialists all over the world to establish their units at their places. Many such countries with plenty of mineral reserves offer cheap skilled laborers, tax concessions and other relaxations in different standard operating procedures (sops) as main attractions for new ventures in their territories. India is a leading nation, which has successfully wooed many industrialists to open factories on its land. We have seen politicians, even from the backwaters of India, clad in” dhoti and kurta” board planes from time to time to convince business communities across the globe to come to their territories to set-up their units for production. But such apolitical gestures mostly turn in to gimmicks and industrial growth is still very dismal.

Gone are the days in the seventies when India opted for indigenous production of every product, disallowing free trade as part of its struggling economy. In the nineties when the winds of economic liberalization cast its magical prowess, India opened its door for the companies throughout the world to begin their ventures. Let’s see some of the reasons for slow industrial growth;

Skilled but undisciplined labor-force - Availability of plenty of skilled work force is definitely one of the main attractions. The industrial leaders pay much lesser wages in comparisons to other work force in developed countries. The workers or better to say the human resources are skilled but hardly have any exposure towards world class work atmosphere. The work force is highly politicized and more often than not controlled by inconspicuous political connections. Very often it is seen that political pigmies try to run their dictates by creating divisions and conflicts in the work force. They try to force human resource heads to give jobs to their own people. Denial to all this might result in heavy disputes between management and labor-force. When a multinational opens its office for operations, it is inundated with letters of recommendations from political heavyweights as well as small fry to provide jobs to the local candidates and those with recommendations. Worse if the management allows its employees to form their own unions as it gradually turns the organization in to a behemoth.

Collective looting by government offices - When an industrialist opens his plant, the initial response from the government is a warm welcome, literally by rolling a red carpet under the feet of the newcomer to the place. But gradually overcoming the deliberately created hurdles set up by the same government offices becomes difficult. The person establishing a plant has to comply with a number of government rules and regulations of the land. Every system and procedure of the bureaucracy takes its toll. The most notable among all these departments is the department of pollution control, which breathes heavily down on the functioning of the plants. In India, there is a mush-room growth of plants for producing sponge-iron but surprisingly those are situated mostly near the lands for cultivation and farms. While the department of industries gives NOC (no objection certificate) to the industrial owners to set up plants, the pollution control boards step in citing stricter pollution control norms barely days after the plant starts production. Industrial owners have to spend a lot of money as bribe to various government organizations to appease the bureaucracy. The major problem is dealing with the knotty and delaying pending government approvals is a concern for every industrial owner and it can be termed as self created perpetual crisis by the administration of the local government.

Availability of plenty of raw-materials-truth or myth? - Generations have carried the impressions that there are places in the third world countries which have rich mineral reserves. So the prevailing idea is if plants are situated near the mineral reserves, industrial production would be easier and quicker. But in most cases, it is just the opposite. It is because industrial owners after spending millions of rupees for setting up plants and complying with administrative procedures from government are unable to find raw materials for production. If they take new mines for excavation, there begins huge protests by groups in the name of environment. For example, at present in India, Korean major multinational Posco is facing a major setback because it has been denied the permission to excavate mines for production. It has already invested billions of dollars for the plant. Another instance is all the new and old plants are facing serious shortfall in the supply of coal. Although government has fixed quotas of coal as allotments to them, the reigning mafias in the mines always call the shots in such matters. Huge scams have been unearthed in the department of mines and mineralogy, which were taking place by the nexus between government officials and mafias. Killings, demands for ransom, threats to industrial owners are common incidents at the places where reserves of raw-materials are said to be plenty.

Human resource development- a real misnomer – Although there is spread of industries in the developing nations, skilled labor force lacks world class professional acumen. It is happening because of their lack of exposure to world class work atmosphere. Here the human resource developers follow the easiest policy in man-power management- that is hire, tire and fire. Highest number of pass outs from the most premier educational institutions in India prefers to go abroad for job hunting. In most of the industrial sectors in India, employees’ moral is abysmally low. Most of the industrialists in India, barring a few, do not believe in implementing incentives for improving their work-force.

Quality of education- not conducive for industrial growth- Education in the developing nations is far from being world class. There is a mush-room growth of technical and professional education by the increase in the number of private ownerships of educational institutions. For example in India every city houses innumerable private colleges, catering to the professional and technical education. But Indian industries are very cautious while hiring through campus programs because of the poor quality of teaching methods and absence of quality in the students. Although there is a choice in the students to go for technical and professional education, technology is not only studied in any developing nation to cater to the industrial growth, rather it is helpful in abetting crimes in the society. Hopefully this is evident from innumerous scams and cyber crimes in every developing nation, where unfortunately technology has to pander to such things.