Transition Economy

We live in a fast pace world and almost everything changes daily. Most of the goods that we use are mass produced in very large quantities. The basic rule of thumb in economics dictates that the more goods produced leads to less production cost per item. The cost of living decreases with industrialization and technology but industrialization also brings up its own problems. Agricultural economy is fueled by farming. Farmers play an important role in any society because they feed people. Farming has been valued in almost every nation.

Farmers has known to be the nation’s life and farmers were seen as an example of economic virtues such as hard work, self- sufficiency, initiative, pride and productivity. On the other hand, Industrial economy has been seen as the backbone and the strength of the nation. The stronger the industry is in one nation, the more strength, power, technology that the nation possesses. In other words, industrialized nations in the world are the ones that are economically developed, stable and seize political power and influence. In this essay, I would like to discuss the transition economies in the world and show how these transition economies are affected.

The biggest change that the revolution created was an industrialized society in which large scaled mechanized manufacturing replaced farming as the main source of jobs. Farmers used to grow their own food and made the products they need and use at home and sold the excess products that they do not need. With this revolution, a great number of farmers in an industrialized society changed their life styles and started working for wages and bought their food and other necessities. They lived in towns and cities rather than in the country side, farms or small villages.

Progression in technology and in industrial development has been continuously developing since the Industrial Revolution began. No one can deny that industrial revolution brought different life styles changes and improvements in technology. As Joseph Montagna mentioned that the major change was the migration of people from rural areas to urban areas (Montagna, 1981). This brought both advantages and disadvantages for the society as a whole in England. One of the advantaged that people started work for higher wages in industries and housing conditions improved (Montagna, 1981).

Following this, higher wages and improved conditions in housing allow people to get married in earlier ages which lead high population growth. Montagna showed the reasons behind high population which were a decline in the death rate, an increase in the birth rate, elimination in the diseases, and increase in the availability of food (Montagna, 1981). This means that England was in the second stage of the demographic transition. The one of the Industrial Revolution advantages was that it introduced inexpensive mass produced manufactured goods to the market and this also lead to increased trade between nations.

Before the Industrial revolution, most of the agricultural goods were household consumption; however, the technological advance leads to increased yield for agricultural products. There was very little international trade done before revolution. On the other hand, Industrial Revolution also had a dark side in its early days. For Instance, the revolution brought exploitation of workers, slums and great suffering for the people as a result of periodic employment created by the switch between labors intensively work to mechanized work. Moreover, Montagna underscored that the towns become crowded and dirty.

There was also problems in sanitation and public health in cities. No one can deny both sanitation and public heath cause big problems for the crowded cities (Montagna, 1981). As we have seen from the example of England, Health conditions in crowded cities were affected by the spread of outbreak diseases such as typhoid and cholera (Montagna, 1981). In addition to these advantages and disadvantages of the Industrial Revolution, It was also responsible for the horrors of the modern Warfare and brought the rise of communism, socialism, and capitalism. In those days, England was the most colonist country in the world.

At this time, the conditions of the workplaces were bad for the employees. These factories were dirty, noise, no air conditioning, and poorly lighted areas (Montagna, 1981). These kinds of workplaces forced to employees to become union. Government regulation, social legislation, and labor unions are also the products of Industrial Revolution which started from England. In today’s world one of the best examples of the transition from agricultural economy to industrialized economy is China. China is the largest country in terms of population in the world.

However, The Chinese government allows one child per family in order to control population; however, the total fertility rate is below from the replacement level. The reason is for that Authoritarian regime is to increase the availability of jobs, standards of living, and better working environment (Dutta, 2004). In addition, China has been known as agricultural country where the majority of citizens are farmers. In recent 50 years, there has been a massive industrialization effort which made China one of the powerful players in the world economy. As we have seen from data, Chinese agricultural share of GDP dropped from 42.

2 to 11. 9 between 1970- 2000; industry and service sectors increased their share in Chinese GDP (Dutta, 2004). This does not mean that Chinese agricultural output dropped; there was large productivity gain per unit of labor which means that there is less labor need to produce the same output. This also increased the availability of workers for manufacturing sector and farmer’s income (Dutta, 2004). On the other hand, as we have seen from the labor surplus model, if more and more worker withdraws from agriculture, the food supply is going to drop and prices are going to go up.

In addition to this problem, workers in the industry start to work for low wages because of the increase in the labor supply. China had experienced this kind difficulty in early years of the Industrial Revolution; however, the vital point is to find a balance between industry and agriculture. Dutta mentioned that why china become successful is that productivity gain and increase in the income of farmers to buy manufactured products from the market (Dutta, 2004). He also mentioned that why China become successful also in the industry sector.

The Chinese started to accept to foreign direct investment which foreigners and investors own and manage their companies and it was very attractive for multinational companies because of natural resources and low-wage labor ( Dutta, 2004). What most multinational companies do is that they produce goods in China which cost less than home country, and sell these goods to home country. This makes companies to stay competitive in the world market. On the other hand, China becomes successful in export-led growth because of human capital and new technology.

After this succession, the Chinese Government has to focus on different aspects such as health, education, and distribution of income (Dutta, 2004). Workplaces are still not in good condition in China, the factories are dirty, unsecure, and unventilated. In addition, the rate of depletion of natural resources is high which means they can become scarce at some time in the future. The reason behind is that discount rate is high and then the government uses these sources in order to get more revenue.

Moreover, as we have seen from the example of China, developing countries do not care about the environmental degradation and the depletion of resources. In short, China faces with economic growth but they are far behind the economic development because people, who live in China, do not have access to good education, and health. The same transition that China is facing also happened to Japan and they created dual economy. Japan has become one of the superpower in the world economy because of subsidized industries, its strong work ethic, and ability to manufacture technological goods, and its lifetime employment program (Ronald, Robert, 1994).

Japan’s agriculture has always been very important to its people and agriculture. However, hilly geography and the size of the land put limit on agriculture. That makes Japan one of the most expensive nations in terms of living standards. The Japanese government agricultural sector highly protected and subsidized that favor small scale farmers instead of large scale farmers (Ronald, Robert, 1994). Importing food products such as rice is heavily taxed in order to protect domestic producers. This is the main reason that why agricultural and meat products are so expensive in Japan.

Moreover, Japanese textile, food and auto industry is highly protected but Japan faced with low productivity (Katz, 1998). For example, Richard Katz, who is the author of Japan: The System is Soured, underscores the low productivity of food industry in Japan which is one third of U. S level and it is also far behind U. S (Katz, 1998). Moreover, as Richard mentioned that the auto industry, for example, highly protected and subsidized (Katz, 1998). After that, Japanese automobile industry became one of the biggest exporters.

However, this made automobile industry competitive in the market and take off for the Japanese economy. Japanese economy came to some point and started to slow-down. These subsidized and protected industries became inefficient; the Japanese economy started to give trade surpluses (Katz, 1998). As author Richard Katz underlined that Japanese economy have two problems which are supply and demand side. In supply side, protected and subsidized industries became inefficient and they did not have to stay competitive in the market without protection.

In demand side, the economy did not consume what they produce (Katz, 1998). This means that consumption is so low that does not keep economy on track. In conclusion, it is not easy to transform economy from agriculture to industry. There will always be a lot of parties that will be affected. At the same time with transition, there is always going to be winners and losers. The vital point is that the governments have to make transition as smooth as possible. Traditionally, agriculture has always been important in every nation’s history; farmers also play crucial role to feed its own nation people.

The economic structures of the world have changed. The countries wit dominant agricultural economies have seen as less-developed countries. On the other hand, developed countries are considered as technologically advanced. After Industrial Revolution, the world focuses on industrial economies which we live today. Today, the human being became dependent on technological machines. In short, some economies achieved economic growth in this era; however, some countries are far behind the economic development such as China.