Introduction
Second, even the food that is consumed issubject to more transformation. Food productsare taken over longer distances, processed andbranded. This also requires that food productshave to be preserved. As a result, the prices thatfarmers get tend to be much less compared tothe prices at which consumers buy.Generally, “any human activity which isengaged in the conversion of raw materials into
readily usable materials is called an industry”.Industrialisation refers to the process of usingmodern techniques of production to producegoods that are required by both consumers andother producers on a large scale. In this chapter
we will learn the nature of industrialisation ofTamil Nadu, importance of industrial clusters,how industrial clusters have developed in TamilNadu and the role of government initiatives inpromoting industries.To understand importance of industries,we need to understand why the share ofagriculture in an economy's income andemployment decreases with development.First, demand for food remains constant withregard to income. Therefore, as an economygrows and incomes increase, consumers tendto spend a lesser share of their income on
products from the agricultural sector.Second, a market exists for both producers
and consumer goods. Even services likebanking, transport and trade are dependent onproduction of industrial goods.Third, by using modern methods ofproduction, industries contribute to betterproductivity and hence lower cost of production
of all goods produced.
Industrial Clusters
It therefore helps peopleto buy goods at a cheaper rate and help createdemand for more products.Fourth, through such expansion of
production, industrialisation helps to absorbthe labour force coming out of agriculture.Employment generation is therefore animportant objective ofindustrialisation.Fifth,arelatedadvantageofindustrialisation is therefore technologicalchange. Through use of modern techniques,industrialisation contributes to learning of suchmethods and their improvement. As a result
labour productivity, ie, output per unit of labourinput increases, which can help workers earnhigher wages.Sixth, expanding incomes lead to moredemand for goods and servicIndustrial clusters are groups of firms ina defined geographic area that share commonmarkets, technologies and skill requirements.The advantages of industrial clusters or districtswas first observed by the famous economist
Alfred Marshall in the 1920s when he triedto understand the working of clusters of smallfirms in the metal-working and textile regionsin England. While the notion of an ‘industrialdistrict’ was developed by Marshall, it was onlyafter the success of small firms in Italy in the1980s that it became popular. Policy-makersin developing countries like India began topromote them actively as they realized that there
several such small firm clusters in the country.
How Do Clusters Originate?
Clusters may arise due to many factors.Certain clusters evolve over a long time in
history when artisans settle in one localityand evolve over centuries. Handloom weavingclusters are one examples of this development.Or else, in some sectors, when a large firm isestablished, a cluster of firms may emerge totake care of its input and service requirements.At times, governments may decide to encourage
manufacturing using raw materials from aregion, which may also lead to emergence ofclusters In Western Tamil Nadu, the emergenceof textiles industries also led to demand andstarting of textile machinery industry in theregion. This textile machinery industry in turnled to the rise of a number of small workshops
for repair and producers of machinerycomponents. Another major development
in the western region is the introduction ofelectricity from hydro-electric power in 1930s.Availability of electricity allowed for use ofoil engines for drawing ground water. Thisled to both expansion of agriculture as well asincrease in demand for oil engines. In turn, itled to emergence of workshops for servicingengines and also for addressing the demand forspare parts. Foundries began to be set up andagricultural machinery began to be produced.
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