2015-08-21
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One important factor affecting the economic growth of a country is the nature of, and the value placed upon, natural resources. Often natural resources, such as mineral wealth or the potential to produce high yielding foods, are limited. When resources, especially minerals, are available economically developing countries often lack the capital and the technology to develop them. As a result most of the available resources are bought, at as low a price as possible, by the richer and already industrialised economically more developed countries. Having traded their natural resources at a low price, developing countries have then to buy back these materials in a processed (manufactured) form at a much higher price. The resultant trade deficit means even less money is available to try to develop their own resources.
Industrial development is also affected by the amounts and type of inward investment from the government within a country, or through foreign investment, loans and development assistance programmes. These, and other factors, may provide opportunities for the economic development of a country, but more often put constraints upon it.
Two extreme examples, taken from Kenya, have been selected to try to show how the factors listed earlier can affect economic growth. They are the large Bamburi Portland Cement Company near Mombasa (table A) and the Jua Kali metal workshops in Nairobi (table B).
Table A
| Bamburi Portland Cement Company, Mombasa | |
| Type of industry | Formal,i.e. it is organised, so workers have contracts, work fixed hours and receive a regular, but low, wage. A raw material location. |
| Raw materials | Built on coral limestone which provides the lime for the cement. Adequate supply of water from rivers and boreholes. Some coal (to heat furnaces) has to be imported. |
| Energy | Electricity from National Grid. Uses 5 per cent of Kenya’s total electricity. |
| Technology | Advanced methods to compete with other world producers. Production is capital intensive. |
| Investment | A multinational. Parent company is International Cementia of Switzerland. Also has links with Blue Circle (UK). Overseas companies provide the high level of investment needed. |
| Trade | Up to 35 per cent of cement is exported, mainly to neighbouring Somalia, Tanzania and the Indian Ocean islands. About 65 per cent is used internally in Kenya for new buildings. Specialised machinery, lorries and spare parts for both have to be imported for quarrying the coral, and producing and transporting the cement. |
| Workforce | European managers. There are 850 permanent Kenyan workers, many of whom have had training. Not large numbers since production is capital intensive. |
| Advantages to Kenya | High level of taxes paid to the Government for land rates, using water and electricity, etc. Helps trade balance as value of export of cement is greater than costs of imports. Provides employment and improves skills of local people. Paid for the building of a local school. |
Table B
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| Jua Kali metal workshops, Nairobi | |
| Type of industry | Informal, i.e. spontaneous jobs, often small scale family enterprises. Long and irregular hours, low and uncertain wages. A market location. |
| Raw materials | Cheap scrap metal is recycled by melting it down and hammering it into various shapes, e.g. locks, boxes, cooking utensils, water barrels. Charcoal is used to heat the scrap metal. |
| Energy | Manual labour. |
| Technology | Appropriate technology which is sustainable and suited to the skills of the people, the availability of raw materials and capital. Labour intensive. |
| Investment | Very limited. The Government (inward investment) has supported this Jua Kali scheme by providing roofs to protect the workers from the weather (Jua Kali means ‘under the hot sun’). There are many types of Jua Kali in Nairobi. |
| Trade | All the products are sold and used locally. |
| Workforce | Over 1000 workers in an area about 300m x 100m. Workers have had to develop their own skills. Large numbers since production is labour intensive. |
| Advantages to Kenya | Estimates suggest 600 000 people are employed in 350 000 small scale Jua Kali enterprises in Kenya. Enterprising spirit. Firms need little capital, recycle materials which otherwise would be wasted, provide low cost training, and can react quickly to market changes. They provide the backbone for Kenya’s industrial development. |
