Economics · Lesson 14

Industry, location & industrialisation

JAMBWAECNECO

What the syllabus asks

JAMB: Industry and industrialisation: concepts (industry, firm, plant); types of industries; strategies of industrialisation; factors determining location and localisation of industry; problems of industrialisation in Nigeria; role of small-scale industries; government policies (indigenisation, privatisation, export processing zones)

WAEC: Industrialisation: meaning and types of industries; importance of industrialisation; strategies (import substitution, export promotion); factors affecting location of industry; localisation and dispersal of industries; problems of industrialisation in Nigeria and solutions; small-scale industries; role of government

NECO: Industrialisation: meaning and types of industries; importance of industrialisation; strategies (import substitution, export promotion); factors affecting location of industry; localisation and dispersal of industries; problems of industrialisation in Nigeria and solutions; small-scale industries; role of government

What you will learn

Distinguish plant, firm and industry and classify types of industry.
Explain the importance of industrialisation for Nigeria.
Compare import substitution and export promotion strategies.
Explain the factors affecting location of industry and calculate least-cost locations.
Explain localisation and dispersal of industries with merits and demerits.
Explain the problems of industrialisation in Nigeria, the role of small-scale industries and government policy.

Key points

Plant = one factory; firm = one business; industry = all firms making similar goods.
Types: extractive, manufacturing, construction, service.
Industrialisation creates jobs, value added, diversification, forex savings and technology.
Import substitution saves forex but may be inefficient; export promotion earns forex but faces world competition.
Location: raw materials, market, power, transport, labour, water, policy, external economies.
Weight-losing → near raw materials; weight-gaining or perishable → near market.
Localisation brings external economies but risks structural unemployment.
Dispersal aims at balanced development.
Problems: power, infrastructure, finance, imported inputs, policy, insecurity, low capacity utilisation.
Policies: indigenisation (1972, 1977), SAP (1986), NEPZA (1992), Bank of Industry, pioneer status, privatisation.

Start here: Plant, firm, industry; types of industry

A cement factory near Obajana in Kogi State is a plant. The company that owns it, which may own other factories too, is a firm. All cement companies in Nigeria together form the cement industry.

Plant: a single production unit. Firm: a business under one ownership and control. Industry: all firms producing similar goods or services.

Types of industry

Extractive: mining, quarrying, fishing, lumbering, crude oil production.
Manufacturing: changes raw materials into finished goods, e.g. textiles, cement, food processing, vehicle assembly.
Construction: roads, bridges, buildings.
Service (commercial): banking, insurance, transport, trade, telecommunications.

Manufacturing may be light (consumer goods like soap, beverages) or heavy (steel, machinery, chemicals).

Worked example 14.1

Classify: (a) tin mining on the Jos Plateau; (b) a flour mill; (c) building an estate; (d) a telecom company.

(a) Extractive.
(b) Manufacturing.
(c) Construction.
(d) Service.

Extractive; manufacturing; construction; service

⚠️ Common mistake: using "firm" and "industry" interchangeably. One firm is part of an industry; an industry contains many firms.

Try it yourself. Can a firm own more than one plant?

Show solution

Yes: e.g. a cement company with factories in several states.

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Practice questions

1. A single factory or production unit is a

plant
firm
industry
conglomerate

Show answer

A: plant
A firm may own many plants.

2. All firms producing similar goods form an

plant
firm
market
industry

Show answer

D: industry
E.g. the cement industry.

3. Industrialisation helps a developing economy mainly by

reducing value added
ending trade
diversifying the economy and creating jobs
increasing imports

Show answer

C: diversifying the economy and creating jobs
It reduces dependence on primary products.

4. The strategy of producing at home goods that were formerly imported is

free trade
import substitution
export promotion
dumping

Show answer

B: import substitution
It saves foreign exchange.

5. A weight-losing industry tends to locate near

its raw materials
the market
the capital city
the coast only

Show answer

A: its raw materials
Transport of bulky raw materials is costly.

Key words

Plant: A single production unit or factory.
Firm: A business unit under one ownership and control, which may own several plants.
Industry: A group of firms producing similar goods or services.
Industrialisation: The process of developing manufacturing so that it plays an increasing role in output and employment.
Extractive industry: Industry taking resources from nature, e.g. mining, fishing.
Manufacturing industry: Industry changing raw materials into finished or semi-finished goods.
Construction industry: Industry building roads, houses and other structures.
Service industry: Industry providing services, e.g. banking, transport.
Import substitution: Producing at home goods that were formerly imported.
Export promotion: Industrial strategy aimed at producing goods for export.
Location of industry: The choice of site for a firm or factory.
Localisation of industry: Concentration of an industry in a particular area.

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