Chapter # 6 – Economic Development
6.1 Major Industries of Pakistan
6.1.1 Describe Different Kinds of Industries in Pakistan i.e. Cottage, Small Scale and Large Industry.
The term “industry” refers to the creation of goods and services aimed at meeting various human needs.
Goods refer to tangible items that can be seen and touched, such as cell phones, rugs, and carpets. Conversely, services encompass activities undertaken by individuals or groups to benefit others, such as patient treatment, teaching, goods transportation, and tourist guiding. Both goods and services hold monetary value, which service providers directly or indirectly charge from consumers.
Difference between factory and Industry
The terms “factory” and “industry” are related but refer to different concepts within the realm of manufacturing and production:
Factory:
- A factory is a specific physical location or facility where goods are produced or manufactured.
- It is a building or group of buildings equipped with machinery, equipment, and labor for the purpose of manufacturing products on a large scale.
- Factories typically house assembly lines, production lines, or other manufacturing processes where raw materials are transformed into finished goods.
- Factories can be specialized for specific industries or products, such as automobile factories, textile mills, or food processing plants.
The primary function of a factory is to carry out the manufacturing process efficiently and effectively, often under controlled conditions to ensure quality and productivity.
Industry:
- Industry refers to a broader concept encompassing various economic activities involved in the production of goods or the provision of services.
- It includes not only manufacturing but also sectors such as agriculture, mining, construction, utilities, services, and information technology.
- Industry encompasses all businesses and organizations engaged in production, regardless of their size, scope, or specialization.
- While a factory is a specific unit within the manufacturing sector, industry refers to the collective activity of all manufacturing units, along with other sectors contributing to economic output.
- Industry plays a crucial role in economic development, generating income, creating employment opportunities, and driving innovation and technological progress.
In summary, a factory is a specific facility where goods are manufactured, while industry refers to the broader sector encompassing all manufacturing activities and related economic sectors.
Classification
Economists categorize industries into various types based on factors such as manufacturing levels, raw materials, and the scale of operations. This article outlines the classification of industries based on their manufacturing levels and scale of operations.
Classification based on industrial levels:
- Primary Industry:- Primary industry represents the initial stage of production where raw materials are collected. Examples include mining for mineral resources and drilling for petroleum extraction. Primary industries focus on the extraction and gathering of natural resources.
- Secondary Industry:- Secondary industry involves the processing of raw materials into finished goods. Industrialists refine crude oil and mineral resources using labor and machinery to produce final products. This stage entails the transformation of raw materials into usable goods.
- Tertiary Industry:- Tertiary industry revolves around manufacturing goods in response to market demand and facilitating their distribution to consumers. Manufacturers generate demand for their products through various marketing strategies. The distribution process involves multiple stakeholders such as media, transporters, and retailers, collectively providing services to ensure goods reach consumers. Services encompass not only product distribution but also the labor involved in raw material collection, processing, and conversion into finished goods.
Classification on basis of the scale of operations
Based on the scale of operations, industries are classified into three categories: cottage, small, and large-scale industries. The scale of operations refers to the size of inputs and outputs in terms of production, labor force, and capital investment.
- Cottage Industry:- Cottage industry involves the production of goods with minimal investment and the use of simple tools, typically by family members. Examples include carpet making, handmade jewelry, and handicrafts.
- Small Scale Industry:- Small-scale industries employ no more than 20 workers and have a maximum capital investment limit, often set at Rs. 10 million in Pakistan. These industries utilize basic technology. Examples include sports goods manufacturing, surgical instruments production, and small bakeries.
- Large Scale Industry:- Large-scale industries have no restrictions on labor employment or capital investment. Production occurs on a significant scale, often employing sophisticated technology. Examples include cement manufacturing, automobile production, steel manufacturing, and fertilizer production.
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