Why manufacturing matters

The term industry is used interchangeably between manufacturing and services sectors, though in government documents it refers to manufacturing industries alone. Many lessons are to be learnt from the first and second industrial revolutions. At the heart of the first and second industrial revolutions were innovations in manufacturing that changed the economic equations. One lesson from the industrialization revolution experiences is that the transformation of raw items into valuable manufactured items changed human functionalities for the teeming mass of people making up society. These changed human functionalities generated the economic outcomes leading to wealth creation. The chapter specifically evaluates manufacturing functionalities, and their vital importance, in the context of national economic development.

India’s economy has fundamentally shifted towards the services sector. This has been documented in Chapter 8. In this chapter, I make a paean for manufacturing. Only a deeper focus on the manufacturing sector will make India rich and developed. I ground my arguments in the philosopher David Hume’s belief that the determinants of a nation’s prosperity, and the subsequent resources available to the state, are based upon real, as opposed to monetary, factors. This view was conditioned by his observations of the Indian eighteenth-century economic phenomenon. The acquisition of bullion could be generated by trade, but such a bullion hoard was impermanent.