This topic cover: 1. Colonialism and Imperialism 2. This topic cover: 1. Colonialism & Imperialism 2. Industrial Revolution 3. Capital & Technology 4. Competitive Advantage 5. Trade & Foreign Direct Investment (FDI) 6. Role of the International Holding Company (MNC's)

1. The Dynamics of Urbanization-
Industrialization
C H A P T E R 4 Nor Suzylah Sohaimi (PhD)

2. 1.
Colonialism and
Imperialism
2.
Industrial
Revolution
3.
Capital and
Technology
4.
Competitive
Advantage
5.
Trade &
Foreign Direct
Investment
(FDI)
6.
Role of the
International
Holding Company
(MNC’s)

3. 1. Colonialism and Imperialism
What is the relationship between
colonialism & imperialism and urbanization &
Industrialization ?

4. • The dynamics of urbanization and its relationship to social and economic
change can only be revealed by intensive historical studies of individual
countries during the process of development.
• Colonialism is the establishment, exploitation, maintenance, acquisition,
and expansion of colony in one territory by a political power from another
territory.
• It is a set of unequal relationships between the colonial power and the
colony and often between the colonists and the indigenous population.
• Peninsular Malaysia has been the most successful of Southeast Asian
countries in terms of socio-economic development, especially since
Independence in 1957.

5. • Colonial settlement – creates new buildings, infrastructures and amenities in
one area.
- built new roads : to transport goods to port to the colonial country.
- bring in people from outside the country to build the infrastructures and
exploit the local products and minerals etc.
• Areas with local products and minerals exploited by the colonial government
– become densely populated.
• More infrastructures and amenities created in the area.

6. 2. Industrial Revolusi
• Initiated in England around 1830s
• Since 1700-1830 – more than 5000 inhabitants in Cities – from 15% to 34%
• Since 1700-1830 – more than 5000 inhabitants in Cities – from 15% to 34%
• Without massive import of food stuff from other countries
• Rate of urbanization is slower (1.3%) than the rate of population settlement
(2.3%) in cities in 1830-1924

7. The Industrial Revolution brought rapid urbanization, or the movement of
people to cities causes:
1. Changes in farming
2. Soaring population growth,
3. Increasing demand for workers led masses of people to migrate from farms
to cities.
Almost overnight, small towns around coal or iron mines mushroomed into
cities. Other cities grew up around the factories that entrepreneurs built in
once-quiet market towns.

8. 4. New Social Classes Emerge:
• A new middle and Industrial working class
• Middle class owned and operated the new factories, mines, and railroads,
among other industries.
• Their lifestyle was much more comfortable than that of the industrial
working class.
• Need for mass production of goods, equipment and facilities.
• Introduction of new production technology and system
• Innovation and promotion of new ideas and invention to cater the industrial
and social needs.

9. 3. Capital and Technology
• The last two hundred years have witnessed dramatic gains in the standard of living in the
United States, driven by the technological innovations introduced by the Industrial
Revolution and carried forward by the evolution of technology since then.
• This evolution is reflected both in the development of new products (electric lighting,
automobiles, open-heart surgery) and in the improved efficiency of production processes
(the assembly line, just-in-time inventory controls, computer-aided design).
• New technology introduced in cities
• Capital investment – promote innovation of new technologies
• Technology will grow to other parts of a country if the country have enough capital
• If not the growth is limited

10. 4. Competitive Advantage
• A competitive advantage is an advantage gained over competitors by offering customers
greater value, either through lower prices or by providing additional benefits and service
that justify similar, or possibly higher, prices.
• Industry over agriculture
• Employment
• Income
• Urban over Rural
• Facilities and infrastructures
• Services

11. 5. Trade & Foreign Direct Investment (FDI)
• FDI – induce urbanization or urbanization induce FDI
• Are cities successful because they attract lots of investment including FDI
and skilled labour? Or do cities attract economic activity and skilled labour
because they are successful
• Are cities booming because they are more conducive to international trade
and have reliable institutions and better financial centres than rural districts?

12. • FDI is higher in host countries that have good institutions, well developed
financial systems, a high road density, a high income per capita and
substantial natural resource exports.
• Countries also attract more FDI if they have more medium-sized cities, but
primacy has the opposite effect
• However, urbanization as measured by both primacy and the number of
cities, openness and high income per capita in surrounding countries depress
FDI/MNC.

13. 6. Role of the International Holding Company (MNC’s)
• FDI/MNC is a key vehicle for transferring knowledge and technology, thereby
increasing productivity growth. Hence promote urbanization
• The role of small & medium industries (SMIs) :
- Investment of SMIs in small towns and cities promotes urbanization.
- Urbanization is an index of transformation from traditional rural economies
to modern industrial one.

14. The possible benefits of a multinational investing in a country:
Inward investment will usually help a country's balance of payments situation. The investment itself will be a direct flow of capital
into the country and the investment is also likely to result in import substitution and export promotion. Export promotion comes
due to the multinational using their production facility as a basis for exporting, while import substitution means that products
previously imported may now be bought domestically
Improving the balance of payments
Providing employment
Most employees will be locally recruited. These benefits may be relatively greater given that governments will usually try to
attract firms to areas where there is relatively high unemployment or a good labour supply
Source of tax revenue
Profits of multinationals will be subject to local taxes in most cases, which will provide a valuable source of revenue for the
domestic government.
Technology transfer
multinationals will bring with them technology and production methods that are probably new to the host country and a lot can
therefore be learnt from these techniques. Workers will be trained to use the new technology and production techniques and
domestic firms will see the benefits of the new technology. This process is known as technology transfer.
National reputation
the presence of one multinational may improve the reputation of the host country and other large corporations may follow
suite and locate as well

15. Urbanization Policy:
• In Malaysia Urbanization policy focuses on planned and monitored urbanization.
• It is an important strategy to achieve NEP and to ensure balanced economy between
urban and rural.
• The main goal is to instigate integrated economic system of the country
To ensure:
• well organize towns and urban centres with various sizes and capacities and also in terms
of roles and contributions to the overall socio-economic development of the country.
• Well organized road system linking rural and urban areas. This is to enable rural dwellers to
participate in urban base economic activities with have higher production capacity
• Also will expedite the process of urbanization in rural areas.

16. National Industrial Policy:
• In 50s and 60s, industrial program is introduced to diversify the country’s economic
activities – which was relying heavily on rubber and tin production.
• The prices of both commodities were not stable. Therefore, the government has launched
industrial program to activate stable and rapid economic development
• Early stage of industrial development was focusing on import substitution industry.
• 70s, focused on rapid industrial development to fulfill employment capacity to achieve NEP
– export base industry that requires many employees (labour force).

17. In the 80s - focused on heavy industry
• To strengthen the industrial base
• To increase the skills in high-tech industries.
• To promote faster industrialization process.
• Therefore, the government has to plan, implement, finance and manage heavy industries
as the private sector was unable to finance the industry and unable to take risk.
• Requires a large amount of capital and long term economic returns.
• Pelan Induk Perindustrian:
Please refer to the slides provided in Learning.uum.edu.my

18. Creating a private sector-led economy by modernizing business regulation, liberalizing
the services sector, removing market distortions, introducing competition legislation and
improving the interface between government and business;
Supporting innovation-led growth by shaping a supportive ecosystem for innovation,
creating innovation opportunities, putting in place innovation enablers and funding
innovation;
Rationalizing the role of government in business by increasing privatization and public-
private partnerships (PPPs), establishing a facilitation fund and achieving an appropriate
balance between government, government linked companies (GLCs) and the private sector
10th MP- Industrial Focus :

19. Developing small and medium enterprises (SMEs) as an engine of growth and innovation by
reducing regulatory costs borne by SMEs, building capacity in SMEs, supporting the creation
of an entrepreneurial culture, strengthening enabling infrastructure, and enhancing access to
financing;
Competing globally by supporting Malaysian firms to compete in global markets and
competing to attract foreign investment and talent to Malaysia;

20. Putting in place world-class infrastructure for growth by significantly increasing broadband
penetration, continuing to upgrade physical infrastructure to enhance access andconnectivity,
and ensuring effective sourcing and delivery of energy
Focusing on key growth engines by building
urban agglomerations, focusing corridors
around clusters and developing National Key Economic Areas (NKEAs)

21. 11th MP
• Transforming services
• Energizing manufacturing
• Modernizing agriculture
• Transforming construction
• Growing dynamic SMEs
• Translating innovation to wealth
• Investing in competitive cities and
regional economic corridors