The export of raw resources entails the creation of jobs and income in the importing countries, which for the exporting nations virtually means losing the said jobs and incomes. This process is considered a form of de-industrialisation, according to a 2013 paper by the Economic Commission for Africa (ECA), which sees it as a “critical cause” of weak industrial development.
The antithesis of the ill-advised export of rich and diverse resources is the resource-based industrialisation or SME promotion which not only retains jobs and incomes but also broadens the opportunities for creating more of them. In particular, the paradigm shift to resource-based industrialisation brings provable benefits to a nation’s continued growth and development efforts.
Every industrial entity or SME, supported by natural resources behind it, creates multiple backward, forward and horizontal linkages, thereby generating expanded opportunities for jobs and incomes on a sustained basis. The establishment of resource-backed industrial SMEs sets conditions for input supplies behind them (backward linkages) to increase in quantity and quality. They, in turn, generate inputs for other SMEs to take them for further processing, and that signifies forward linkages. Phenomenal in this whole process is also the provision of services at every stage. This exemplifies expanded and diversified opportunities stemming from SMEs.
Effective utilisation of investment resources in industrial promotion also occurs when SMEs, based on the input resources, generate multifaceted returns including jobs, incomes for employees and profit for enterprises on a sustained basis. Here, the prime objective of maximised benefits over generated costs in the process is derived from the investment. The ratio is maximised. Finally, the fiscal linkage is created here when the government receives tax revenues from thriving SMEs.
The productive utilisation of people’s capacity finds meaningful expression and the participation of communities will be rooted in the inputs they provide and in the end products they consume. The spatial spread or diffusion of development effects across a nation becomes rooted in the resource possibilities of geographical areas and in the entrepreneurial talents of SME promoters to utilise them.
Depending on the diversity of resource endowments between regions, region-based specialisation in product types can also be vital outcomes for mutually rewarding inter-regional exchanges of goods and services.
Necessarily, there need to be conditions that are basic and take centre stage for the preceding benefits to occur in the process of promoting resource-supported SMEs.
Critical among these is the acquisition of appropriate technology, which ought to be at best preceded and at worst coupled with the development of knowledge and skill capacities. The principles of increased technology productivity and technology maintenance demand for the said capacities to exist. Intensive and extensive vocational quality-based training is one route that can be expedited.