"THE CONSTRUCTION OF AN INDUSTRIAL STATE" "Further talks have occured of the need for 'real' economies and not 'fake' economies. People have grown tired of the financial-fictionalism as the paper oil market collides with the actual oil market as many economies shift towards a service-focused economy. But one asks, how do we get a 'real' economy?" "The 'real' economy that people talk about is an economy that is focused more on the real or tangible goods or more specifically in this case industrialisation? But what does industrialisation actually involve or entail?" "When implementing economic instruments, it's important to remember that not all economies are equal. You have your cards. And they have their cards. There are certain economic contraints within your economy for example, you might lack the raw materials, you might have low labour shortages, you might have a small budget. It's important to understand your constraints. For example, having a high exchange rate means that exports become less globally competitive in the market in terms of price. How do you deal with this? If you are borrowing a lot of money, how much are the interest payments?" "There are other forms of constraints which one of them is political constraints within a country in which various stakeholders seek to be satisfied. To understand this, look at gulf countries. Many of the countries actually refuse to go towards a proper form of industrialisation and more specifically arms industrialisation as they fear a large domestic arms industry could lead to a coup and the saudis try to 'offset' this via their massive imports of western arms which they purchase from multiple european countries and american companies in which a lot of money is exchanged. In other words, in many cases, its not that countries aren't capable of it, they're simply unwilling to do it and in the context of industrialisation, the difference being willing to do something and not willing to something means a lot and there is a magnitude of differences that outwardly observed." "To take into consideration when we are talking about industrialisation, when industrialisation was initially talked about, it was mentioned in the context in an era of where feudal lords who owned the land used the serf and the slaves as part of their expansion and the fertilisation of their land in a sedantry agarian economy." "In the context we live, we are talking about shift from a services focused economy towards a more industrialised country or countries that are trying to skip industrialisation as part of their attempt in obtaining the service type economy that many people in the global south see within the west. Obviously the problem with trying to skip industrialisation as part of their attempt to get the service type economy the west has is that the service type economy that the west has relies on significant amount of hardware and technological progress which is unlikely to be done without industrialisation." "But how do we move forward from a service type economy to an industrialised economy. What is meant by a service type economy in the context we live in is that we are referring to a financialised economy more specifically where a large proportion of the money is being allocated or circulated within the financial sector. This isn't to dismiss the financial sector as being integral to the economies of today in fact south korea forcibly pushed banks into financing the south korean industry i.e. the industry that is associated with the chaebols. But it is undeniable that many economies are reliant on the financial products that is offered by the finance sector and that many common people that struggle to purchase assets such as cars or houses tend to sigh themselves towards the finance sector as they seek methods of obtaining that asset. The finance sector chases after high profit margins which is quite obvious as many firms want to increase their profit but understanding this is important in why if the finance sector was left alone, it is unlikely to willing finance the industrialisation of the economy. To understand this further, we look at the categorisations between different assets where one of them is an appreciating assets and the other is depreciating assets. The popular appreciating assets tend to be houses especially in capital cities as demand tends to increase as the population increases and the land in which the house was built becomes more scarce i.e. the housing supply tightens. Whilst investing in houses could be beneficial to the construction company which still has a role in the industrial state, much of the construction is towards retail housing and not really factories. Meaning much of the money and the finanacing and the consumption is allocated toward mainly either the finance sector via the consumption of loans and the retail housing sector. This is very much an obstacle towards industrialisation because industrialisation involves the financing of machinary but the thing with machinary is that it tends to depreciate in value not vice versa like housing. This is because machinary can get rusty, they become more used and they tend to wear down. This is even seen with commercial cars which common purchased by the consumer. In other words banks are not really interested in investing in companies with depreciating assets or the financing of such items when even the housing industry is much more profitable than the automotive industry which has products sold to multiple consumers. The question is how to obtain industrialisation in this context?" "Before dwelling onto the methdologies of industrialisation let us remind ourselves that certain countries have political constraints and economic constraints which prevent full industrialisation and that full industrialisation involves the usage of multiple economic instruments which push and push and push the stubborn door towards industrialisation. Don't think that using one economic instrument is enough to push industrialisation. Are you prepared to use multiple economic instruments at your disposal?" "The economic conditions needed for proper industrialisation: Low consumption level, high saving rate, cheap financing of machinary, low exchange rate, high forex reserve. Now some people understand the cheap financing side of things but why low consumption level and low exchange rate? Consumer consumption allocates money within the economy towards consumer goods and not capital goods such as machinary and low exchange rate is needed to keep exports which the industrial sector manufactures more competitive and it tends to be foreigners who demand industrial products and not domestic consumers." "However some might point out that machinary are not as popular as consumer goods for example the textiles industry gets more revenue and increases the currency reserve more than many machinary companies therefore the compromise towards this especially in the context of a very financialised and consumerist economy is the exportation of dual-use goods. Obviously they are not as effective as the actual machinary that the country wants to sell them, but it is a compromise after all." "However there are forms of methods in pushing industrialisation within the context of a financialised economy and the marketing strategy or pushing the bubble. Similar to the dot com bubble and the ai bubble, many bubbles are grow biggier with elaborate marketing strategies which exaggerate the potency of their products in which venture capital companies, finance companies and several other companies end up doing investing inside this bubble as they are swayed by these marketing strategies despite the profits being negative which is seen with openai." "There are several economic instruments that government is capable of using in obtaining industrialisation which is generally the following: purchasing foreign currency assets, changing interest rates (interest rate lowered if someone wants to lower exchange rate but increases consumption, interest increased if someone wants to lower consumption levels but increase exchange rate), subsidies (subsidies could be used to selectively pick companies that achieve particular production goals to avoid subsidies making companies to ineffcient), tariffs which could be used to aid domestic industry."
