IRJET- The Importance of Industrial Parks in Economic Development of Bihar

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The Importance of Industrial Parks in Economic Development of Bihar Amit Kumar Sinha1, Abhishek Soni2 1

Assistant Professor Civil Engineering Department Mandsaur University Assistant Professor Civil Engineering Department Mandsaur University

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Abstract - Besides having globalization process, the development inequality among countries occurred more significantly.

Some countries have effectively benefited from the globalization process, but some could not use the advantages like the developed countries. Thus, the impact of the globalization process on the countries’ economy started to be the debating topic.

The one of the major catalyst sector of economy is industry, and the further important field in industry sector is industrial zones, that have become recent actual topics in economy. In this paper, the impacts of Industrial Parks on economic development, the historical development of industrial parks, characteristics and importance have been analyzed, by reviewing the international experience and possible significance on Bihar industrialization process.

Key Words: Globalization, Industrial Parks, Industry, Economic Development.

1. INTRODUCTION The imbalances and inequalities of Globalization Process have become the debating topic in recent years. In order to reduce these imbalances, there have been several investigations and measures took place. The international and regional economic organizations thinking to be reduction instrument for the problems that have been occurred due to the globalization. This is an obvious trend that, these international and regional organizations have always plausible influences on the economies. In order to enhance the economic development, the infrastructure in industrial, agricultural and service sectors has to be completed.

Nowadays, the main actors in economic development are industrial and service sectors, thus, industrial sector is essential in building the economic development strategy. So, Industrial Parks in this prospective, have to be investigated and discussed possible outcomes for the economic development.

1. The Concept of Industry and Industrialization When we say industry, we generally perceive it like diversification of raw materials to the final goods. Briefly to express, by using capital and labor from the production functions, diversification from raw materials and intermediate goods to final goods, which simply derives manufacturing, or in broad sense, the production of goods and services organized by entrepreneur that brings profit, could be the definition for the term industry [1. p.205]. Furthermore, industry as a concept in brief could be named as production industry, or in broad it covers mining and energy sectors [2. p.344]. The Australian economist Colin Clark argues that, having industrialization, is development of agricultural and service with the same level as in industry, by promoting strong physical capital, also by strengthening the research and development of these technological sources to more productive steps. Where nowadays when we say developed economies, we perceive fruitfully industrialized economies, the yields that industrialization is the main indicator for the economic development of the country [3. p.67].

The development of countries economies is the same meaning with the development of industrialization sector. The industrializations means, the enhancement of the weight of industry sector. But, industrialization does not necessarily mean the augmentation of proportion of the industrial goods in the total production of final goods. Having the increase of industrial goods in total production, the enhancement of the industrial goods in the export goods, also the development in the level of the physical capital, technology, and development of the industrial production and its utility, give the proper definition for the term of industrialization [4. p.181].

2. Industrial Parks and Historical Development Being far away from the Heavy Industry and integration facilities, Industrial Parks (IP) contains the small and middle size manufacturing unities that have different and complying production procedures in special closed zones. IPs have common social, technical and residential services. The most important issue here is, these services and promotions have been harmonized and adjusted for the same goal. The residential life doomed to be arranged for the healthier and proper urbanization facilities [5. p.1]. There are many definitions and explanations for the concept if industrial parks. According to the Š 2020, IRJET

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United Nations definition, “Industrial Parks are, the small and middle size organizations that have integrated business and production, with benefiting from the common infrastructure services, that have allocated in standard fabric buildings” [6. P.1].

In the other argument, IPs are the fabric allocations under economic measurement where, transportation, water, canalization, electric, banking, canteen, medical aid and other services are given in the same restrained zone [7. p.2]. The other interesting definition is; “Excepting Heavy Industrial Complexes(Zones), but small and middle sized organizations, situated in harmonized and in complementary production process, with limited location area and common production process planning” have been explained [8. p.62].

IPs’ first implementations started by private sector in order to get profit. But after the World War II, IPs have been invested and constructed by the governments, and intended to maximize and develop small and middle size businesses in least developed countries [7. p.2].

The first IPs invested in England in 1896, near the Manchester city in the so called Tradford Park. This trend followed by United States in 1899, and by Italy in 1904. The implementation and improvement of IPs in the developing countries have been observed after 1950s. Private Industrial Zones and Technoparks have come about in the last two decades, that reflects the global competition that brought by the foreign direct investments.

Technoparks have established by the private companies for the R&D supporting intentions. The main factor that approved IPs in global arena acceptable is, it has been found as an important method of industrialization. As industrialization found the major negative factor that opens big gap between development levels among developed and developing countries. In this perspective, IPs by its equal and fair added value distribution decrease these problems to the minimum level. Also IPs has been perceived as the main force in the urbanization, started to be one of the governmental policies [9. p.1].

1.3. Characteristics of Industrial Parks We can state the main characteristics of IP’s like: -

The institutions in IPs are either complementary in production process or producing in the same line.

The institutions here are purposed for production and they have limited size: small or middle sized.

Accumulated in a certain place and contains clustered institutions, Having supporting local, administrational and private institutions in the clusters by networking [10. p.209].

The other transportation, water, electrical, gas and canalization services is common. The use of the infrastructural services with common discipline, helps to avoid environmental pollutions and for the appropriate regional planning. Furthermore, the deal with infrastructural issues is completely related to the administration of IPs, that increases the profitability and utility of clusters.

1.4. The Purposes in Implementation of IPs. Holding the main purpose of IPs effective allocation, it is also a development instrument. Where, IPs are the fruits of the planned, organized and systemic approach. That even for entrepreneurs, IPs offers, organized and productive areas, that is profitable for beginners. In this sense, we can characterize the purposes of IPs as following [11. p.14]: -

The promotion the appropriate environment for the entrepreneurs, Besides keeping strong and effective infrastructure, institutions benefits from the positive externalities of IPs, which enhances their competitiveness and profits, Faster industrialization and its quick influence around the country, To avoid the uncontrolled urbanization, Hold the distribution of economic development sustainable and equal over the regions of the respective country, Reduction of immigration process, simply saying decreasing in the rate of migration to the big cities, Promote Standardization,

IPs give incentives for the entrepreneurs by reducing the challenges of where and how to produce, in other words, entrepreneurs easily and fast can invest and enter to the market with minimal biases.

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2. The Importance of the IPs and its Functions In the past century, IPs has been established for the development of industrialization, having increasing the productivity, utility and quality of the goods. IPs recognized as a method of cost-alleviation process in the industrialization process. In most of the developed countries, IPs has been organized for the transformation of population from the crowded cities to the rural and accurate areas, as an instrument of public policy [12. p.311]. We definitely know that, allocation of industries within or even around the cities yields to very significantly negative externalities like, air and environmental pollution, unsystematic city distribution and allocation and the difficulty with the transportations. Thus, the establishment of IPs has become inevitable for the governments that would induce industries to facilitate the living standards in urban areas [13. p.6]. Besides its environmental benefits, IPs also decreases the transportation and business expenditures by promoting easy and productive atmosphere. Where, it is the proper way to produce cheap and effective goods, providing the economies of scale [14. p.2]. In the other hand, one of the main withdrawers are entrepreneurs, using the mobilites that provided by IPs, giving them opportunity to invest and produce more effectively, as the communal and energy expenses decreases the production prices, that brings to lower prices and effective competition [12. p.11].

In developing countries, the necessity for the IPs is rather important and beneficial than in developed ones. As the clusters in IPs are small and middle sized institutions, the importance and productivity of these businesses are more efficient than in developed. Because, the institutions in developed countries are large and could provide these functions within the institutions themselves, and small- middle sized businesses are not so much productive than large ones, thus, the effectiveness of IPs remarkably beneficial for developing countries. In this case, we can derive that IPs promote huge incentives for small and middle businesses in order to invest and enlarge their productivity and profits [13. p.15].

The one important issue for IPs is the appropriation the places that are not eligible for agricultural purposes. One possible negative externality of IPs is its damage for suitable lands that are opportunity for agriculture sector, for that reason, in the construction plans of IPs this harm has to be taken into the consideration. As in construction of IPs the habitation for the employees is the case, so in order to meet healthy and safe conditions for habitants, the planning and structuring of IPs have to be toward above standards [16. p.12] Eventually, IPs showed significant regional development in all locations where they have constructed. In a long trend, it has been witnessed that IPs revived the stagnation in the regions by accumulating and increasing the employment and promoting balanced economic growth [17. p.203].

3. The Global Implementations of IPs. There are many implications of IPs that could be easily observed in United Kingdom from Europe, in United States from America and in Malaysia and Singapore from Asia, where IPs have important role in their economic growth and development [5. pp.48-57].

3.1 IPs in United Kingdom: In UK the IPs are mainly called “Industrial Estates”. UK’s government has supported the investments to the IPs, where it would reduce the unemployment and would revive the economy in these areas, that apparently will open the gates for the economic growth. In the first years, the goal of IPs was oriented to get profit, but after World War II it has become as an instrument for economic strategy. The first implementations of IPs, is possible to see near the city of Manchester. But, it has gained its importance after 1959s, where IPs started to control under the governmental regulations and rules. Here, private sector has its priority. The aims could be listed in 4 main headings: -

Shifting industrial zones to less developed areas, Using IPs as a main instrument in coping with unemployment, Giving incentives for shifting the IPs to the non-industrialized regions, especially transforming from the industrialized and big cities, Application the urbanization and industrialization for the undeveloped areas in planned and systematic format.

3.2 IPs in United States: But in comparing with UK, “Industrial Parks” is the name that have been perceived in US. As in its other economic fields, the IPs in US established under the market mechanism regulations. In the establishment of these zones, real estate trader firms, railway and airway companies, and land owners are main entrepreneurs. In the large sized industry IPs, the controlling and monitoring of IPs is running by the public agents. The implementations of IPs fostered after World War II, and have main four goal: -

Providing certain areas divided into sub-parcels, introducing to the industrial institutions,

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The investments in the big cities would bring to higher costs due to the higher rents, by shifting IPs to rural areas, the aim is to have lower-cost production, The use of more productive areas, where the raw materials and other opportunities are mobile for the industries, that they can withdraw, Using these IPs for the future development purposes as a strategic instrument.

3.3 IPs in Malaysia: Since 1960s, the 78% of overall industry has been occupied by IPs, which is the significant rate for IPs investments, that, was the main policy in the development and improvement of industrialization. Also, the areas where the IPs would constructed have been categorized and systematically adjusted. The same above mentioned purposes were among the establishment goals of IPs in Malaysia.

The main aim of IPs in Malaysia is to have export-oriented growth, by stimulating and motivating the exporting. The classification of IPs in Malaysia is following: -

Having 222 economic and free trade zones, supporting by port and local administrations, There 13 export led industrial zones, where 80% of their production is exporting, To meet the technologic knowledge and R&D necessities of industries, there are 4 private industrial parks functioning.

3.4 IPs in Indonesia: The promotion of IPs in Indonesia has significant role, where IPs has been established for exporting intentions by having low labor costs and higher technology. Although, the establishment of IPs began in 1970s, the integration of private sector to the IPs started in 1989. There are 4 different regions exist: National private company, Foreign investment joint entrepreneurs, Businesses under the governmental property and Local firms.

The allocation of IPs is strictly distributed by local and central administration, namely, suitable lands for agriculture has not been touched, and organized according to systemic scale. According to 2002 data, there are 185 IPs functioning in 17 different geographical regions Indonesia. In addition, there are 46 IPs that are under the property of government. The 80% of these IPs are situated in between West Java Region and Jakarta city, where 85% of them are private property. The 15% of total industrial production coming from IPs, and the weight of Japanese and Korean investors is significant. The majority of production in IPs are: manufacturing, paper and other heavy industry businesses. There are several discounts and many infrastructural services that provided for investors in IPs as, healthcare, security, offices, conference halls, telecommunication and private transport services.

As seen from the experiences above, the implications of IPs in different countries servicing to the one goal, to increase the production and economic growth, by reducing costs and giving incentives for entrepreneurs to invest. The establishment of IPs in developing countries, mostly oriented for export enhancing plans. In the implementation of IPs in various countries has to be investigated and well programmed. The one successful experience in country could not be the prerequisite for another, the economic, geographic and financial opportunities and conditions has to be taken into the consideration in the establishment of IPs [17. pp.91-102].

4. CONCLUSIONS Since after gaining independence bihar was one of the most successful and industrial state of India. But since after independence government policies and bad governance of state, make a great deterioration in the industrial development of bihar. Since after division of bihar and formation of Jharkhand which undertake major industries and mines, make bihar an undeveloped state and very backward state. As bihar is facing problem in the field of education, employment and health sector.

Setting up of industries parks would make Bihar self sufficient and they would bring more industrial investments and also great amount of jobs and prosperity.

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5. Yavuz Bayülken , Cahit Kütükoğlu, Organize senayi bölgeleri, Küçük senayi siteleri, Teknoparklar, tmmob ,Makina mühendisleri odası, Yayın no:MMO/584,2012, s. 1 6. Çezik, Asuman-Ayda Eraydın; Türkiye’de Organize Sanayi Bölgeleri (1961-1981), DPT Yayınları, Ankara , 1982, s.1 7. Eyüboğlu, Dilek; 2000’li Yıllarda Organize Sanayi Bölgelerimiz, MPM Yayınları, s.2. http://www.mpm.org.tr/OSB.pdf (12.03.2007) 8. Dinler, Zeynel; Bölgesel İktisat, Ekin Kitapevi Yayınları, 6. Baskı, Bursa 2001, s. 62.

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