ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A cottage industry is a small manufacturing business that is owned and operated by an individual or a family, typically operating out of a home rather than a purpose-built facility. Cottage industries are defined by the small amount of investment that is required to start one.

Detailed explanation-2: -These kinds of businesses start in rural areas where unemployment and underemployment are common. Cottage industries benefit the economy by absorbing a large portion of the surviving workers in rural areas.

Detailed explanation-3: -The first cottage industries started in the U.S. and the U.K. and primarily focused on sewing, garment-making, shoe-making, small machine parts, and textiles. Oftentimes, these businesses’ staff were comprised of family members that produced finished goods by utilizing raw materials.

Detailed explanation-4: -During the Industrial Revolution, family-based cottage-industries were displaced by the factory system, a method of manufacturing using machinery and the division of labor.