Factors of Localization of Industries

factors of LOCALIZATION OF INDUSTRIES, Definition:

Localization of industries refers to the concentration of firms or industries producing similar products in an area.

In other words, it is the establishment of many related industries or firms which produce similar goods in a particular location, e.g. many cement manufacturing firms could be located in the same area because all of them produce similar goods which is cement.

Factors that Favor Localization of Industries

Access to raw material: This factor is important if the industry is raw material oriented. An industry is raw-material-oriented when the raw materials are bulky with a high cost in transportation.

Many firms which use the same type of raw materials could come together, resulting in localisation.

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  • Availability of marketing facilities: The concentration of industries in a particular area could be a way by which their products can easily be marketed.

Joint research and training centres: Research and training centres can easily be jointly established since all the industries involved are producing similar products. The cost of such projects will be minimal when it is jointly financed.

Government policy:Government can play a specific role towards the localization of industries either for economic, geographical, political or strategic reason Availability of labour: The large power of labour encourages firms to come together, resulting in localisation The availability of such labour promotes industrial growth. read about labour efficiency here

 Presence of technical economies: The concentration of firms that use the same type of spare parts or components in production may be located near industries r e: which produce such spare parts Availability of infrastructural facilities: The availability of infrastructural facilities like road, telephone, water and electricity could encourage the concentration of firms in a particular area.

Advantages of Localization of Industries 

It encourages development: The growth of industries leads to an increase in production of goods and services.

 Emergence of subsidiary firms: As major firms concentrate in one area, other subsidiary service firms that assist those major firms in the production of goods usually emerge.

 Generation of employment: The concentration of many industries in an area leads to the creation of many job opportunities.

 Emergence of organized market: Localization of industries assists in the emergence of organized market for the products.

  • Creation of competition: The existence of many industries leads to a healthy competition among them in order to excel or out-sell one another. This has indirectly resulted in high quality products.
  • The emergence of a pool of skilled labour: A large pool of skilled labour does emerge because such labour is easily attracted to industrial zones

The attraction of more people: A highly concentrated industrial estates attracts different shades of people to such areas for one reason or the other.

 Provision of social amenities: An industrial zone is always provided with social amenities like pipe-borne water, electricity, good roads, communication facilities, etc.

  • External economies: The concentration of industries in anD check out my post on purchasing power area encourages production of goods at the lowest cost, thus making such goods cheap and affordable. check
  •  Emergence of inter-dependence among firms: The concentration of many industries in an area leads to industries deriving mutual benefits from one another.
  • Encouragement of division of labour and specialization: Localization of industries leads to the emergence of division of labour and specialization resulting in increased production.

  • It ensures co-operation among firms: Localization of industries leads to cooperation among firms, possibly for a joint purchase of raw materials, joint research and training.

Disadvantages of Localization of Industries

  •  It leads to congestion: The concentration of industries leads to human, housing and traffic congestions.
  • Pressure on social amenities: As a result of high population in industrial estates, there is always pressure on available social amenities like pipe-borne water, electricity and housing.
  • It results in uneven development: The concentration of industries in one area leads to uneven development as other areas are left undeveloped.
  •  factors of LOCALIZATION OF INDUSTRIES, Definition: Localization of industries refers to the concentration of firms or industries producing It causes structural unemployment: When the industries suffer setbacks, there will be structural unemployment.
  •  Increase in crime rate: As a result increase in population in the industrial estate, there is usually an increase in rates such as armed robbery, snatching and hired assassins.
  •  It causes environmental pollution: a result of high concentration of in it leads to noise, air, water and pollution.
  • Targets of enemy attack: During industrial estates are usually the enemy attack.
  •  It encourages rural-urban migration: Industrial estates encourage people migrate from rural to urban centres.


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