Location of industry and factors influencing it


 Location of industry may be defined simply as the sitting or establishment of a firm or industry in a particular place. An industry may be established either by individuals or government, either for economic or political reasons.

In locating an industry in a particular area, one must bear in mind that the cost of production must be at the lowest level in order to ensure the continued existence of such an industry.


Many factors are considered before an industry is located in an area. These factors include:

  •  Proximity to source of raw materials
  • Cement producing industries should be located close to sources of raw materials to reduce cost of transportation.
  • Perishable goods like fruits, palm oil industries, etc should be located near their raw materials

  • Nearness to market: There should be ready market for the products of any industry to be sited in a place.
  • Fragile goods like glass, bulky goods like cement and other perishable goods should be located near the market.

  • Nearness to market reduces the cost of transportation and meets high demand by consumers.
  • Such industries located or directed towards the market are called market- oriented industries.

  • Availability of capital: There should be’ enough capital to purchase industrial input before and after setting up industries.
  • Entrepreneurs should have access to loans.
  • Industries which use heavy machines or which require large capital for their operations are called capital-intensive industries.

  •  Nearness to source of power
  • There should be ready and dependable sources of power.
  • Sources of power could be electricity,
    coal, thermal, petroleum products, etc.
  • Availability of labour
    There should b high quality skilled labour.
    There should also be enough unskilled labour.
  • Industries which require large labour force for their operations are called labour-intensive industries.

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  • Transport could be by road (cars, lorries, buses, trucks, etc.) by sea (boats, ship) or by air (aeroplane).
  •  Political stability

  • A stable government encourages industrial growth.
  • Political stability also attracts foreign investors.
  • Communal wars and conflicts do not favour industrial growth.
  •  Favourable climate

-There should be favourable climatic conditions for industries to grow.

  •  Government policies
  • Government can encourage the location of industries through certain policies like:
  •  Direct participation in setting up of industries.
  • Creation of industrial zones in the country

  • Provision of infrastructures like electricity, pipe-borne water, roads and telecommunications.
  • Granting credit facilities to industrialists.
  • Granting of tax incentives or holidays to potential industrialists or industrial set-ups

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  • To raise the standard of living: This is one of the reasons government participates in the location of industries. When such industries are located, are made available and the people

Employment and earn income, hence standard of living will be raised or improved.

  • Provision of standard goods: Industries so located are capable of producing standard goods, thereby preventing the proliferation of low quality goods.
  •  Equitable spread of development: Government tries to locate industries in different parts of the country in order to ensure even development.

  • Provision of employment opportunities: Government also participates in the location of industries in order to generate employment opportunities for the where such industries are located.

  • Political consideration: Government can also influence the location of certain industries for political reasons, for the purpose of winning election.
  • To check rural-urban migration: Industries are located in rural areas by the government to check the movement of people from rural to urban centres.
  • For economic development:  Industries which are equitably distributed round the country do ensure rapid economic development.

  • For strategic reasons: Government can also influence the location of certain industries for strategic reasons, e.g industries that manufacture arms and ammunition must be protected from competition.

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