Location of industry and factors influencing it

LOCATION OF INDUSTRY. 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 located or established either by individuals or the government, either for economic or political reasons.

they\’re a whole lot of effects that warrant the location of an industry in a particular place

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.

The location of an industry can vary depending on various factors such as the type of industry, availability of resources, market demand, infrastructure, labour force, and government policies.

 Here are some common considerations for choosing the location of an industry:

  1. Proximity to Raw Materials: Industries that rely heavily on raw materials, such as mining, forestry, or agriculture, tend to be located close to the source of those materials to minimize transportation costs.

Access to Transportation: Industries that require easy access to transportation networks, such as manufacturing or distribution centres, often choose locations near major highways, railways, airports, or ports to facilitate the movement of goods.

  1. Market Accessibility: Industries that primarily serve local or regional markets may locate their facilities close to their customer base. On the other hand, industries that operate on a global scale may prioritize proximity to major transportation hubs for easy export and import of goods.

Labour Availability and Skills: The availability of a skilled workforce is an important consideration for industries.

They may choose locations where there is a pool of skilled workers or establish their facilities in areas with training institutions to develop the required workforce.

  1. Infrastructure: Adequate infrastructure, including reliable power supply, water resources, telecommunications, and waste management systems, is crucial for industrial operations. Industries often look for locations with developed infrastructure or collaborate with governments to develop it.

Government Policies and Incentives: Governments may offer various incentives, such as tax breaks, subsidies, or grants, to attract industries to certain areas.

Industries may consider these incentives and favourable government policies when selecting a location.

  1. Environmental Factors: Some industries, such as renewable energy or eco-friendly manufacturing, may prioritize locations with favourable environmental conditions or regulations to minimize their ecological impact.


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

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 the 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 the 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 a large labour force for their operations are called labour-intensive industries.


Adequate transport network

Transport is required essentially to move raw materials to industrial sites. read about distribution channels here

    • Transport could be by road (cars, lorries, buses, trucks, etc.) by sea (boats, ships) 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.

The creation of industrial zones in the country helps in the industry location

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 the 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 those where such industries are located.

Political consideration: Government can also influence the industry location of certain industries for political reasons, for the purpose of winning the 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 industry locations that manufactures arms and ammunition must be protected from competition.


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