Location of Industry

Back to: ECONOMICS SS2

 

Welcome to class! 

In today’s class, we will be talking about the location of industry. Enjoy the class!

Location of Industry

What does “Location of Industry” Mean?

This simply has to do with the geographical spread of economic activity in an economy.

Every economy in every country in the world have its own economic hub, even though some countries (such as the very developed countries) are fortunate enough to have their own locations of industries spread across. Note that there are several factors responsible for the location of industries. Locating an industry is a major business decision made by business executives. And they often make these decisions bearing the aforementioned factors in mind.  Some of these factors include but not limited to the following- proximity to raw material supplies, availability of labour, good communications and nearness to markets.

One of the good things about locating industry is that once it is established in a particular area, it serves as a focal point for more economic expansion by attracting the establishment of ancillary trades.

Factors affecting the location of industries

The factors affecting the location of industries are majorly divided into two namely-

• Geographic:

1. Availability of raw materials
2. Availability of electricity
3. Availability of qualified labour force
4. Good transportation network
5. Availability of water
6. Proximity to the targeted market
7. Availability of good, affordable and flat site for locating the factory
8. A conducive climatic condition

• Non-geographic factors:

1. Availability of the needed startup capital
2. Favourable/unfavourable government policies
3. Proximity to banking facilities
4. Availability of insurance companies

What are the advantages and disadvantages of localization of Industries?

Advantages

1. It brings about economic development within the specific location
2. A large market for a certain type of labour is developed
3. Labour force gets trained and equipped
4. Financial facilities grow even as more banks and other financial services providers establish businesses within the area.
5. Basic amenities get developed even as overall development gets to the new area of industrialization
6. There is a stimulus for starting subsidiary companies to provide support to the main companies.
7. The reputation of a locality for particular kinds of goods widens.

Disadvantages

1. There is an over-dependence on the main industry which may not be healthy
2. Over-population may become a problem.

 

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