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Agglomeration & Dispersion

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Presentation on theme: "Agglomeration & Dispersion"— Presentation transcript:

1 Agglomeration & Dispersion

2 Industrial Agglomeration
Clustering or concentration of industrial activities in a comparatively small area a process which encourages the clustering of industrial activities in particular areas because of external economies of scale

3 Specialization Economies of Scale experienced workers
higher efficiency expertise research and development

4 Measurement Coefficient of Localization Location Quotient Lorenz Curve

5 Line of even distribution

6 Linkages Production unit Subcontract Information Service links links
Marketing links

7 Vertical linkages Garment Factory Cloth Textile Factory
Synthesis fiber Chemical factory

8 Horizontal Linkages Glass-making Factory Iron & Steel Factory Engine
Tyre-making Factory Motor car assembly factory

9 Diagonal Linkages Jam- Fruit bottling Ice cream making canning Sugar
refinery Glass bottle factory Sugar mill

10 Agglomeration Economies
Transfer economies shorter distance for assembly of raw materials and distribution of products Localization economies specialization/division of labour bulk purchase of raw materials prestige & advertising advantage presence of ancillary services saving of storage a pool of skilled labour and managerial expertise

11 Urbanization economies
a pool of skilled labour and managerial expertise infrastructure savings snowballing effect research & development attracting investment

12 Diseconomies of scale Physical Economic shortage of land for expansion
shortage of labour traffic congestion urban decay Economic rising rent rising labour cost high tax

13 Social pollution / environmental problems high crime rate
pressure from labour union pressure from green groups government policy

14 Industrial Inertia Existing linkages
loss of skilled , experienced worker high cost of relocation risk of relocation personal & behavioural factors reputation & prestige

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