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Agglomeration & Dispersion. Industrial Agglomeration Clustering or concentration of industrial activities in a comparatively small area a process which.

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Presentation on theme: "Agglomeration & Dispersion. Industrial Agglomeration Clustering or concentration of industrial activities in a comparatively small area a process which."— 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 links Information links Service links Marketing links Subcontract links

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

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

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

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 –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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