1. Locational Factors for Industries

2. Factors affecting industrial location

3. Locational Factors Physical Factors Land Raw materials Power / Energy
Human Factors:
Labour
Transport
Market
Technology
Capital
Behavioural factors
Government Policy
Agglomeration

4. Land Land: Heavy industries: A large area of cheap low flat land.
Location
Size
Landform
Cost
Heavy industries: A large area of cheap low flat land.
Light industries: Small apartments are also OK.

5. Raw Materials Raw materials Ubiquitous Localized Water, Air, Soil……
Iron ore, coal, gold, tin, ……

6. Raw Materials Characteristics of Raw Materials
Weight loss or Weight gain
Degree of perishability
Value per unit of weight
Availability of substitute materials
Number of materials involved in production
Source of supply
Raw materials oriented / Market oriented

7. Raw Materials Decreasing importance of raw materials
Improvement in Transport
Improvement in industrial techniques
Others:
New raw materials / Substitution
Recycling

8. Power / Energy Type of Power Electricity Water  H.E.P. Fossil fuel
Coal
Oil
Natural Gases
Nuclear
Electricity
Aluminum Smelting as a Power Oriented Industry

9. Labour Cost of Labour – Wage Level Skills of Labour Labour Mobility
Highly skilled, Semi-skilled, Unskilled
Labour Mobility
Highly skilled (highly mobile)
Semi-skilled (fairly mobile)
Unskilled (least mobile
Reputation

10. Labour Labour-oriented Industries Declining in importance
Machines / Robots
Still very attractive for labour-intensive industries
Labour-oriented Industries

11. Transport Import raw materials Export finished products
Transport cost was the critical factor affecting industrial location in the past

12. Transport
Transport costs decreasing with increasing distance

13. Transport
Freight Rates

14. Transport
Mode of transport

15. Transport Mode Long distance Short distance Speed Goods Type Water
Cheapest
Highest
Slow
Bulky, low value,
non-perishability
Rail
Cheap
High
Fast
Bulky
Road
Fair
Door to door, light
Air
------
Fastest
High value, fragile
Perishability

16. Market Markets are where the finished products will be finally go.
Markets attract many industries to locate
Good infrastructure
Transportation, Electricity supply, water supply, drainage system, communication…….
Large population size
Large labour force
Skilled labour
Obtain advanced technology
Industrial agglomeration

17. Market Some industries are more likely to be located near markets
Perishable products: eg. Bread, cakes….
Fragile products: eg. Bottled drinks, porcelain…..
Bulky and low value products: eg. Brick-making…..
Labour intensive industries: eg. Toy-making, electrical goods….
Keep close contact with consumers: eg. Jewellery, printing…
Involve large quanities of raw materials: eg. Electric Appliance..
Specialized products:
eg. Automobile parts manufacturers located near auto making centre

18. Technology Technology is very importance It is a localized factor
It change the production process completely
It is a localized factor
Ways to obtain technology
From advanced countries (developed world)
Universities
Research Centre

19. Technology It costs much capital for research
Technology-intensive industry = Capital-intensive industry

20. Behavioural Good decisions Real World Full knowledge of information
Rational
Objective
Real World
Incomplete information
Irrational
Subjective

21. Behavioural Entrepreneur is not an Economic man
Entrepreneur is a Satisficer

22. Behavioural
Decision Making Process

23. Behavioural
Behavioural Matrix

24. Behavioural
Improvement of entrepreneur skill

25. Government Policy
Cycle of industrial
development

26. Government Policy Rationale of government intervention
Strategic reasons: eg. China, USA
Economic reasons
Promote overall economic growth
Promote the growth of a particular industry
Diversify the economy
Ensure regional economic balance
Ensure efficient ultilization of resources

27. Government Policy
Indirect role
Indirect role of governments

28. Government Policy Effect of government intervention
Extending Spatial Margins
Regional Multiplier
Cumulative Causation

29. Government Policy
Extending Spatial Margins

30. Government Policy Regional Multiplier K = 1 / MPS
Where K is the multiplier
MPS is the marginal propensity to save
Example: MPS=0.2; K=1/0.2=5; initial input=$1000
$1000+$800+$640+$ ……+$m=$5000
$5000 is five times of the initial input $1000

31. Government Policy
Cumulative Causation

32. Agglomeration Industrial Linkages Locational choice
Continuing operation of firms at given location
Constraint on movement

33. Agglomeration Types of Linkage Material Linkages (Tangible)
Process Links
Sub-contract Links
Service Links
Marketing Links
Information Linkages (Non-tangible)
Banks, stock-brokers, telephone and face to face contact between firms

34. Agglomeration
Forms of Linkages I

35. Agglomeration
Forms of Linkages II

36. Agglomeration
Complexity of Linkages

37. Agglomeration Reasons for agglomeration (External Economies of Scale)
Transport savings
Access to skilled labour
Presence of ancillary services.
Possibility of internal economies
Infrastructure savings
Attract investment
Research and development

38. Agglomeration Industrial Inertia / Geographical Inertia
Once a factory has been built on a particular site, it will tend to remain there even though the original factors no longer exist.
It is a very important factor for hindering the movement of industries.

39. Agglomeration Reasons for industrial inertia Costs of moving
Presence of a pool of labour
Costly to move a skilled labour
Costly to train unskilled labour
Presence of associated industries
Infrastructure might not be a available in the new area
Reputation

40. Agglomeration
Decentralization (Suburbanization of industries)

41. Agglomeration Factors affecting decentralization Expansion of firm
Redevelopment of inner cities
Inner city problems which hinder firms development
Demand for office space in the central city
Suburbanization (population & market)
Nature of industry
Government Encouragement