Agglomeration & Dispersion

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

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

Measurement Coefficient of Localization Location Quotient Lorenz Curve

Line of even distribution

Linkages Production unit Subcontract Information Service links links Marketing links

Vertical linkages Garment Factory Cloth Textile Factory Synthesis fiber Chemical factory

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

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

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

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

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

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

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