Industrial Deglomeration A case study of China
What is industrial de-agglomeration? Deglomeration occurs when companies and services leave because of the diseconomies of industries’ excessive concentration. Firms can achieve economies because of the increase in scale of industrial activities benefited from agglomeration. However, after reaching the optimal size, local facilities may become over-taxed, lead to an offset of initial advantages and increase in PC. Then the force of agglomeration may eventually be replaced by other forces which promote deglomeration. (Diversification of an industry in the horizontal relations between processes within the plant.)
How does industrial de-agglomeration occur? Short-distance intra-city dispersal Long-distance dispersal – at regional/national level or international level
Intra-city dispersal From city areas to outskirts Suburbanization of industries Out-of-town movement of industries
Examples in Hong Kong
Long-distance dispersal Regional/national level From one part of a country to another Dispersal to new regions From more prosperous regions to less prosperous regions
Industrial decentralization in 1950s
Go West Policy, 1999
Long-distance dispersal International level From one country to another From MDCs to LDCs/NICs From LDCs to MDCs Cross-border or overseas Multi-national
Factors for industrial deglomeration Industrial diseconomies To capture a wider market To utilize raw materials from widely dispersed sources To benefit from the incentives offered by the government