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Industrial Location: Economic Factors, Strategies, Classifications

December 9, 2023 1909 0

Factors Shaping Industrial Location

The factors affecting the industrial location are the availability of raw material, land, water, labor, power, capital, transport and market. Industries should be located at points where the production costs are minimum. Hence, Industries are situated where some or all of these factors are easily available. 

Industrial location, a key aspect in this decision-making process, plays a pivotal role in determining the success and efficiency of an industry. Sometimes, the government provides incentives like subsidized power, lower transport cost and other infrastructure so that industries may be located in backward areas. Industrialisation often leads to development and growth of towns and cities.

Some of the factors that influence the industrial location are as follows:

Access to Market
  • Strategic Placement: The primary factor in choosing the location of industries is the presence of a market for manufactured goods.
  • Definition of Market: A “market” refers to individuals who both desire these products and possess the purchasing power to buy them from sellers in a given area.
  • Market Dynamics in Industrial Location: Remote regions with sparse populations offer limited markets.
    • Developed areas such as Europe, North America, Japan, and Australia offer extensive global markets due to the high purchasing power of the people. 
    • Likewise, densely populated areas in South and Southeast Asia also present large markets. 
  • Global Giants: Certain industries, such as aircraft manufacturing, operate on a global scale, catering to a worldwide market
    • Similarly, the arms industry also serves global markets.
Access to Raw Material
  • Strategic Sourcing: Industries prefer raw materials that are not only cost-effective but also easily transportable
  • Proximity to Raw Material Sources: Industries based on cheap, bulky and weight-losing material are located close to the sources of raw material such as steel, sugar, and cement industries.
  • Perishability: It also plays a critical role in determining the location of industries. 
  • Example: Industries involved in agro-processing and dairy products tend to establish themselves in proximity to the sources of farm produce or milk supply respectively. 
Access to Labour Supply
  • The Crucial Role of Labour Supply: Labour supply is an important factor in the location of industries. 
  • Evolving Dynamics: Increasing mechanisation, automation and flexibility of industrial processes have reduced the dependence of industry upon the labours
  • However some types of manufacturing still require skilled labour such as electronics or defence manufacturing etc. 
Access to Sources of Energy
  • Power Proximity: Industries which use more power are located close to the source of the energy supply such as the aluminium industry.
  • Shifting Energy Landscape: Earlier coal was the main source of energy, today hydroelectricity and petroleum are also important sources of energy for many industries.
Access to Transportation and Communication Facilities
  • The Crucial Role of Transportation Infrastructure: Fast and efficient transportation infrastructure is essential for the growth of industries. 
    • It is crucial for transporting raw materials to factories and distributing finished products to markets.
  • The Cost of Transport: It plays an important role in the location of industrial units. 
    • Regions like western Europe and eastern North America, have highly advanced transportation systems, which has always induced the concentration of industries in these areas. 
  • Transportation and Communication Synergy: In the modern context, modern industry is closely intertwined with transportation systems.
    • Improvements in transportation led to integrated economic development and regional specialisation of manufacturing.
    • Effective communication is another vital requirement for industries. 
      • It facilitates the exchange and management of information, enabling businesses to operate efficiently and stay competitive in the global marketplace.
Government Policy
  • Strategic Development: Governments implement “regional policies” to promote “balanced” economic development by strategically establishing industries in specific areas.
  • Fostering Equity: These policies are designed to distribute economic opportunities more evenly across regions and promote overall economic stability and growth. 
Access to Agglomeration Economies/ Links between Industries
  • Strategic Alliances: Many industries benefit from proximity to a leader-industry(such as steel industry) and other industries. 
    • These benefits are termed as agglomeration economies.
    • Savings are derived from the linkages which exist between different industries.

Table: Factors influencing industrial location

A Comprehensive Look at the Classification of Manufacturing Industries

Manufacturing industries are classified on the basis of their size, inputs/raw materials, output/products and ownership. This classification plays a crucial role in the broader context of industrial location, shaping the economic landscape. Let’s delve into the details of this classification.

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Let’s analyse this classification of industries  in detail. 

Classification of Industries

Exploring the Spectrum of Household, Small-Scale, and Large-Scale Manufacturing

  • Metrics of Magnitude: The amount of capital invested, number of workers employed and volume of production determine the size of industry. 
  • Accordingly, industries are classified into household or cottage, small-scale and large-scale industries.

Cottage Manufacturing: Crafting Local Livelihoods through Artisanal Ingenuity

  • Artisanal Manufacturing: This type of manufacturing represents the smallest-scale production unit.
    • Artisans utilise local raw materials and basic tools to create everyday items within their homes
    • It  often involves the assistance of family members or occasional part-time labour. 
  • Local Economies: Finished products may be for consumption in the same household or, for sale in local (village) markets, or, for barter.
    • In this form of Production, factors like capital and transportation have limited influence because it holds low commercial significance, and most tools are crafted locally.
  • Diverse Range of Products: Typical products produced within this sector encompass a range of everyday goods,
    • Example: Food items, fabrics, mats, containers, tools, furniture, wooden figurines sourced from local woodlots and forests, leather goods such as shoes and thongs, pottery, bricks from locally available clays and stones, and jewellery made from gold, silver, and bronze by skilled goldsmiths. 

Housing Industry in nagaland

 

Foot Loose Industries:

Foot loose industries can be located in a wide variety of places. They are not dependent on any specific raw material, weight losing or otherwise.

They largely depend on component parts which can be obtained anywhere. They produce in small quantities and also employ a small labour force. These are generally not polluting industries. The important factor in their location is accessibility by road network.

 

Empowering Communities: The Impact of Small-Scale Manufacturing on Local Economies

  • Beyond the Household: Small-scale manufacturing is distinguished from household industries by its distinct production methods and the location of manufacture
    • It typically takes place in workshops situated outside the home or cottage of the producer.
  • Characteristics of Small-Scale Manufacturing:
    • This form of Production relies on local raw materials.
    • It  incorporates basic power-driven machinery, and employs semi-skilled labour.
  • Employment Generation and Economic Growth: It plays a crucial role in generating employment opportunities and boosting the local purchasing power within communities.
    • As a result, countries like India, China, Indonesia, Brazil, and others have developed labour-intensive small-scale manufacturing as a means to provide jobs for their populations.

Products of cottage industry in Assam

Transforming Industries: Exploring the Dynamics of Large-Scale Production

  • Characteristics Large-scale Manufacturing: It is characterised by several key features, such as
    • Access to various raw materials, enormous energy, specialised workers, advanced technology, assembly-line mass production and large capital.
  •  Two Broad Types: On the basis of the system of large scale manufacturing, the world’s major industrial regions may be grouped under two broad types:
    • Traditional large-scale industrial regions which are thickly clustered in a few more developed countries.
    • High-technology large scale industrial regions which have diffused to less developed countries.

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Read Also: Cultivating Prosperity: The Dynamics of Agro-Based Industries and Their Impact on Economy

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 Final Result – CIVIL SERVICES EXAMINATION, 2023.   Udaan-Prelims Wallah ( Static ) booklets 2024 released both in english and hindi : Download from Here!     Download UPSC Mains 2023 Question Papers PDF  Free Initiative links -1) Download Prahaar 3.0 for Mains Current Affairs PDF both in English and Hindi 2) Daily Main Answer Writing  , 3) Daily Current Affairs , Editorial Analysis and quiz ,  4) PDF Downloads  UPSC Prelims 2023 Trend Analysis cut-off and answer key

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 Final Result – CIVIL SERVICES EXAMINATION, 2023.   Udaan-Prelims Wallah ( Static ) booklets 2024 released both in english and hindi : Download from Here!     Download UPSC Mains 2023 Question Papers PDF  Free Initiative links -1) Download Prahaar 3.0 for Mains Current Affairs PDF both in English and Hindi 2) Daily Main Answer Writing  , 3) Daily Current Affairs , Editorial Analysis and quiz ,  4) PDF Downloads  UPSC Prelims 2023 Trend Analysis cut-off and answer key

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AVAILABLE FOR DOWNLOAD SOON
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध
Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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