Locational Factors (YES)

7/21/2019 Locational Factors (YES)

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Locational Factorsfor

Industries


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Factors affecting industrial location

in the real world


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Locational FactorsPhysical Factors

Land

Raw materials

Power / Energy

Human Factors:

Labour

TransportMarket

Technology

apital!eha"ioural #actors

$o"ernment Policy

%gglomeration


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LandLand:

Location

Size

Landform

Cost

Hea"y industries: % large area o# cheap low&at land'

Light industries: (mall apartments are also)*'


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Raw MaterialsRaw materials

+bi,uitous

-ater. %ir. (oil

Locali0ed

1ron ore. coal. gold. tin.


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Raw Materialsharacteristics o# Raw Materials

-eight loss or -eight gain

2egree o# perishability

3alue per unit o# weight

%"ailability o# substitute materials

4umber o# materials in"ol"ed in production(ource o# supply

Raw materials oriented / Market oriented


7/41

Raw Materials2ecreasing importance o# raw

materials

1mpro"ement in Transport

1mpro"ement in industrial techni,ues

)thers:

54ew raw materials / (ubstitution

5Recycling


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Power / EnergyType o# Power

-ater H'E'P'

Fossil #uel

5 oal

5 )il

5 4atural$ases

4uclear

Electricity

Aluminum Smelting as a

Power Oriented Industry


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Labourost o# Labour 6 -age Le"el

(kills o# LabourHighly skilled. (emi7skilled. +nskilled

Labour MobilityHighly skilled 8highly mobile9

(emi7skilled 8#airly mobile9

+nskilled 8least mobile

Reputation


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Labour2eclining in importance

Machines / Robots

(till "ery attracti"e #or labour7intensi"e industries

Labour-oriented Industries


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Transport1mport raw materials

Eport ;nished products

Transort cost was t!e critical "actor

a""ecting industrial location in t!e ast


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TransportTransport costs decreasing with increasing distance


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TransportFreight Rates


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TransportMode o# transport


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Transport

ModeLongdistance

Shortdistance

Speed Goods Type

WaterCheapest

Highest SlowBulky low !alue

non"perisha#ility

$ail Cheap High %ast Bulky

$oad HighestCheapest

%air&oor to doorlight

'ir High """"""%astest

High !aluefragile

(erisha#ility


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MarketMarkets are where the ;nishedproducts will be ;nally go'

Markets attractmany industries to locate#Good infrastructure

Transportation, Electricity supply, water supply, drainagesystem, communication.

#Large population size#Large labour force

#Skilled labour

#Obtain adanced tec!nology

#"ndustrial agglomeration


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Market(ome industries are more likely to be located near

markets(erisha#le products) eg* Bread cakes+*

%ragile products) eg* Bottled drinks porcelain+**

Bulky and low !alue products) eg* Brick"making+**

La#our intensi!e industries) eg* Toy"making electrical goods+*

,eep close contact with consumers) eg* -ewellery printing+

.n!ol!e large /uanities of raw materials) eg* 0lectric

'ppliance**

Specialized products)

eg* 'utomo#ile parts manufacturers located near auto making centre


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TechnologyTechnology is "ery importance

1t change the production process completely

1t is a locali0ed #actor

-ays to obtain technology

From ad"anced countries 8de"eloped world9

+ni"ersitiesResearch entre


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Technology1t costs much capital #or research

Technology"intensi!e industry 1 Capital"intensi!e industry


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Behaioural$ood decisions

Full knowledge o# in#ormation

Rational

)b


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BehaiouralEntrepreneur is not an Economic man

Entrereneur is a Satis"icer


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Behaioural2ecision Making Process


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Behaioural!eha"ioural Matri


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Behaioural1mpro"ement o# entrepreneur skill


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!oern"ent Policyycle o# industrial

de"elopment


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!oern"ent PolicyRationale o# go"ernment inter"ention

(trategic reasons: eg' hina. +(%

Economic reasonsPromote o"erall economic growth

Promote the growth o# a particular industry

2i"ersi#y the economyEnsure regional economic balance

Ensure e=cient ultili0ation o# resources


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1ndirect role o# go"ernments!oern"ent Policy

1ndirect role


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!oern"ent PolicyE>ect o# go"ernment inter"ention

Etending (patial Margins

Regional Multiplier

umulati"e ausation


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!oern"ent PolicyRegional Multiplier

* ? @ / MP(-here * is the multiplier

MP( is the marginal propensity to sa"e

E(amle) MPS*+,. *0/+,*1. initial inut*20+++

20+++324++3256+321036+7,538832m*21+++

21+++ is "i'e timeso" t!e initial inut 20+++


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!oern"ent Policyumulati"e ausation


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#gglo"eration1ndustrial Linkages

Locational choice

ontinuing operation o# ;rms at gi"enlocation

onstraint on mo"ement


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#gglo"erationTypes o# Linkage

Material Linkages 8Tangible95 Process Links

5 (ub7contract Links

5 (er"ice Links

5 Marketing Links

1n#ormation Linkages 84on7tangible95 !anks. stock7brokers. telephone and #ace

to #ace contact between ;rms


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#gglo"erationForms o# Linkages 1


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Forms o# Linkages 11

#gglo"eration


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#gglo"erationompleity o# Linkages


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#gglo"erationReasons #or agglomeration

8Eternal Economies o# (cale9

5Transport sa"ings5%ccess to skilled labour

5Presence o# ancillary ser"ices'

5Possibility o# internal economies

5 1n#rastructure sa"ings

5%ttract in"estment

5Research and de"elopment


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#gglo"eration1ndustrial 1nertia / $eographical 1nertia

)nce a #actory has been built on a particularsite. it will tend to remain there e"en though

the original #actors no longer eist'

It is a 'ery imortant "actor "or !indering

t!e mo'ement o" industries,


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#gglo"erationReasons #or industrial inertia

osts o# mo"ing

Presence o# a pool o# labour5ostly to mo"e a skilled labour

5ostly to train unskilled labour

Presence o# associated industries1n#rastructure might not be a a"ailablein the new area

Reputation


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#gglo"eration2ecentrali0ation 8(uburbani0ation o# industries9


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#gglo"erationFactors a>ecting decentrali0ation

Epansion o# ;rm

Rede"elopment o# inner cities1nner city problems which hinder ;rmsde"elopment

2emand #or o=ce space in the central

city(uburbani0ation 8population A market9

4ature o# industry

$o"ernment Encouragement

Documents

Locational Factors (YES)