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Lesson Note
Subject: Economics
Topic: Localization of Industries
Lesson Objectives: by the end of the lesson, the learners should be able to:
- Define the term localization y industries;
- State the factors that favours the localization of industries;
- State the advantages of localization of industries ;
- State the disadvantages of localization of industries.
LESSON DISCUSSIONS
Localisation of Industries
Localisation of industries refers to the concentration of firms or industries producing similar products in an area. In other words, it is the establishment of many relationship industries or firms which produce similar goods in a particular location, e.g many cement manufacturing firms could be located in the same area because all of them produce similar goods which is cement.
Factors that Favour Localisation of Industries
i. Access to raw material: This factor is important if the industry is raw-material oriented. An industry is raw-material oriented when the raw materials are bulky with a high cost in transportation. Many firms which use the same type of raw materials could come together resulting in localisation.
ii. Availability of marketing facilities: The concentration of industries in a particular area could be a way by which their products can easily be marketed.
iii. Joint research and training centres: Research and training centres can easily be jointly established since all the industries involved are producing similar products. The cost of such projects will be minimal when it is jointly financed.
iv. Government policy: Government can play a specific role towards the localisation of industries either for economic, geographical, political or strategic reasons.
v. Availability of labour: The large pool of labour encourages firms to come together resulting in localisation. The availability of such labour promotes industrial growth.
vi. Presence of technical economies: The concentration of firms that use the same type of spare parts or components in production may be located near industries which produce such spare parts.
vii. Availability of infrastructure facilities: The availability of infrastructural facilities like road, telephone, water, electricity etc could encourage the concentration of firms in a particular area.
Advantages of Localisation of Industries
i. It encourages development: The growth of industries leads to an increase in production of goods and services.
ii. Emergence of subsidiary firms: As major firms concentrate in one area, other subsidiary, service firms that assist those major firms in the production of goods usually emerge.
iii. Generation of employment: The concentration of many industries in an area leads to the creation of many job opportunities.
iv. Emergency of organised market: Localisation of industries assists in the emergence of organised market for the products.
v. Creation of competition: The existence of many industries leads to a healthy competition among them in order to excel or outsell one another. This has indirectly resulted in high quality products.
vi. Attraction of more people: A highly concentrated industrial estate attracts different shades of people to such area for one reason or the other.
vii. Provision of social amenities: An industrial zone is always provided with social amenities like pipe borne water, electricity, good roads, communication facilities, etc.
viii. External economies: The concentration of industries in an area encourages production of goods at the lowest cost thus making such goods cheap and affordable.
Disadvantages of Localisation of Industries
i. It leads to congestion: The concentration of industries leads to human, housing and traffic congestions.
ii. Pressure on social amenities: As a result of high population in industrial estates, there is always pressure on available social amenities like pipe borne water, electricity.
iii. It results in uneven development: The concentration of industries in one area leads to uneven development as other areas are left undeveloped.
iv. It causes structural unemployment: When the industries suffer setbacks, there will be structural unemployment.
v. It causes environmental pollution: As a result of high concentration of industries, it leads to noise, air, water and land pollution.
vi. Targets for enemy attack: During wars, industrial estates are usually the target for enemy attacks.
vii. Increase in crime rate: As a result of increase in population in the industrial estate, there is usually an increase in crime rates such as armed robbery, car snatching, hired assassinations, etc.
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Take a quick test for this lesson
- Define the term localization y industries.
- What are the factors that favours the localization of industries?
- State the advantages of localization of industries.
- State the disadvantages of localization of industries.
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