Agglomeration

1
Agglomeration Dispersion
2
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

3
Specialization

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

4
Measurement

• Coefficient of Localization
• Location Quotient
• Lorenz Curve

5
Line of even distribution
6
Linkages
Subcontract links
Information links
Service links
Production unit
Subcontract links
Marketing links
7
Vertical linkages
Garment Factory
Cloth
Textile Factory
Synthesis fiber
Chemical factory
8
Horizontal Linkages
Glass-making Factory
Iron Steel Factory
Engine Factory
Tyre-making Factory
Motor car assembly factory
9
Diagonal Linkages
bottling
Jam- making
Fruit canning
Ice cream
Sugar refinery
Glass bottle factory
Sugar mill
10
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

11

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

12
Diseconomies of scale

• Physical
• shortage of land for expansion
• shortage of labour
• traffic congestion
• urban decay
• Economic
• rising rent
• rising labour cost
• high tax

13

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

14
Industrial Inertia

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