Post on 21-Jan-2017
Industrial Location
PRESENTED BY: MR. VIKAS SUTAR
MR. AMRUT HUBBALLI MR. BALAJI DEVAKARI
MEANING OF INDUSTRIAL LOCATION
Industrial location refers to geographical position of industries.
The analysis of industrial location shows wide variations in their distributional patterns.
Some industries are spread evenly throughout the whole region and some other are found only at a particular place.
LOCATION AND LOCALIZATION OF INDUSTRIES
An entrepreneur would like to establish his industry where the cost of production is lowest, this is called ‘Location of Industry’.
The Concentration of an industry in a particular area is called as ‘Localization of Industry’. For example:- A large number of factories
producing cotton textiles are concentrated in Mumbai & Ahmedabad.
WEBER’S LEAST COST THEORY OF INDUSTRIAL LOCATION
WHO WAS ALFRED WEBER?
Alfred Weber was a German economist, geographer, sociologist and theoretician of culture whose work was influential in the development of modern economic geography.
Published his Theory on Location of Industries in1909.
Earlier to Weber, another German economist Launhardt has given a simple principle of industrial location based on minimum transport cost. (30July 1868 – 2 May
1958)
INTRODUCTION
Weber’s basic principle is that a firm would choose location where costs are the least.
Assumptions:- Unit of study is taken as single country with
consumption centre. Some natural resources are ubiquitous.
E.g.: Water, Sand, Clay etc. Some natural resources are localized in nature.
E.g.: Iron ore, Fuel etc. Labour is not ubiquitous but it has fixed location and
fixed mobility. Homogeneous climate.
Factors Influencing Industrial Location
Regional FactorsOr
Primary Causes
Intra Regional FactorsOr
Secondary Causes
Transport CostLabour Cost
AgglomerativeDeglomerative
EXPLANATION:
TRANSPORT COST
Transport cost are influenced by three basic elements. The weight to be transported. The distance to be covered. The nature of commodity.
Classification of Raw Materials
Ubiquitous Materials Localized Materials
These are such materials which are found or available everywhere.Eg: Water, Sand, Clay
These are such materials which are found in particular placeEg: Iron ore, Coal
Classification of Raw Materials
Ubiquitous Materials
Localized Materials
Pure materialsGross materials
OrWeight losing
materials
Materials which impart their total weight to the final product.Eg: Cotton, Wool
Materials which impart part of their weight to final product.Eg: Gold, Coal, Fuel
E.g. 1000 kg of Gold Ore will give you only10 kg of pure Gold.
MATERIAL INDEX
If MI is greater than one then the firm is material oriented.
If MI is less than one then the firm is market oriented.
If MI is equal to one then the firm is material as well as market oriented.
MI= Material Index
Material Index= Weight of local materials inputWeight of final products
LOCATIONAL TRIANGLE
Market
Material A
Material B
Costliest & Shortest to Transport
2nd Costliest & 2nd Shortest to Transport
Cheapest & Longest to Transport
LEAST TRANSPORT COST POINT
(Gold) (Silver)MI=100 MI=10
LABOUR COST
According to Weber, another regional factor for deviation of Industry from one place to another is Labour Cost. It happens due to Difference in labour costs.
The Labour costs may differs due to two reasons:- Differences in wage rates. Differences in the level of efficiency.
According to him, If savings in labour cost per unit of output are greater than the extra transport cost per unit then the industry take deviation from Least Transport Cost Point to Least Labour Cost Point.
T= Least Transport Cost Location
L= Cheap Labour Cost Location
$3
$6$9
Labour cost per unit at L are less than $6 than at point T, as L is within isodopane $6, the firm would, other things being equal, will divert its location at the point of reduced labour cost i.e. at ‘L’.
Factors Influencing Industrial Location
Regional FactorsOr
Primary Causes
Intra Regional FactorsOr
Secondary Causes
Transport CostLabour Cost
AgglomerativeDeglomerative
AGGLOMERATIVE
Meaning – Agglomerative refers to the advantages or cheapening of cost production due the concentration of an industry.
In others words –minimizing cost of production due to centralization of many industries in a particular area through internal and external economics of various kinds such as:- • Sharing of equipments• Specialization • Large scale of business and selling
LOCATING THE CENTRE OF AGGLOMERATION
P1
P3
P2Pa
DEGGLOMERATIVE Meaning – Degglomerative is opposite to
the agglomerative. Such situation arises due to rise in the cost of production and leads to decentralization of industries.
Cost of production increases due to
following reasons. Rise in the price of raw materials High price of land Rise in tax rates Government policies.
SPLIT IN LOCATION Its means locating industry more than one
place.In other words, first stage of production
may be near the source of raw materials and later stage may be near the place of final consumption(market). This results in cost savings. For example- In gold manufacturing industry,
the processing of gold ore(raw) will be near the source of gold ore and manufacturing of gold ornaments will be near the place of final consumption or market.
CRITICISMS OF WEBER'S THEORY Weber’s treatment of transport costs in terms weight and
distance only found to be objectionable. Further, the transport costs in the actual word vary largely with type of transportation and the quality of goods.
Weber, in his theory of location, has assumed the existence of fixed labour centers. In real world, it is very difficult to find places with unlimited supplies of labour.
Weber’s assumption of the existence of fixed points of consumption has been questioned. According to Austin Robinson in reality there is a wide spread market served by competing producers.
Weber has been criticized because he has selected only three factors namely transport, labour and agglomeration as causes of localization. According to S.R.Dennison this largely arbitrary. There may be other similar which cannot be ignored.
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