Factors affecting industrial locationAn introduction

Location conditions & location factors Location conditions = the differences among locati

on that exist for all industries Location factors = specific importance that is attac

hed to such differences by individual firms when choosing locations for specific factories

Nishioka and Krumme (1973)

What places offer industry? (location conditions) Physical environment: land, raw material, power r

esources, water supply Cultural environment: capital, labour, technology, t

ransport, government aids, financial & insurance supports

What industry seeks in places? (location factors) Dominating effect on the location Institutional (government policy of China on industr

ial location), industrial inertia, transport, raw materials, power supply, labour (cost reduction)

Location factors

Location factors are dynamic Changing over time Decline/increase in importance

Example: Iron and steel industry

Industrial inertia

Plants may be located at non-optimal sites in order to utilize existing infrastructure.

Which factor(s) is/are important?

No single factor stands alone Several factors operate

simultaneously

Is it possible to find an ideal location? NO But it is possible to find locations where

advantages > disadvantages

Footloose industries However, some industries are not tied to any of th

e particular locational factors Example: brick-making, IT industries

Who is the decision maker? What are their major concerns?

Industrialists Government

Cost reductionProfit-making

For the welfare of people of the nation (social consideration)

Industrial decentralization in China

Reference Raw, Michael (2000), Manufacturing Industries: th

e impact of change, Second Edition, London: Collins Educational

Roger Hayter (2004), Dynamics of Industrial Location, Simon Fraser University