Generally speaking, a firm will be sited in an area which is free from any close competitor. In this way, it can have the whole market to itself. However, it is often found that firms producing similar products are located close to themselves in certain areas. The concentration of various arms of an industry producing related goods in a particular area, such that the area becomes closely associated with the industry, is called localization. There are some advantages in locating industries close to firms producing similar products. These advantages which a firm derives by its location nearest to firms of a similar nature are called external economies.
In Great Britain, many industries are highly localized. The main centre of the cotton industry, for example, is concentrated in South Lancashire, while the woollen industry is concentrated in Yorkshire. Similarly, boots and shoes industries are localized in West riding, pottery in North stafordshire, motor industry in the black country and cutlery manufacturing at sheffield.
In West Africa, the industrial are not so localized since we have not started to have many industries comprising very many firms. The practice, as a beginner in industrialized, is that a firm is almost an industry in itself. However, we sometimes have localization not because of the size of the industry but as a result of the regional nature of the production activity. Thus, the leather industry is localized in the northern part of Nigeria, while plywood and timber industry is localized in the southern part. It is important not to confuse these economic with the external economic of scale. The external economic of scale are concerned with the expansion of the size of the firm or industry. External economies, on the other hand, are concerned with the location of similar firm or industries in an area.
In Great Britain, many industries are highly localized. The main centre of the cotton industry, for example, is concentrated in South Lancashire, while the woollen industry is concentrated in Yorkshire. Similarly, boots and shoes industries are localized in West riding, pottery in North stafordshire, motor industry in the black country and cutlery manufacturing at sheffield.
In West Africa, the industrial are not so localized since we have not started to have many industries comprising very many firms. The practice, as a beginner in industrialized, is that a firm is almost an industry in itself. However, we sometimes have localization not because of the size of the industry but as a result of the regional nature of the production activity. Thus, the leather industry is localized in the northern part of Nigeria, while plywood and timber industry is localized in the southern part. It is important not to confuse these economic with the external economic of scale. The external economic of scale are concerned with the expansion of the size of the firm or industry. External economies, on the other hand, are concerned with the location of similar firm or industries in an area.
ADVANTAGES OF LOCALIZATION
Regional Division of Labour:Where an industry can be extended to a whole industry.
Technical Linkages:When several firms in similar production activities are located in the same area, they can link their technical processes.
Localization of Skilled Labour:Localization makes possible the development of a reservoir of skilled labour for the local industry from which a new firm can recruit. Indeed, this reservoir might be the main attraction of new firms.
DISADVANTAGES OF EXCESSIVE LOCALIZATION
Environment Pollution:Localization of industries can lead to environmental pollution resulting from gas and effluent of the factories.
Serious Industrial Disaster: When industries are heavily localized, great economic disaster may occur if there is an outbreak of fire which may engulf the whole industry. Because firms are rather closely built, a fire outbreak from one firm may spread to many other firms.
Danger of Extensive Destruction During War: Heavy Localization of industries will expose the economy to a great risk of extensive destruction during any war. Industrially concentrated areas are, usually, target of heavy bombing by enemies during wars.
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