After reading this article you will learn about:- 1. Concept of Localization 2. Causes of Localization of Industries 3. Advantages 4. Disadvantages.
Concept of Localization:
An industry concentrated in a certain locality is commonly described as a localized industry. For example, woolen carpet industry is localized in and around Mirzapur, brass work is being carried out in Moradabad, textile industry has been localized in Bombay and Ahmedabad etc.
The localization of industry gradually prepares the way for many of the modern developments of division of labour in the mechanical arts and in the task of business management. Even now we find industries of a primitive fashion localized in some villages of central Europe, and sending their simple wares even to the busiest haunts of modern industry.
Another example of localization of industry can be found in Russia, where over 500 villages are devoted to various branches of wood-work, every village carrying on only one branch of production. One village makes nothing but spokes for the wheels of vehicles, another nothing but bodies and so on.
Causes of Localization of Industries:
(1) Physical conditions:
The chief cause of the localization of industries has been the physical conditions such as the character of the climate and the soil or within easy access by land or water. Thus, textile industry has been located near coastal areas (e.g., Bombay).
(2) Market:
It has been seen that Industries are attracted to big cities where they easily find a big market. A number of manufactures of Television sets have localized their industries in and around Delhi. Even cloth mills have been started in our country into the interior (away from the coastal areas) where the actual demand exists. A number of such industries can be seen in Delhi and Faridabad.
(3) Raw material and fuel:
Industries have been localized in the neighbourhood of mines and quarries. Metallic industries (such as those of iron and steel, copper, aluminum etc.) have generally been either near mines or in places where fuel (e.g. coal) was cheap.
The iron industries in England first sought those districts in which charcoal was plentiful and afterwards they went to the neighbourhood of collieries. Iron industries developed in Bihar (India) because of iron and coal mines being together.
(4) Labour:
Cheap, efficient and specially trained labour has been another important cause of localization of industry. Availability of labour is the major cause for the manufacture of woolen carpets at Mirzapur.
(5) Imitation:
Sometimes a person sets up an industry in a locality and it starts enjoying high profits. Others watch and thus many more similar industries come up and congregate in that area resulting in the localization of industries. An example of such type is the location of a number of firms manufacturing drawing instruments at Roorkee (U.P.).
Advantages of Localization:
(i) When an industry is highly concentrated in an area, the principle of division of labour can be extended to a whole industry. Different firms which constitute the whole industry and are close together can specialize in particular varieties of a commodity. For example, in wool textile industry, fine worsteds can be made by one firm, heavy woolens by another firm and so on.
(ii) Localization of industry brings into being a reservoir of skilled labour for new firms which intend to set up in that area.
(iii) When an industry is highly localized, subsidiary industries grow up to cater for the needs of the major industry.
(iv) Localization of industry often leads to the establishment of highly organized markets.
Products of localized industry enjoy goodwill and find a good market. Moreover, localization creates a local market for that skill.
(v) Localization encourages the use of specialized machinery and offers great opportunities for Research and Development, inventions and improvements in machinery.
(vi) Localization attracts banks and other financial agencies and thus increases the supply of capital by affording a profitable field for investment.
Disadvantages of Localization:
(i) If a highly localized industry declines due to drop in the product demand, mass unemployment may result in that area.
(ii) Another disadvantage of extreme localization is the growth of great conurbations, where one town merges into another, with consequent overcrowding, lack of open spaces and traffic congestions.
(iii) Localization causes the economic dependence of one part of the country over another and in times of hostilities, great difficulties arise to both the consumers and manufacturers.
(iv) Localization narrows the intelligence and skill of mind as only one type of labour is required.
(v) In some cases heavy costs of transport may out-weigh the advantages of localization.