Meaning and Definition:
By 'localization of industries' is
meant the tendency on the part of industries to
be concentrated in regions which are most suited for their
Some industries are carried on and developed in
certain areas because of their natural or acquired advantages.
For example in Pakistan, sugar industry is localized in NWFP and
Punjab, paper match box industry in NWFP, cotton industry in
Punjab and Sindh, simply on the basis of nearness to source of
The important factors which influence the
localization of industries are discussed as below:
(i) Nearness to raw material.
One of the very important factor which affects the birth of an
industry in certain areas is the nearness to sources of raw
material . The availability of raw material near the location of
the industry helps considerably in reducing the transport cost
and so the total cost of production of the commodity. It is due
to this reason that most of the industries are established in
regions where the raw material is available in abundance.
Concentration of jute industry in Bangladesh and sugar industry
in NWFP are mainly due to these factors.
(ii) Availability of source of
power. Availability of cheap power resources is another
important factor which influences the concentration of
industries in particular areas. If for instance, electricity is
to be carried over to a long distance where the industry is
located or the coal which serves as raw material is to be
transported at a far-off distance from whereat is extracted, it
will not then he economical to set up the industry at such
places which are far away from the sources of power.
(iii) Physical and climate
conditions. Physical and climatic conditions have an
important hearing on the growth of industry. If suitable
climate and desirable physical conditions exist for a particular
industry, that will he established and developed in that region
Nearness to market.
Industries have a tendency to be localized in those
areas where the market is
near at hand. The goods produced can be easily brought in the
market and there can be much saving in the cost of
(v) Supply of trained labor.
Supply of trained labor is another great attraction for the
concentration of an industry in a particular area. If for
instance, one wishes to set up a cotton factory, it will be
advantageous for him to install it in Faisalabad or Okara.
(vi) Availability of capital.
Industries may spring up in those areas where capital is
available at a lower rate.
(vii) Momentum of an early start.
Sometimes, it so happens, that an industry gets itself
established and developed in a particularly locality not due to
the reasons discussed above but Just by some chance or other.
Later on, that locality acquires reputation in the production of
the commodity and more industries are set up-there. For instance
sports goods industry is located in Sialkot for no reason other
than this that it got an early start there.
When an industry gets itself
established in a locality, it enjoys the following advantages.
Firstly, a localized product
gains reputation and thus it becomes easy for a firm to find
good market within and outside the country. On the basis of
reputation, it is generally able to charge higher prices than
the products of their counterparts situated elsewhere. For
instance, the sports and leather goods manufactured in Sialkot
have acquired very good commercial reputation and it is easy to
sell them at good prices.
Secondly, when an industry is
located in a particular region, it is easy to get skilled labor
of the industry, industrial skill passes on from father to son.
The children team ft almost unconsciously.
Thirdly, localization leads
to promotion and growth of subsidiary.
Fourthly, it results in the
development of specialized research institutions.
Fifthly, it leads to the
spread of fast means of communication and transport.
encourages the development of financial facilities. When banks
and other financing cooperation find profitable field for
investment in a locality, they at once open their branches
provides opportunities both for workers and the industrialists
to understand each other and to form themselves into an
organization in order to safeguard their respective interest.
Disadvantages of Localization:
Localization has certain
disadvantages too. They are as following:
(i) Localization is dangerous when
the demand for the localized products declines due to the growth
of foreign competition or due to the changes in the tastes of
the people. In that case there will be mass unemployment in the particular localized industries.
(ii) Localization results in the
economic independence of one locality on the other or of one
country on the other; if the commodity demanded is one of the
basic necessities of life, it can cause much inconvenience to
the depending nations.
(iii) People can learn only one type
of work in a localized industry. If they wish to go to another
place, they may face difficulty in getting employment.
(iv) During war, a localized
industry can easily be made a target for bombardment and the
whole industry can be ruined to ashes. So it is not wise to
place all eggs in one basket. The industry should be
decentralized. It should be spread out in various parts of the
country so that it may not become an easy target for enemy's air