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Difficulty: MediumLocation and Localization of Industries

A rubber processing factory initially established its plant in Benin City to be close to raw latex plantations. Over time, numerous independent rubber processing and footwear manufacturing firms established operations within the same city to share specialized labor and infrastructure. Which economic phenomenon is demonstrated by the eventual concentration of these firms in Benin City?

  1. Localization of industryAnswer
  2. B
    Location of industry
  3. C
    Internal economies of scale
  4. D
    Commercialization of industry

Answer

Localization of industry
Localization of industry refers to the geographic concentration of several independent firms belonging to the same or allied line of production within a specific town or region. In this scenario, the concentration of multiple rubber and footwear businesses in Benin City allows them to enjoy external economies such as a shared pool of skilled labor and developed infrastructure.

Step-by-Step Solution

1
Analyze the initial setup phase described in the scenario.
The setting up of the single initial rubber factory near latex plantations represents the location of a single firm based on raw material proximity.
Location of industry refers to the specific geographical site chosen by an individual business unit.
2
Analyze the subsequent development where multiple independent firms aggregate in the same area.
The clustering of numerous independent firms in Benin City to benefit from shared pool of labor and infrastructure represents localization of industry.
Localization of industry occurs when several firms in the same or allied trade concentrate within a particular locality, reaping external economies of scale.

Key Concept

Distinction between Location of Industry and Localization of Industry
Estimated Time:1m 0s
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Topics

Location and Localization of Industries

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