Industrial locational pattern
Agglomeration
Case: industrial estates in HK
Industrial land use
Use of land for industrial activities
Old industrial
areas
Hong Kong
Science Park
Yuen Long
Industrial
Estate
Tsuen
Wan Lai Chi
Kok
Industrial
estates
Cyberport
Dofor
For
you
example,
know what
industrial
are the
Areas
hightechnology
differences
estates are more
between
spacious,
old
industry
ofindustrial
lower density
areasand
andmore
industrial
well-planned.
estates?
Tai Po Industrial
Estate
Kwun
Tong
Tseung Kwan
O Industrial
Estate
The Exercise Key
HK
industrial estates in Hong
Kong & space cost curve analysis
The answer key
 a(i)
X – I (brewing of beer)
Y – B or H (concrete panels/
tempered glass)
Z – F (dairy products & soft drinks)
The answer key
 a(ii)
industries in the industrial estates:
- occupies large space / larger factory
buildings
- not produced in flatted factories
- modern capital – and technologyintensive industries
The answer key
b
- lower land acquisition costs
- land converted from farm lands
- inland site – no need for reclamation
from the sea as in the case of the two
other estates
The answer key
b
(con’t)
- cargo loading and storing facilities
(as at waterfront sites of Tseung Kwan
O) not required
- only road transport service provided
(no water transport)
The answer key
c
- industrial estates are located in
suburban areas
- cost curve of the industries declines
with distance from city centre – mainly
due to lower land price at suburban
locations
- as a result of less competition or
demand for space
The answer key
c
(con’t)
- revenue curve of the industries
remains constant over space
- no spatial variation in the price of
product
- uniform price of the finished products
in the local market
The answer key
c
(con’t)
- or no local spatial variation in price
element for export-oriented industries
- whilst the higher freight charges of
road transport to and from the port for
these suburban industries are
relatively insignificant
The answer key
d.- better planning provides more open
space and road network
- reduction of congestion problems
- sewage disposal facilities / sewage
treatment plant reduce water pollution
- strict control on types of industries /
emissions
- location distant from housing areas
reduces environmental impact
Industrial agglomeration
What & why?
Industrial agglomeration?
 industries
can obtain benefits from
clustering together
 as described as internal and external
economies
(refer to the discussion on the part
Weber’s industrial model – the 2nd
deviating factor)
Industrial agglomeration?
 Agglomeration
emerges as a
phenomenon which demonstrates a
spatial clustering or concentration of
industrial activities in a relatively small
region;
 As a process, agglomeration triggers a
snowball effect to further attracts
manufacturing firms / plants to cluster in
that relatively small area over time.
Industrial agglomeration?
 With
given time, it results in the growth
of a large industrial areal pattern of
industrial land use, characterized with
the concentration of associated and
inter-denpendent industries and plants
in the surrounded areas.
 There are different scales of industrial
agglomeration.
Industrial agglomeration: scales
 (1)
Industrial districts within cities
e.g. HK – Lai Chi Kok, Tai Po
Sydney – Rockdale, Paramatta
(2) Minor industrial centres / towns
e.g.in Pearl River Delta / Zhujiang Delta
Dongguan (hard-disk drive, PC
accessories), Foshan (light bulbs),
Shunde (electrical appliances)
Industrial agglomeration: scales
 (3)
Industrial cities (with specialization)
e.g. Detroit (automobile), USA
Nagoya (motor cars), Japan
Shanghai, Shenzhen (textile), China
(4) Industrial regions
e.g. the Honshu Industrial Belt in Japan
Atlantic Seaboard, New England, US
the Ruhr Valley of western Europe
the Damordar Valley integrated plan,
Industrial agglomeration: scales
 Specialization:
- IT industry of Silicon Valley in California,
USA
- Shipbuilding surrounding the Inland Sea,
Japan
- light fabricating industries, toys in the
Pearl River Delta, South China
Industrial agglomeration: scales
Science parks – regional clusters of
hi-tech innovative industries
e.g. Silicon Valley, Route 128 (near
Boston, New England (US),
Tijuana Triangle (Mexico)
Cambridge Science Park,
along the M4 and M11 corridors,
Hsinchu Science Park (Taiwan),
Hong Kong Science Park
(refer to T.B. for details)
 (5)
Industrial agglomeration: scales
 (5)
Science parks (con’t)
e.g. Zhongguancun in Beijing,
Multimedia- Super Corridor (Kuala
Lumpur) in Malaysia
Singapore Science Park,
Bangalore in India,
Tel-Aviv-Yafo in Israel
Lesson Preparation:
Think about it - What are the
possible results of excess
agglomeration?
Excessive Agglomeration?
 Diseconomies
may set in to offset any
advantages of industrial clustering
 resulting
in industrial decentralization /
dispersion / deglomeration
Industrial Deglomeration /
Decentralization / Dispersion
Industrial decentralization:why

Physical factors
 Economic
 Social
 Political
 Environmental
 Institutional
 Marketing
 others
ID – Physical factors
 Shortage
of land for further expansion
& overcrowding
 Insufficient raw materials
 Lack of storing facilities
 Traffic congestion
 What
are the results of the above?
ID – Economic factors

Higher land rents - strong competition among
land users bid up the land price and rent /
Higher land taxes due to shortage of land
 Higher production costs (cost of inputs)
 Lack of auxiliary facilities & services resulting
in rising costs
 Traffic congestion results in delay in supplies
and delivery, incurring higher costs & loss of
good will
ID – other factors

1. Production disturbance caused by
labour union
 2. Waste disposal
 3. Environmental degradation/ pollution
 4. Policy of urban land use zoning
 5. Availability of labour
 6. Better utilization of raw materials located in
widely dispersed sources
 7. Capturing of wider potential markets (DL-RD)
 8. Enjoying benefits from incentives by govt. in
the less developed industrial areas
ID – other factors

9. Government policy/international agreements
(a) stick / discouragement due to:
- overconcentration of industrial activities
- overcrowding in the city centres / inner city
- by stricter pollution control, heavy tax, etc.
- by dispersing / decentralizing economic
activities; encouraging population
decentralization to less prosperous regions
- e.g. the industrial relocation in China in
the 1950s- late 1970s
ID – other factors

9. Government policy/international agreements
(b) carrot / encouragement / incentives / due to:
- financial assistance
e.g. grants & loans, subsidies, tax holiday
& allowance, provision of ind. land,
contract preference, lower power price
- improvement & investment in infrastructure
e.g. transport & public facilities (supply of
water, electricity, waste disposal),
housing, education)
ID – other factors

9. Government policy/international agreements
(b) carrot / encouragement / incentives / due to:
- direct investiment in industries
e.g. national enterprise / factories
- protect local, dispersed industries with trade
restrictions imposed on foreign enterprises
e.g. tariffs, quotas, embargo
ID – motives behind govt policy

(a) Economic considerations
- utilization of resources (factors of production) in
the dispersed areas
- regional balance of national economic
development
- diseconomies of excess agglomeration
ID – motives behind govt policy

(b) Social considerations
- tackling regional inequalities that result in
social conflicts / instability / problems
- regional unemployment / underemployment
- drop in income levels / tax income
- large scale migration from the less
prosperous to the more prosperous regions
- alleviating the problems occurring in the
regions with excess agglomeration
- environmental degradation, crime, distress,
competitive nature of social & econ. structure
ID – motives behind govt policy

(c) Political considerations
- reducing regional disparities and maintaining
national cohesion
- withholding the chance of wining the re-election
of the ruling parties in the government
(d) Strategic considerations
- ensuring security by decentralizing industrial
development in times of war / becoming less
vulnerable to attack
ID – Scales & Resulting patterns

Short-distance (city level)
 (1) outward shift to the suburban areas
e.g. Hong Kong (old vs new),
Sydney & Melbourne, New York
 Long-distance (regional / national level)
 (2) Dispersal to new regions (with movt with
populuation, esp. market-oriented ind.)
ID – Scales & Resulting patterns

Long-distance (international level)
(3) Cross-border from the more prosperous
to the less e.g. China, Brazil
-
-
-
from MDCs to LDCs
(lower production cost & potential markets)
from MDCs to MDCs
(expanding overseas markets)
from LDCs to MDCs
(expanding overseas markets)
ID – Hindering factors

Barriers to be the pioneer movers, e.g.
1. General preference vs financial incentives
2. Government’s objectives vs individual
industrialist
3. Very strong initiatives are required to offset
industrial inertia
4. Home town effect
5. Risks and uncertainties
6. Imperfect knowledge
7. Existing ind. linkages, prestiage vs relocation
e.g. ind. Inertia & agglomeration continue in
New England (USA)
Industrial inertia
The case of iron & steel industry
in Japan
Globalization – Transnational
& Multi-point production
IT industry in Silicon Valley
Transnational corporations
TNS

The ones that operate in many different
countries regardless of national boundaries.
 The headquarters and main factory are
usually located in an economically more
developed countries.
 Although, at first, many branch factories were
in economically less developed countries
(usu. more than 1 country), there has been
an increasingly global shift to the more
affluent markets of Europe, North America
and Japan.
 Details (T.B. p.573-574)
Examples of TNCs

TNCs based in MDCs:
e.g. Automobiles: Honda, Toyota, Nissan
IT industries: IBM, HP, Microsoft
Electronics: Sony, Panasonic, Epson
Sportswear: Nike, Adidas, Puma
Fast food:
McDonald’s, Wendy’s,
Coca Cola, KFC
Superstore: Walmart, World Superstores
 branch factories & offices in MDCs &LDCs
e.g. Toyota (Japan) – MDCs : US, CN, AU, EU
LDCs: China, Brazil, India, S.E. Asia
Examples of TNCs

TNCs based in LDCs
- esp. those more developed LDCs /
NICs (newly industrialized countries)
e.g. Samsung (electronic firm based in S Korea)
- MDCs : EU, N Am, Japan
- LDCs* :the Far East, SE Asia, S America
TNCs: The trend of the
recent decades

headquarters still in the MDCs
 Many production bases (plants) and sales
outlets (marketing offices) in other countries
 Demonstrating the trend of diverting overseas
investments through setting up multi-point
production towards globalization.
 Establishment of global specialization / light
manufacturing / labour-intensive / footloose
 Think about it: the textile industry?
Globalization – why?

why is there the rapid growth of trade
relationship between the MDCs & LDCs?
(1) improvement in transport & comm tech
- improved efficiency of moving raw
materials and finished products
- efficient global communication
e.g. fax machines, email, tele- / videoconferencing
Globalization – why?
(2) for reducing cost of production
- higher production cost in the MDCs
e.g. higher wage cost due to higher
skills, education background &
productivity, low birth rate and
labour shortage;
higher land price due to keen
competition of ind. land & limited
room for further expansion
Globalization – why?
(3) linkage with market
- to establish direct contact with clients
e.g. adapt to changing market
demands and customers’ needs
potential market expansion
more business opportunities
even in the LDCs
Globalization – why?
(4) technological transfer
- adaptation & sharing of
technology and managerial skills
e.g. Toyota / Honda spirit
Globalization – why?
(5) government / institutional policies
 In LDCs:
- financial incentives to attract FID
e.g. preferential terms, lower tax, tariff
- stable political & sound legal system
e.g. Singapore, India vs African nations
 In MDCs:
- strict law on controlling pollution
- higher production cost vs Mexico
Globalization – impacts in LDCs
(1) socio-economic impacts
- profit-drained
- economic instability due to withdrawal
of investment at any given time
- multiplier effect to stimulate growth
- provision of job opportunities
- rise in income level & living standard
- increase in GDP & tax income
- improved infrastructure with FID
Globalization – impacts in LDCs
(1) socio-economic impacts (con’t)
- measures to attract further FDI:
e.g. education & training programs to
offer qualified / eligible workers
- increased links between the industry &
local R&D institutes
- setting up liberal trade policies, international transportation facilities &
marketing networks
- joining global / regional trading
organizations
Globalization – impacts in LDCs
(2) environmental impacts
environmental degradation:why?
-
limited awareness to env. conservation
low level of technology
lack of scientific knowledge
heavy indebtedness
Globalization – impacts in MDCs

Refer to the case study of the IT industry
in Silicon Valley