location of industry

location of industry

the geographical spread of economic activity within an economy. A multitude of factors influence the location decisions of firms and industries, including proximity to raw material supplies, availability of labour, good communications and nearness to markets. Once an industry becomes established in a particular location, it tends to act as a focal point for further economic expansion, attracting, directly, the establishment of ancillary trades (component suppliers, back-up services, etc.) and, indirectly, other firms and industries through EXTERNAL ECONOMIES OF SCALE and regional MULTIPLIER effects. REGIONAL POLICY also has a significant effect on INDUSTRIAL LOCATION. See FIRM LOCATION.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005