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What is agglomeration of industries? Explain it's benefits. |
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Answer» eration is a phenomenon: it refers to the SPATIAL clustering or concentration of industrial activities in a relatively small AREA. Agglomeration is a process: it refers to the snowballing process whereby more and more manufacturing firms cluster or a really CONCENTRATE in a relatively small area.*Benefits arise from the spatial agglomeration of physical capital, companies, consumers and workers: Low TRANSPORT costs. A GREAT (local) market. A large supply of labor and thus the increased chance of supply and demand for labor, particularly for specialists to compensate for fast matching, lower search costs.*There are actually two major categories of agglomeration: Urbanization economies and Localization economies. The term urbanization economies refers to benefits that firms in a number of different industries receive from population and infrastructure clusters. A great example of this is a shopping mall.I hope this helps u;-) |
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