Industrial Agglomeration and Transportation

Industrial Agglomeration and Transportation

There are two opposite spatial characteristics for production systems in terms of their level of concentration:

  • Diffused production. Represents industrial activities gaining from specific local/regional comparative advantages, such as access to resources or labor. Its main drawback resides in the linkages between the elements that can be difficult to maintain if transport costs are high or if transportation has insufficient physical capacity. This system can also be a reflection of relative autarky for multidomestic production systems.
  • Agglomerated production. Represents industrial activities taking advantage of increased interactions when they locate in proximity, also known as economies of agglomeration. This leads to the setting of manufacturing clusters where transportation and coordination costs are lower. Linkages between zones of agglomeration are generally serviced by high capacity transport corridors between terminals such as ports, airports, or rail yards. If this process occurs over a period of time, manufacturing clusters may emerge through cumulative agglomeration.