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Industrial Deglomeration

Industrial Deglomeration. A case study of China. What is industrial de-agglomeration?.

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Industrial Deglomeration

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  1. Industrial Deglomeration A case study of China

  2. What is industrial de-agglomeration? • Deglomeration occurs when companies and services leave because of the diseconomies of industries’ excessive concentration. Firms can achieve economies because of the increase in scale of industrial activities benefited from agglomeration. However, after reaching the optimal size, local facilities may become over-taxed, lead to an offset of initial advantages and increase in PC. Then the force of agglomeration may eventually be replaced by other forces which promote deglomeration. (Diversification of an industry in the horizontal relations between processes within the plant.)

  3. How does industrial de-agglomeration occur? • Short-distance intra-city dispersal • Long-distance dispersal – at regional/national level or international level

  4. Intra-city dispersal • From city areas to outskirts • Suburbanization of industries • Out-of-town movement of industries

  5. Examples in Hong Kong

  6. Long-distance dispersal • Regional/national level • From one part of a country to another • Dispersal to new regions • From more prosperous regions to less prosperous regions

  7. Industrial decentralization in 1950s

  8. Go West Policy, 1999

  9. Long-distance dispersal • International level • From one country to another • From MDCs to LDCs/NICs • From LDCs to MDCs • Cross-border or overseas • Multi-national

  10. Factors for industrial deglomeration • Industrial diseconomies • To capture a wider market • To utilize raw materials from widely dispersed sources • To benefit from the incentives offered by the government

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