Regional maldistribution of industry

Other Names:
Regional industrial imbalance

Economic growth if not checked by appropriate measures has the tendency to limit itself to its original centres or regions. When a region becomes developed, it tends to make other areas appear backward and unpromising. Private enterprise easily overestimates the external economies accruing to these growing centres. They may have scavenged the opportunities that exist in the centres but are reluctant to venture out of the area to investigate possibilities elsewhere. Government policy tends to be influenced by this impressive picture of growth poles. Thus it is that in all developing countries the bulk of public investment in new plants and projects goes to centres that have already 'taken off'. Like private operators, the majority of governments in developing countries are either too timid or find it too difficult to break away from the growing centres to establish new basic industries in underdeveloped regions.

At some stage in the development of an industrial complex, maximum economies of scale are achieved and further expansion may result in 'dis-economies' which offset or more than offset the economies. There is, for example, the constant competition between various industries which increases the price of materials and other factors of production such as skilled labour, land, capital and transportation. There may be militant labour unions whose activities affect wages and attitudes towards labour. Strikes may be frequent and widespread. When the provision of services and amenities increases in cost, taxes are raised to pay for them. Costs rise as a result of congestion and the strain on existing services such as transportation, water supply and waste disposal. Rural population, attracted by employment opportunities in growing centres, migrate to these centres in quest of jobs ranging from work in trades, administration and services, to labouring jobs such as digging, carrying, loading and cleaning. The urban-industrial complexes are usually ill-prepared to receive the 'in-migrants'. The preparation of building sites, the provision of roads and services and the construction of houses cannot keep pace with the influx. Without money or possessions and willing to live at a lower standard than other residents, the newcomers crowd in with friends who have arrived earlier, become squatters and create shanty towns; in extreme cases some band together into gangs and go foraging.

The negative aspects of economic concentrations are not only localized within the concentrations themselves, but at the national level they have produced one of the most urgent problems facing the large developing countries, namely the problem of regional inequality and stranded or neglected areas. Undue emphasis has often been laid on the development of the privileged areas. Consequently, other regions, some of them very promising growth poles, may be left relatively inaccessible and virtually neglected.

Related UN Sustainable Development Goals:
GOAL 9: Industry, Innovation and InfrastructureGOAL 12: Responsible Consumption and Production
Problem Type:
D: Detailed problems
Date of last update
04.10.2020 – 22:48 CEST