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Industrial location in the developing countries : The Accra plains (Ghana). Twumasi, Kojo 1963

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INDUSTRIAL LOCATION IN THE DEVELOPING COUNTRIES: THE ACCRA PLAINS (GHANA) by KOJO TWUMASI B.Sc. (Econ.) Hons., University of London, 1961 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE i n the Department of Community and Regional Planning We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1963 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of Bri t i sh Columbia, I agree that the Library shall make i t freely available for reference and study. I further agree that per-mission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representativeso It is understood that copying or publi-cation of this thesis for financial gain shall not be allowed without my written permission. K o j o Twumasi Department of Community and R e g i o n a l P l a n n i n g The University of Brit ish Columbia, Vancouver 8, Canada. Date A p r i l 18. 1963.  ABSTRACT The purpose of the study i s to show that only predetermined i n d u s t r i a l l o c a t i o n within a regional frame-work w i l l a s s i s t the developing countries to achieve t h e i r i n d u s t r i a l i z a t i o n goals. The study of t h i s regional approach to i n d u s t r i a l l o c a t i o n i n the developing countries i s undertaken because i t i s f e l t that l o c a t i o n of industries i s one of the problems of the i n d u s t r i a l i z a t i o n process i n the developing countries, and that there i s a need fo r an approach which the developing countries can use to achieve t h e i r i n d u s t r i a l i z a t i o n goals of f u l l employment, higher income per capita, and earning or saving foreign exchange. In order to investigate this regional approach to i n d u s t r i a l l o c a t i o n , i t i s necessary to make some preliminary considerations of the various concepts involved. The term 'the developing countries' i s defined, and the role of i n d u s t r i a l i z a t i o n i n economic development of these countries i s indicated. Location of industries i s shown as .one of the problems of i n d u s t r i a l i z a t i o n , and methods of analyzing the problem of i n d u s t r i a l l o c a t i o n are examined. The importance of the concept of predetermined i n d u s t r i a l l o c a t i o n within a regional framework necessitates, a review of the concept and i t s a p p l i c a t i o n i n Puerto Rico. These preliminary considerations form the basis of the appreciation of the problems of i n d u s t r i a l l o c a t i o n , which the developing countries must consider i n t h e i r national i n d u s t r i a l development p o l i c i e s . These problems are: the s e l e c t i o n of industries and of i n d u s t r i a l locations, and the provision of the f a c i l i t i e s necessary to support i n d u s t r i a l locations. The consideration of the problems of i n d u s t r i a l l o c a t i o n provides an opportunity f o r r e l a t i n g the regional approach to i n d u s t r i a l l o c a t i o n to the case study area, namely, the Accra Plains i n Ghana. In this regard, Ghana's national i n d u s t r i a l i z a t i o n goals are i d e n t i f i e d ; the s e t t l e -ment pattern, the economy and the resources of the region are examined to show the extent to which industries could be developed to achieve the national i n d u s t r i a l i z a t i o n goals. A regional plan prepared for this region i s also evaluated. I t i s observed that the planning consultants recommended i n d u s t r i a l concentration only i n four large urban centres i n Ghana with complete disregard for the smaller urban centres and the r u r a l areas, and that the implementation of such a recommendation would tend to widen further the e x i s t i n g gap between the l i v i n g standards of the people i n these large urban areas and the rest of the country. Only these four centres were selected as points of i n d u s t r i a l concentration because i n d u s t r i a l l o c a t i o n was predetermined within a national framework. I t i s concluded that only predetermined i n d u s t r i a l l o c a t i o n within a regional framework w i l l a s s i s t Ghana to achieve her i n d u s t r i a l i z a t i o n goals, since the use of such an approach would enable the country to examine the resources and the needs of a l l the urban and the r u r a l areas. iv It i s emphasized that although the regional approach to i n d u s t r i a l l o c a t i o n w i l l a s s i s t the developing countries to achieve t h e i r i n d u s t r i a l i z a t i o n goals, nevertheless t h i s approach must take cognizance of the national development goals and be related to l o c a l economic, s o c i a l , and physical conditions. ACKNOWLEDGEMENTS With p a r t i c u l a r gratitude, I wish to acknowledge the contributions of those whose assistance has made thi s study possible. Great assistance was given by Professor H. P. Oberlander, Head, Community and Regional Planning Department of the University of B r i t i s h Columbia, whose knowledge of the problems of the developing countries was a great source of help. I am grateful also to Professor J . N. Jackson, Associate V i s i t i n g Professor of the Depart-ment, fo r his lectures i n Regional Planning, which enabled me to appreciate the importance of regional planning to the developing countries. Many thanks go to Dr. K._J. Cross, also of the Department, f o r systematically going over the f i r s t draft of the Thesis and making suggestions; his advice was a major source of i n s p i r a t i o n . The assistance given by Mr. D. Johal of the Ca p i t a l Region Planning Board, V i c t o r i a , B. C , should be mentioned; Mr. Johal advised me generally on how to write a Master's Degree Thesis and I am grateful to him for the advice. My gratitude goes also to Miss M. J . Dwyer, the L i b r a r i a n of the Pine Arts section of the University Library, f o r making books available f o r my use. The contributions of the t y p i s t and of my wife are also appre-ciated. My sincere thanks go also to Professor V. N. Prasad of the U. N. Regional Planning Mission to Ghana and a l l others TABLE OP CONTENTS PAGE ABSTRACT . ... i i TABLE OP CONTENTS v ACKNOWLEDGEMENTS v i i i CHAPTER I. THE DEVELOPING COUNTRIES AND INDUSTRIAL LOCATION 1 The Developing Countries The Role of I n d u s t r i a l i z a t i o n i n Economic Development Theory of In d u s t r i a l Location August Losch and Indu s t r i a l Location Theory Edgar Malone Hoover and In d u s t r i a l Location Theory Walter Isard and Others on I n d u s t r i a l -Complex Analysis Summary Conclusion II . THE CONCEPT OP PREDETERMINED INDUSTRIAL LOCATION WITHIN A REGIONAL FRAMEWORK 23 The Basis of the Concept of Predetermined Ind u s t r i a l Location within a Regional Framework Application of the Concept i n Puerto Rico Delimitation of Ind u s t r i a l Areas and Centres The Resulting Pattern Summary Conclusion I I I . PROBLEMS OF INDUSTRIAL LOCATION 36 National I n d u s t r i a l i z a t i o n Goals Increase i n Income per Capita Earning or Saving Foreign Exchange F u l l Employment Summary Selection of Industries Factor Intensity Plant Size and Complexity Foreign Exchange Benefits U t i l i z a t i o n of Raw Materials Summary Selection of In d u s t r i a l Location Transportation Raw Materials Markets Labour Energy Summary F a c i l i t i e s Supporting I n d u s t r i a l Location Transportation Communication U t i l i t i e s I n d u s t r i a l Parks Housing Commercial F a c i l i t i e s Recreation, Health, and Welfare F a c i l i t i e s Vocational Training and Education Summary Conclusion INDUSTRIAL LOCATION IN THE ACCRA PLAINS Ghana's I n d u s t r i a l i z a t i o n Goals F u l l Employment Increase i n National Income Maintenance of a Strong Balance of Payments Summary Settlement Pattern Size and Location of Settlements Service Centres Summary Economy Urban Economic A c t i v i t i e s Rural Economic A c t i v i t i e s Resources Summary v i i CHAPTER PAGE 'Accra-Tema-Akosombo Regional Programme and Plan' Degree of Ind u s t r i a l Development Selection of Industries Selection of Ind u s t r i a l Locations Summary Conclusion 'V. AN EVALUATION OP THE REGIONAL APPROACH TO INDUSTRIAL LOCATION IN THE DEVELOPING COUNTRIES..136 Summary Evaluation A p p l i c a b i l i t y of the Regional Approach Conclusion Recommendations Administrative P o l i c i e s Special Devices to Influence In d u s t r i a l Locations Studies i n Regionalism APPENDIX I -- CONWAY'S PLANT LOCATION FACTORS 152 BIBLIOGRAPHY 155 LIST OP FIGURES FIGURE " PAGE I. Major Ind u s t r i a l Development Areas 27 I I . The Accra Plains i n a Regional Setting 10O I I I . Size and Location of Settlements i n the Accra Plains 102 IV. Urban Centres for Ind u s t r i a l Concentration 125 LIST OF TABLES TABLE I. Industries Already Established i n Tema I l l II. Industries i n the Planning or Construction Stage I l l who sent me written materials from Ghana. F i n a l l y , I am very grateful to the United Nations and the Government of Ghana f o r making i t possible f o r me to pursue th i s planning course i n t h i s University. CHAPTER I THE DEVELOPING COUNTRIES AMD INDUSTRIAL LOCATION In order to orient the reader with reference to the general subject of i n d u s t r i a l l o c ation i n the developing countries, the main body of t h i s study i s prefaced by a discussion of a general nature. The discussion which follows defines the term 'the developing countries' and considers the role of i n d u s t r i a l i z a t i o n i n t h e i r economic development. I n d u s t r i a l l o c a t i o n i s regarded as a problem of i n d u s t r i a l i z a t i o n and methods are considered f o r analyzing the problem. THE DEVELOPING COUNTRIES U n t i l quite recently, the countries of Latin America, A f r i c a , and Asia were described as 'under-developed countries' e s p e c i a l l y by i n t e r n a t i o n a l bodies, such as the United Nations, and by development economists. A l l of these various groups defined the term 'under-developed countries' d i f f e r e n t l y . For instance, a group of the United Nations experts defined the term as follows: We use the term 'under-developed countries' to mean countries i n which per capita r e a l income i s low when compared with the per capita r e a l incomes of the United States, Canada, Australasia and Western Europe. In this sense an adequate synonym would be 'poor countries'.1 United Nations. Measures fo r the Economic Development  of Under-Developed Countries. New York. United Nations. 1951, p. 3. 2 Following Almeida Magalhaes' discussion of the economies of under-developed countries, Dr. Loeb, a development economist, describes 'under-developed countries' as "those countries which, given the available natural and human resources, have been backward i n employing economically f e a s i b l e modern techniques". Without going into the analysis of the realism of these d e f i n i t i o n s i t can be said that the use of the term 'under-developed countries' to describe the countries of Latin America, A f r i c a and Asia, should be discontinued because i t i s unsuitable now, not merely because the term i s a r e l a t i v e one, thus making i t d i f f i c u l t f o r people to understand the socio-economic conditions of the countries unless they are compared to other countries, but also because a l l these so-called 'under-developed countries' are i n the process of developing. Their economies are not based only on export of raw materials and import of manufactured goods; the countries are also processing some of the raw materials domestically. The range of s o c i a l necessities, such as education, housing, recreational and health f a c i l i t i e s , i s also widening. Hence, the term 'developing countries' should be used to apply to these countries i n place of 'under-developed countries'. Perhaps the economic p o s i t i o n of the developing countries can be understood i f i t i s put into the framework of Rostow's stages of economic growth. Rostow, taking the 2 Loeb, G.F. I n d u s t r i a l i z a t i o n and Balanced Growth. Gronigen. J.B. Wolters Press. 1957 , p. 8 . 3 h i s t o r i c a l approach to the explanation of the process of economic development, distinguishes f i v e stages through which a l l countries pass as they become f u l l y developed.3 These stages are: the t r a d i t i o n a l society; a period during which the pre-conditions for the take-off are prepared; the take-off; the drive to maturity; and f i n a l l y , the age of high mass-consumption. The po s i t i o n of the developing countries i s the t h i r d stage, namely 'the take-off', defined by Rostow as "the i n t e r v a l when the old blocks and r e s i s t -ances to steady growth are f i n a l l y overcome".^- At this stage, also, the "forces making f o r economic progress, which yielded limited bursts and enclaves of the modern a c t i v i t y , expand and come to dominate the society. Growth becomes i t s normal conditions. Compound int e r e s t becomes b u i l t , as i t were, into i t s habits and i n s t i t u t i o n a l struc-tures".£ Thus, developing countries are those which are i n the early stages of development with a view to developing t h e i r resources and r a i s i n g t h e i r l i v i n g standards. Although i t i s true that some obstacles to economic development, such as foreign domination, may have been overcome when these countries ' t a k e - o f f , nevertheless, the basic problems c h a r a c t e r i s t i c of the countries, such as 3 p o r a detailed analysis of these stages, see Rostow, R.R., The Stages of Economic Growth. Cambridge. The Univer-s i t y Press. I960, 179 p.. ^I b i d . . p. 7-% b i d . , p. 7-4 unemployment and under-employment, low income per c a p i t a , low standard of l i v i n g , are s t i l l to be overcome. How to sol v e these problems becomes the main p r e - o c c u p a t i o n of the c o u n t r i e s . They r e a l i z e t h a t these problems are p r e v a l e n t not because human and n a t u r a l resources are scarce but because the resources are p o o r l y a l l o c a t e d and i n e f f i c i e n t l y u t i l i z e d . What must be done, t h e r e f o r e , i s to p l a n the whole economy so as to achieve Increases i n employment, i n development of r e s o u r c e s , and i n p r o d u c t i v i t y . THE ROLE OF INDUSTRIALIZATION IN ECONOMIC DEVELOPMENT As the d e v e l o p i n g c o u n t r i e s make t h e i r development p l a n s , they i n v a r i a b l y r e c o g n i z e t h a t i n d u s t r i a l i z a t i o n i s a very important, i f not the most important, means of s o l v i n g t h e i r problems. Not only does i t u t i l i z e human and n a t u r a l r e s o u r c e s , thus c r e a t i n g employment and i n c r e a s i n g r e a l incomes, i t a l s o v i t a l i z e s the economy by i n c r e a s i n g demand f o r a g r i c u l t u r a l p roducts and s e r v i c e a c t i v i t i e s . Hence, t h e i r development p l a n s p l a c e the g r e a t e s t emphasis on the r o l e of b a s i c i n d u s t r i e s . F o r i n s t a n c e , i n the i n t r o d u c t o r y chapter to the T r i n i d a d and Tobago 'Five Year Development Programme' can be found the f o l l o w i n g r o l e which I n d u s t r i a l -i z a t i o n can p l a y i n economic development: The p a r t y i n power i n T r i n i d a d and Tobago - the f i r s t p a r t y government i n the h i s t o r y of the country - enunciated i t s ide a s f o r economic development i n i t s E l e c t i o n s M a n i f e s t o f o r the General E l e c t i o n s on September 2i+, 195>6. The preamble to i t s s p e c i f i c p r o p o s a l s reads as f o l l o w s : 5 The domination of the o i l , sugar and asphalt ind u s t r i e s . The under-development of such areas as St. Andrews, David, Togo, Nariva-Mayo, Ortoire-Morugu. The existence of 1 8 , 0 0 0 unemployed i n a labour force of 2 7 0 , 0 0 0 , i n a population of 720 ,000 of whom 293 ,000 are children under 1$. The existence of considerable under-employment, amounting to llf out of every 1 ,000 persons employed. The p r i n c i p a l economic needs, therefore, are: Provision of a large number of jobs. Development of resources of the entire economy. Expansion of e x i s t i n g industries and Introduc-t i o n of new ones. The Development Programme, herewith presented, i s a f u l f i l m e n t of the s p e c i f i c pledges In the Manifesto.6 Examples of recognition of the role of i n d u s t r i a l i z a t i o n i n economic development can also be found In the Development Plans of such developing countries as Ghana, India, Puerto Rico, and Pakistan. The developing countries recognize also the Impor-tance of the role of the State i n i n d u s t r i a l development. The State must prepare the environment In which industry, as a functioning e n t i t y with a l i f e of i t s own, can l i v e and grow. I t must provide such supporting f a c i l i t i e s as u t i l i t i e s , highways, and s o c i a l services, such as schools, hospitals, and recreational f a c i l i t i e s . In addition, the State must enter d i r e c t l y into i n d u s t r i a l a c t i v i t i e s , either by a s s i s t i n g private entrepreneurs to carry on t h e i r concerns through tax reduction, t a r i f f manipulation or providing Government of Trinidad and Tobago. Five Year Develop-ment Programme, 1 9 5 8 - 1 9 6 2 . Trinidad. Government Prin t i n g O f f i c e . 1 9 5 « , P- 1. 6 finance, or by becoming an entrepreneur i t s e l f , or by working alongside private i n d u s t r i a l i s t s . B a ljet Singh points out the Indian Government's r e a l i z a t i o n of the role of the State i n India's i n d u s t r i a l i z a t i o n : The country needs a large public sector to push investment i n s t r a t e g i c a l directions that have been neglected by, and are unsuitable f o r , private enterprise either on account of marginal considerations pertaining to net return or due to t h e i r magnitude and r i s k s involved.' This State p a r t i c i p a t i o n , however, does not necessarily mean na t i o n a l i z a t i o n of private industries which have already been i n operation. Except i n the communist developing countries where, i n accordance with t h e i r ideology, the State i s the only entrepreneur, a l l the developing countries welcome private p a r t i c i p a t i o n i n i n d u s t r i a l development. For rapid development of the i n d u s t r i a l sector of t h e i r economies, the countries set up ' i n d u s t r i a l develop-ment corporations', or companies, as they are c a l l e d In d i f f e r e n t countries. These are statutory agencies charged with the I n d u s t r i a l development of the countries. The importance of i n d u s t r i a l i z a t i o n to these countries can be seen from the wide range of powers given to these agencies. For instance, the then Gold Coast (now Ghana) Development Corporation, created i n 1951j- by the I n d u s t r i a l Development Ordinance, Chapter 1 9 1 , was given the following powers: (2) The said Corporation s h a l l have power f o r the purpose of the discharge of t h e i r duty under the preceding subsection -7Singh, B., Economic Planning i n India. Bombay. Hind Kitabs, Ltd. 1953 , p. 1 0 . 7 (a) to carry on a l l a c t i v i t i e s , the carrying on whereof appears to them to be r e q u i s i t e , advantageous or convenient f o r or i n connec-ti o n with the discharge of the said duty Including the marketing of i n d u s t r i a l products: (b) to promote the carrying on of such a c t i v i t i e s by other bodies or persons and f o r that purpose to e s t a b l i s h or expand, or promote the establishment or expansion of, other bodies to carry on any such a c t i v i t i e s either under the control or p a r t i a l control of the Corporation or independently, and to give assistance to such bodies or to other bodies or persons appearing to the Corporation to have f a c i l i t i e s f o r the carrying of any such a c t i v i t i e s , including f i n a n c i a l assistance, by the taking up of share or loan c a p i t a l or by loan: (c) to carry on any such a c t i v i t i e s i n associa-t i o n with other bodies or persons (including Government authorities or Local Government authorities) or as managing agents or otherwise on th e i r behalf." In addition to these powers the Corporation was given authority "to do anything and enter into any transaction"^ whether or not this transaction involved expenditure, borrowing, the lending or investment of money, the a c q u i s i t i o n of any property or r i g h t s , "which i n t h e i r opinion Is calculated to f a c i l i t a t e the proper discharge of t h e i r functions or i s i n c i d e n t a l or conducive thereto".10 This wide range of powers, including discretionary ones, i s not r e s t r i c t e d to the then Gold Coast I n d u s t r i a l Development Corporation alone. In the Trinidad and Tobago 'Five Year Development Programme', the envisaged I n d u s t r i a l °The Gold Coast Government. The I n d u s t r i a l Development  Ordinance. Ch. 1 9 1 . Accra. The Government Pri n t e r . 1951+, p. 3 3 8 . 9 I b i d . , p. 338-1 0 I b i d . , p. 3 3 8 . 8 Development Corporation w i l l be responsible f o r "the discovery and p u b l i c i z i n g of some p o t e n t i a l i t i e s , the seeking-out and persuasion of prospective i n d u s t r i a l i s t s and attention to t h e i r needs with regard to information concerning such matters as labour, l e g i s l a t i o n , i n d u s t r i a l r e l a t i o n s , the recruitment of labour, housing accommodation f o r s t a f f and many other points on which they need information and guidance w i l l be amongst the main charges of the Corporation". Other examples can be c i t e d from other developing countries. The e s s e n t i a l c h a r a c t e r i s t i c s of these I n d u s t r i a l Development Corporations are: (a) that they are concerned exclusively with the promotion of i n d u s t r i a l development; and (b) that they are not confined to one industry, or group of industries, but are empowered to operate over a wide f i e l d . But making development plans and establishing I n d u s t r i a l Development Corporations are not the entire solutions to the problems of i n d u s t r i a l i z a t i o n . There are s t i l l problems of the financing of the industries, problems of t h e i r proper location, and problems of getting s k i l l e d personnel to operate the i n d u s t r i e s . Without •investigating a l l these problems, those dealing with the l o c a t i o n of the industries are selected f o r a detailed i n v e s t i g a t i o n . In attacking the selected problems of i n d u s t r i a l location, the following theories are found to be useful as methods of analysis. H-The Government of Trinidad and Tobago, op. c i t . , p. 7• 9 THEORY OP INDUSTRIAL LOCATION The conventional i n d u s t r i a l l o c a t i o n theory seeks to analyze the factors that affect l o c a t i o n of industries. These factors are: markets; s u i t a b i l i t y of labour; cheap land; low rent or low rates; proximity to other f a c t o r i e s i n the same industry and convenience of premises.^ These are the factors which guide an i n d i v i d u a l entrepreneur i n choosing a l o c a t i o n f o r his plant so as to r e a l i z e the maximum p r o f i t . I t i s f a i r l y clear that the average entrepreneur i s i n no way equipped or disposed to analyze so complex a set of unknowns before selecting a plant l o c a t i o n , but the fact that most of these factors are considered i s true since a l l geo-graphic areas do not have the same i n d u s t r i a l l o c a t i o n advantages. The i n d u s t r i a l l o c a t i o n theory i s , therefore, useful i n making prospective i n d u s t r i a l i s t s conscious of these factors so as to minimize costs. Since the beginning of t h i s century, many economists have attempted to develop l o c a t i o n theories, and some have concerned themselves with factors a f f e c t i n g both i n d u s t r i a l and a g r i c u l t u r a l locations. 1 3 The works of two i n d u s t r i a l x For a detailed discussion of these factors of indus-t r i a l locations, see P o l i t i c a l and Economic Planning. Report on Location of Industries i n Great B r i t a i n . London. P o l i t i c a l and Economic Planning. 1 9 3 9 , pp. 5 5 - 8 9 . ^ F o r a detailed account on the development of lo c a t i o n theory, see Isard, ¥., Location and Space Economy. New York. John Wiley and Sons. 1 9 5 6 , PP~ 1 0 l o c a t i o n theorists are reviewed here. In addition, an attempt at a t h e o r e t i c a l approach to selecting industries offered by Walter Isard and his co-authors i s also con-sidered. • These theories w i l l serve as methods of analysis of the problem of i n d u s t r i a l l o c a t i o n i n the developing countries i n subsequent sections. August Losch and I n d u s t r i a l Location Theory-^ In his book, 'The Economics of Location' i n which he discusses the location of industry, a g r i c u l t u r a l a c t i v i t y , towns, regions, etc., August Losch outlines his theory of i n d u s t r i a l l o c a t i o n . Losch begins by attacking such early theories, as that of A l f r e d Weber, which have been one-sided. This one-sided orientation,1^ as he points out, considers only cost factors, that i s to say, cost of transportation and cost of production, disregarding the demand side, that i s , market. Such a theory assumes that demand i s i n e l a s t i c , that i 3 , there i s no competition between ind u s t r i e s . It assumes the b a r r i e r between neighbouring competitors as f i x e d . "In t h i s case, the factory would then be situated at the point of the lowest c . i . f . costs. sch, A., Economics of Location, (translated from the 2nd revised e d i t i o n by William H. Woglam with the assistance of Wolfgang P. Stopler). New Haven. Yale University Press. 19$k> PP« 19-36. ^ B y 'orientation' i s meant motives f o r , or the outcome of, a choice of l o c a t i o n . l ^ I b i d . , p. 21. c . i . f . i s cost, insurance and f r e i g h t . 11 There i s another one-sided, orientation which i s based on 'Gross Receipts'. The aim of this orientation i s to r e a l i z e maximum revenue. This orientation considers only the demand or the market side alone, disregarding t o t a l costs of production. This orientation has two components: orientation by quantity, which would look more toward the number of buyers, that i s , i n a populous d i s t r i c t ; and orientation by price toward t h e i r purchasing, that i s , i n a prosperous d i s t r i c t . Both of these orientations l i k e a l o c a t i o n away from competition. Losch makes i t clear that the one-sided orientation i s not correct. The correct orientation i s the two-sided one, which Is orientation by p r o f i t . This i s the complete orientation. "The r i g h t l o c a t i o n depends neither upon ex-penses nor upon gross receipts alone, to say nothing of any i n d i v i d u a l cost or receipt component. The determining factor i s t h e i r balance: the net profit."-*- 7 In a free economy, Losch says, the correct l o c a t i o n of the i n d i v i d u a l enterprise l i e s where the net p r o f i t i s greatest. The greatest p r o f i t attainable at each of these points can be determined from the cost and demand curves, while from the place of greatest money p r o f i t s , the optimum l o c a t i o n can be found. The procedure of f i n d i n g t h i s point i s by empirical testing, as there i s no s c i e n t i f i c and unequivocal solution f o r the l o c a t i o n of the i n d i v i d u a l firm, but only a 1 7 I b i d . , p. 26. 12 p r a c t i c a l one: the test of t r i a l and error. Hence, the e a r l i e r attempts at a systematic and v a l i d l o c a t i o n theory fo r the i n d i v i d u a l f i r m were doomed to f a i l u r e . Losch's c r i t i c i s m and theories are v a l i d . An o v e r a l l view of both the t o t a l costs and gross receipts i s the most r a t i o n a l approach. This approach seeks the maximum net p r o f i t , which i s t o t a l receipts less t o t a l costs. The other approach, that i s , the one-sided orientation to either lowest costs or greatest receipts, i s deceptive. An industry may produce at low cost i n a p a r t i c u l a r location, but lack of market w i l l r e s u l t i n a great l o s s . On the other hand, an adequate market may be available, but high cost of produc-t i o n may r e s u l t i n a loss to the industry. The correct approach, therefore, i s the balance of the two sides -costs and receipts - which y i e l d s the greatest p r o f i t , the essence of i n d i v i d u a l enterprise. Losch's theory i s oriented purely to the i n d i v i d u a l enterprise where money p r o f i t i s the only motive. The developing countries, however, need a theory which considers more than the p r o f i t motive. The s o c i a l welfare motive, that i s , consideration of the people's needs, must also be incorporated i n a theory of i n d u s t r i a l l o c a t i o n . Edgar Malone Hoover and I n d u s t r i a l Location Theory^ Hoover sets down the e s s e n t i a l problems of indus-t r i a l l o c a tion i n his book, 'The Location of Economic A c t i v i t y ' . -^Hoover, E.M., The Location of Economic A c t i v i t y , New York. McGraw-Hill Book Co. Inc. 191+.8, 310 pp. 113 H i s d i s c u s s i o n s are v e r y much o r i e n t e d t o c o s t f a c t o r s of l o c a t i o n . He d i v i d e s c o s t f a c t o r s i n t o two groups: t r a n s p o r t a t i o n f a c t o r s and the p r o d u c t i o n f a c t o r s . Cost of p r o c u r i n g the raw m a t e r i a l s and c o s t of d i s t r i b u t i n g the f i n i s h e d p r o d u c t s are c o n s i d e r e d as t r a n s p o r t a t i o n c o s t s w h i l e the ' a g g l o m e r a t i v e ' c o s t s and ' i n s t i t u t i o n a l ' c o s t f a c t o r s , such as t a x e s , l a b o u r , e t c . , are c o n s i d e r e d as p a r t i a l d e t e r m i n a n t s of p r o d u c t i o n c o s t s . Hoover's main c o n t r i b u t i o n t o i n d u s t r i a l l o c a t i o n t h e o r y l i e s n o t i n t h e o r e t i c a l o r i g i n a l i t y , but i n p e n e t r a t i n g a n a l y s i s o f the i n f l u e n c e of these f a c t o r s on i n d u s t r i a l l o c a t i o n . F r e i g h t Hoover s t r e s s e s the f a c t t h a t c o s t of t r a n s f e r does not i n c r e a s e p r o p o r t i o n a t e l y w i t h d i s t a n c e ; r a t h e r the a d d i t i o n s t o t r a n s f e r c o s t s are l e s s t h a n p r o p o r t i o n a l as the d i s t a n c e i n c r e a s e s - f o r l o n g d i s t a n c e s , t r a n s p o r t a t i o n c o s t s are l e s s p e r u n i t a r t i c l e , making w a t e r t r a n s p o r t a t i o n cheap, r e l a t i v e t o r a i l o r t r u c k i n g costs.19 From s t i l l a n o t h e r v i e w p o i n t , f r e i g h t c o s t s are s i g n i f i c a n t d e t e r m i n a n t s of l o c a t i o n . Any p e r i s h a b l e , dangerous, f r a g i l e o r o f f e n s i v e cargo r e q u i r e s s p e c i a l h a n d l i n g . The e x t r a c o s t s of such h a n d l i n g f o r c e the e n t r e p r e n e u r t o emphasize t h i s f a c t o r i n s e l e c t i n g an 20 i n d u s t r i a l l o c a t i o n . 1 9 I b l d . . pp. 19-22. 20 I b i d . , p. 25. 14 The same reasoning appears i n Hoover's b r i e f discussion of fr e i g h t absorption. In his view, the fi r m that absorbs f r e i g h t costs i s the p r i n c i p a l "gainer by proximity and the p r i n c i p a l • l o s e r by distance".21 i t follows that the incentive to locate near materials or markets i s reduced f o r one purchasing from, or s e l l i n g to, the f r e i g h t absorber, though, from the standpoint of f l e x i b i l i t y of service, convenience of contact, and accumula-t i o n of inventory, distance s t i l l remains a f a c t o r . None of these f r e i g h t considerations change the basic theory, but they do emphasize some aspects of transportation practice which explains the transport orientation of ce r t a i n in d u s t r i e s . Agglomerating and Deglomerating Forces Hoover's analysis of the agglomerating and deglomerating forces i n i n d u s t r i a l l o c a t i o n i s also penetrat-ing. Included i n agglomerating are such advantages as better transfer services, a broader and more f l e x i b l e labour market, more advanced banking f a c i l i t i e s , better police and f i r e protection, and lower insurance costs and u t i l i t y rates. In addition, by agglomerating and l o c a l i z i n g , firms s p e c i a l i z e to a greater degree. Thus certain operations and services that a plant i n a less i n d u s t r i a l i z e d area would have to perform f o r i t s e l f could now be farmed out 2 1 I b i d . , p. 28. 1 5 e c o n o m i c a l l y . The i n t e r - i n d u s t r y advantage of a g g l o m e r a t i n g i s pronounced. Thus, i n d u s t r i e s may be l i n k e d by t h e use of e a c h o t h e r ' s b y - p r o d u c t s , complementary use of l a b o u r , o r a p o l i c y of 'hand-to-mouth' p u r c h a s i n g of i n v e n t o r y , r a t h e r pp t h a n i n v e n t o r y a c c u m u l a t i o n s . I n s t i t u t i o n a l F a c t o r s Hoover's a n a l y s i s of the i n s t i t u t i o n a l f a c t o r s shows t h a t Hoover, u n l i k e many i n d u s t r i a l l o c a t i o n t h e o r i s t s , i s i n t e r e s t e d i n a l l p o s s i b l e l o c a t i n g f o r c e s , n o t o n l y the g e n e r a l f a c t o r s t h a t a f f e c t a l l p l a n t l o c a t i o n s . T h i s i n t e r e s t makes him a n a l y z e the l o c a t i o n a l i n f l u e n c e of p r o p e r t y t a x e s . Hoover r e g a r d s the p r o p e r t y t a x b u r d en as an element of l a n d c o s t . T h i s f a c t o r , he c l a i m s , a f f e c t s the l o c a t i o n i n much the same manner as the i n t e r e s t b u r d e n . He c o n c l u d e s as f o l l o w s : A t a x t h a t becomes a f i x e d c o s t r e g a r d l e s s of r a t e o f o u t p u t , e.g., a g e n e r a l p r o p e r t y t a x , has about the same e f f e c t as a h i g h e r i n t e r e s t r a t e : i t p e n a l i z e s l o c a l i t i e s where p l a n t and equipment are l e s s f u l l y u t i l i z e d and sharpens the p r o d u c e r ' s i n c e n t i v e t o f i n d a l o c a t i o n where l e s s c a p i t a l i n v e s t m e n t i s r e q u i r e d p e r u n i t of output. 2 3 A t a x r e f l e c t s the r e t u r n on the Investment, t h e r e b y I n f l u -e n c i n g the l o c a t i o n a l c h o i c e . pp. 1 1 6 - 1 2 3 . 2 3 l b l d . , p. 2 p V 16 C l i m a t e H o o v e r d e s c r i b e s t h e s i g n i f i c a n c e o f c l i m a t e i n p l a n t l o c a t i o n i n a s i m i l a r m a n n e r . ^ Where the c l i m a t e i s e x c e s s i v e l y h o t , l a b o u r may be s l u g g i s h and l a b o u r c o s t h i g h ; i f a i r r e f r i g e r a t i o n u n i t s a r e u s e d t o c o u n t e r a c t t h i s t e n d e n c y , t h e l a n d c o s t r i s e s . Where t h e c l i m a t e i s v e r y c o l d , t h e h e a t i n g s y s t e m becomes v e r y c o s t l y , r e s u l t i n g i n h i g h l a n d c o s t . I n a d d i t i o n t o t h e s e p r i n c i p l e s r e l a t i n g t o t h e s e l e c t i o n o f l o c a t i o n f o r p r i v a t e and p u b l i c i n d u s t r i a l a c t i v i t i e s , H o o v e r d e v e l o p s i d e a s on l a n d u t i l i z a t i o n ; m e t r o p o l i t a n and r e g i o n a l p l a n n i n g , and programmes o f i n d u s t r i a l d e v e l o p m e n t and s t a b i l i z a t i o n a t l o c a l , s t a t e , r e g i o n a l and n a t i o n a l l e v e l s ; and t h e l o c a t i o n a l s i g n i f i -c a n c e o f p o l i t i c a l b o u n d a r i e s . These i d e a s , as s e t down i n h i s b o o k , a r e o f g r e a t s i g n i f i c a n c e f o r t h e d e v e l o p i n g c o u n t r i e s . F o r i n s t a n c e , h i s i d e a s on the p r o b l e m s o f e c o n o m i c d e v e l o p m e n t show t h e c o n d i t i o n s w h i c h must be p r e s e n t f o r s a t i s f a c t o r y e c o n o m i c d e v e l o p m e n t a t the r e g i o n a l l e v e l . ^ S u c h c o n d i t i o n s as t h e a v a i l a b i l i t y o f a d o m e s t i c m a r k e t , t h e i n t e n s i t y o f l a n d use f o r I n c r e a s e d p r o d u c t i o n t o r e l e a s e a g r i c u l t u r a l l a b o u r f o r i n d u s t r y , and t h e d e v e l o p m e n t o f m a n u f a c t u r i n g i n d u s t r y , ^ I b i d . . p . 76. 2$Ibid.. p p . 187-196. 17 which, as a basic a c t i v i t y , w i l l r e s u l t i n a greater demand f o r the products of the other sectors of the economy, f o r instance, agriculture and commerce. He also points out such impediments to i n d u s t r i a l i z a t i o n as lack of raw materials, c a p i t a l , and energy, and also high s o c i a l overhead costs, such as cost of providing roads, schools, housing and other s o c i a l f a c i l i t i e s which, though not generally considered as l o c a t i o n a l factors, i n d i r e c t l y a f f e c t i n d u s t r i a l development. Hoover's ideas are useful i n understanding the steps which should be taken by the developing countries i n t h e i r goal towards i n d u s t r i a l i z a t i o n . However, Hoover i s s i l e n t on how industries should be planned within a regional framework. Walter Isard and Others on Industrial-Complex Analysis A t h e o r e t i c a l approach to planned I n d u s t r i a l s e l e c t i o n f o r a region i s taken by Isard, Schooler and V i e t o r l s z . 2 o In t h e i r book 'Industrial-Complex Analysis and Regional Development' they seek to i d e n t i f y some s p e c i f i c combinations of i n d u s t r i a l a c t i v i t i e s f o r which Puerto Rico i s l i k e l y to be an economically favourable l o c a t i o n . After examining such possible approaches of analysis, as the broad economic development approach, the comparative-cost analysis f o r i n d i v i d u a l industries approach, the l o c a t i o n quotient approach, the c o e f f i c i e n t of l o c a l i z a t i o n approach, the 2 6 I s a r d , W., Schooler, E.W., and V l e t o r i s z , T. Industrial.Complex Analysis and Regional Development. New York. John Wiley and Sons. 1959, pp. 1-26. 18 Inter-regional output-input approach, the l i n e a r programming approach, and the gravity model approach, and rej e c t i n g them a l l as inappropriate f o r t h e i r purpose, the authors f i n a l l y developed t h e i r own approach, 'the Industrial-complex a n a l y s i s ' . 2 ? This approach i s based on considerations of sets of sectors and was selected because i t could y i e l d p o s i t i v e r e s u l t s , whereas an approach such as the compara-tive-cost analysis which considers industries i n d i v i d u a l l y could produce a negative r e s u l t f o r Puerto Rico, since the s p e c i f i c industry, considered alone, could operate at a disadvantage compared with the operation of the same industry on the mainland (United States). On the other hand, i f industries are considered i n a complex, because of economies of scale and integration, urbanization economies, production r e l a t i o n , and other agglomerating factors, i t would be economically advantageous f o r these industries to operate together. In developing t h e i r analysis, the co-authors determined the available resources, both human and non-human, i n Puerto Rico. Puerto Rico was seen to have three main l o c a t i o n a l advantages which any r a t i o n a l method of i n d u s t r i a l s e l e c t i o n should take into account. These advantages are: a large supply of moderately s k i l l e d , cheap labour; proximity to o i l deposits i n Venezuela; and easy access to the United States markets. This l a s t factor, 2 7 F o r detailed discussion of the various approaches, see Ibid.. pp. 5 - 2 5 . 19 as was shown, affords Puerto Rico a major advantage r e l a t i v e to other cheap labour regions of the world, including some within the United S t a t e s . 2 8 Given these three advantages, the problem that arose was how they could be combined by means of a matrix of i n d u s t r i a l a c t i v i t i e s to y i e l d the maximum advantage f o r loca t i o n i n Puerto Rico. In other words, t h i s was a problem of i d e n t i f y i n g the i n d u s t r i a l complex which could be advan-tageously located i n the country. The procedure followed was the i d e n t i f i c a t i o n of a group of industries that use the same raw materials. The selected industry was that which u t i l i z e s the un s k i l l e d and semi-skilled labour available i n Puerto Rico. In this case It was necessary to include f i b r e production i n such a complex because of i t s intense u t i l i z a t i o n of the abundance of moderately s k i l l e d and cheap labour. O i l r e f i n i n g was considered together with synthetic f i b r e because the former uses the second Puerto Rican resource, namely^ o i l deposits i n Venezuela. There would be a gain here since the raw materials f o r synthetic f i b r e could be obtained from petroleum refi n e r y by-products. This combination would r e s u l t i n additional gains on two scores: f i r s t , r e f i n e r y products would be upgraded, and secondly, transport costs on chemical intermediates would be eliminated. F i n a l l y , both the r e f i n e r y products and the synthetic f i b r e products 2 8 I b i d . , pp. 27-28. 2 0 could be exported to the United States market duty free, thus making use of Puerto Rico's t h i r d important advantage, that i s , d i r e c t access to the mainland markets. F e r t i l i z e r production was also included In the complex because i t s transport cost i s a l o c a t i o n a l l y important variable, and also because nitrogen f e r t i l i z e r s can be based on refi n e r y by-products, thus upgrading refi n e r y by-products. In addition there i s a great domestic market f o r f e r t i l i z e r s . The authors concluded that, " i n considering the p o s s i b i l i t i e s f o r economic development i n Puerto Rico, i n d u s t r i a l complexes involving petroleum refinery, petro-chemical, synthetic f i b r e and f e r t i l i z e r processes appear to be promising".29 Such an approach as taken by Isard and his co-writers i s a r a t i o n a l one. As has been pointed out above, i f only one type of a c t i v i t y , f o r instance, petroleum refinery, were to be considered, i t would probably be uneconomical to locate i t i n Puerto Rico. Such a r a t i o n a l approach to locating industries i s needed f o r the se l e c t i o n of industries f o r developing countries. However, t h e i r approach i s li m i t e d i n the sense that i t i s r e s t r i c t e d only to selecting the in d u s t r i e s . A wider approach Is needed which i s oriented to considering a l l aspects of i n d u s t r i a l l o c a t i o n i n a regional framework. 2 9 I b i d . . pp. 29, 32. 21 Summary The theories discussed above should be given considerable thought when the developing countries make p o l i c i e s on i n d u s t r i a l i z a t i o n . August Losch writes of a 'two-sided' orientation, that i s , balancing gross receipts against costs, as an indicator of the p r o f i t a b i l i t y of a loc a t i o n . E. M. Hoover takes the same point of view except that he discusses the receipts and costs i n greater d e t a i l . These theorists look at the problems of i n d u s t r i a l l o cation from the viewpoint of private entrepreneurs whose main aim i s p r o f i t . Nevertheless, the developing countries can learn much from these theories f o r no country, however Its goals, can afford to produce at a loss i n d e f i n i t e l y . The r a t i o n a l approach to selecting types of industries, offered by Waiter Isard and his co-authors can also help the developing countries i f the industries are selected with s p e c i a l reference to the i r national goals. CONCLUSION The developing countries have 'taken-off i n economic development i n order to achieve such s o c i a l and economic goals as f u l l employment, a strong balance of pay-ments, higher per capita income, and higher standards of s o c i a l f a c i l i t i e s and amenities. In the course of the i r economic development, they look upon i n d u s t r i a l i z a t i o n as an important means of achieving some of t h e i r socio-economic 22 goals because most of these goals have been achieved by the more developed countries through i n d u s t r i a l i z a t i o n . The degree to which the developing countries attach importance to i n d u s t r i a l i z a t i o n i s shown i n th e i r various development plans. However, i n the process of i n d u s t r i a l i z a t i o n , the developing countries encounter many problems; among them i s the problem of i n d u s t r i a l l o c a t i o n . What approach must be used i n l o c a t i n g the industries i n order to achieve t h e i r i n d u s t r i a l i z a t i o n goals? Should the industries be concentrated i n a few c i t i e s or spread throughout the country? In what framework should i n d u s t r i a l l o c a t i o n be predetermined? Such are the questions which the countries have to answer when they embark upon i n d u s t r i a l development. It i s the contention of the author that: ONLY PREDETERMINED INDUSTRIAL LOCATION WITHIN A REGIONAL FRAMEWORK WILL HELP THE DEVELOPING COUNTRIES TO ACHIEVE THEIR INDUSTRIALIZATION GOALS. The use of this regional approach to i n d u s t r i a l l o c a t i o n i n the developing countries w i l l a s s i s t those responsible for t h e i r national i n d u s t r i a l development p o l i c i e s to examine clo s e l y the resources of both the urban and the r u r a l areas, to u t i l i z e these resources to create employment and income fo r the people. Such a regional approach w i l l necessitate an appreciation of the idea of predetermined i n d u s t r i a l l o c a t i o n within a regional framework. CHAPTER II THE CONCEPT OP PREDETERMINED INDUSTRIAL LOCATION WITHIN A REGIONAL FRAMEWORK L i t t l e has been written concerning the concept of predetermined i n d u s t r i a l l o c a t i o n within a regional frame-work and how the concept has been applied i n either the developed or the developing countries. For thi s reason, i t i s impossible to analyze examples from many countries to i l l u s t r a t e this concept and how i t has been applied. In view of this s c a r c i t y of information, i t i s the purpose of t h i s chapter to examine b r i e f l y the basis of the concept of predetermined i n d u s t r i a l l o c a t i o n within a regional framework and how thi s concept has been applied i n one developing country, namely Puerto Rico, so as to throw l i g h t on the concept. THE BASIS OF THE CONCEPT OF PREDETERMINED INDUSTRIAL LOCATION WITHIN A REGIONAL FRAMEWORK The concept of predetermined i n d u s t r i a l l o c a t i o n within a regional framework i s based upon the premise that a country i s varied i n i t s topography, s o i l s , and socio-economic pattern so that i t s d i v i s i o n into sub-areas i s necessary f o r i n d u s t r i a l planning purposes. Such a d i v i s i o n permits a detailed examination of the needs and the poten-t i a l i t i e s of a l l the various regions i n a country as participants i n i n d u s t r i a l development. A regional analysis f o r the purposes of national i n d u s t r i a l development i s 24 v a l u a b l e not o n l y f o r i t s p r e s e n t a t i o n o f t h e g e o g r a p h i c a l framework w i t h i n w h i c h the e x i s t i n g economy o p e r a t e s b u t a l s o f o r p l a n n i n g o f the f a c i l i t i e s t h a t s u p p o r t i n d u s t r i a l l o c a -t i o n , s uch as t r a n s p o r t a t i o n , u t i l i t i e s , w a ter s u p p l y , e l e c t r i c power, h o u s i n g and o t h e r community f a c i l i t i e s . I n any c o u n t r y , because of v a r i a t i o n s i n i t s p h y s i c a l and s o c i a l c h a r a c t e r i s t i c s , i t i s i m p o r t a n t t o u n d e r s t a n d these c h a r a c t e r i s t i c s and how t h e y a f f e c t the economic s t r u c t u r e . P r e d e t e r m i n e d i n d u s t r i a l l o c a t i o n w i t h i n a r e g i o n a l framework p e r m i t s r e g i o n a l s t u d i e s o f p o p u l a t i o n d i s t r i b u t i o n , n a t u r a l r e s o u r c e s , t r a n s p o r t a t i o n and o t h e r f a c i l i t i e s w h i c h are b a s i c t o i n d u s t r i a l d e v e l o p -ment . APPLICATION OF THE CONCEPT IN PUERTO RICO I n the P u e r t o R i c a n i n d u s t r i a l 'Master P l a n 1 , ^ p r e p a r e d by the P u e r t o R i c o I n d u s t r i a l Development Company, can be found a r a t i o n a l p r e d e t e r m i n a t i o n o f i n d u s t r i a l l o c a t i o n w i t h i n a r e g i o n a l framework. F o r the purposes o f the p l a n , e l e v e n I n t e g r a t e d I n d u s t r i a l Areas and twenty-e i g h t L o c a l I n d u s t r i a l C e n t r e s were e s t a b l i s h e d . These areas and c e n t r e s were d e v e l o p e d "not o n l y t o g i v e a r e g i o n a l b a s i s t o p l a n n i n g but a l s o t o show how the remainder o f the I s l a n d o u t s i d e o f San Juan and o t h e r major c i t i e s w i l l P u e r t o R i c o I n d u s t r i a l Development Company. Ma s t e r  P l a n , San Juan. 195>6, 11+3 P-•'• 2 5 b e n e f i t by i n d u s t r i a l i z a t i o n " . D e l i m i t a t i o n o f I n d u s t r i a l A reas and C e n t r e s The p r i m a r y o b j e c t i v e s o f the i n d u s t r i a l d e v e l o p -ment programme were t o reduce unemployment and under-employment, i n c r e a s e w o r k e r s ' incomes, and r a i s e t h e l e v e l o f l i v i n g o f f a m i l i e s i n P u e r t o R i c o . Much i n d u s t r i a l i z a t i o n has t a k e n p l a c e i n the San J u a n M e t r o p o l i t a n A r e a , and the r e s t o f the c o u n t r y has n o t b e n e f i t e d b y the e a r l i e r i n d u s -t r i a l development programmes. T h i s i s the r e s u l t o f the r e l a t i v e a d v a n t a g e s , such as l a r g e l a b o u r f o r c e and market, w h i c h the San J u a n M e t r o p o l i t a n A r e a p o s s e s s e s f o r t h e l o c a t i o n o f i n d u s t r i e s . I n o r d e r t h a t the achievement o f the above O b j e c t i v e s might be advanced i n the o t h e r a r e a s o f P u e r t o R i c o , i t was proposed by the Development Company t h a t i n d u s t r i a l c e n t r e s be d e v e l o p e d w h i c h would have a t t r a c t i o n s f o r i n d u s t r y s i m i l a r to those o f the M e t r o p o l i t a n A r e a . The i n d u s t r i a l i z a t i o n p o t e n t i a l not o n l y o f the c e n t r e s them-s e l v e s but a l s o o f the s u r r o u n d i n g towns would be i n c r e a s e d by the p r o v i s i o n o f e a s i l y a c c e s s i b l e s e r v i c e s and f a c i l i t i e s . The f o l l o w i n g m u n i c i p a l i t i e s were s e l e c t e d as i n d u s t r i a l c e n t r e s : 1. San Juan $. Manati-Vega B a j u 9. P a j a r d o 2. Ponce 6. Aguadi 10. Yauco 3 . Caguas-Humacgo 7. Guayama. 11. Cayey ij.. Mayaguez 8. A r e c i b o 2 I b l d . , p. 13. 26 These centres can be seen i n Figure I on the following page. They were selected because they exhibited a combination of the following c h a r a c t e r i s t i c s : a. Large centre of population b. E x i s t i n g i n d u s t r i a l development c. Trade centre f o r surrounding towns d. E x i s t i n g i n d u s t r i a l and r e s i d e n t i a l services and f a c i l i t i e s . e. A c c e s s i b i l i t y to surrounding towns as centre for new services and f a c i l i t i e s . These c h a r a c t e r i s t i c s are quite important i n any regional i n d u s t r i a l development. A large centre of population i s needed f o r the labour-oriented industries; such a centre, l i k e a trade centre f o r surrounding towns, can also serve as' a market for the i n d u s t r i a l products. E x i s t i n g i n d u s t r i a l development i s also important for the e f f i c i e n t operation of new industries which require integration with other in d u s t r i e s . E x i s t i n g i n d u s t r i a l and r e s i d e n t i a l services and f a c i l i t i e s would help to cut down the cost of providing these f a c i l i t i e s and services. F i n a l l y , a c c e s s i b i l i t y to surrounding towns i s important i n enabling the surrounding towns to benefit by the i n d u s t r i a l development i n the centre. After the i n d u s t r i a l centres were selected, a study was made to i d e n t i f y the towns with which the centres had primary economic re l a t i o n s h i p s . These economic t i e s were thought of i n terms of wholesale and r e t a i l trade, farm produce markets, professional and business services, etc. It was understood that for certa i n kinds of economic or s o c i a l a c t i v i t y , every town eventually depended upon San Juan because i t i s the economic, c u l t u r a l , and governmental Figure I. M A J O R I N D U S T R I A L D E V L L O P M L N T A R E A S 0 CE A N 0 A T L A N TI CO MAR C A R I B E o to KILOMETXOS P.R. INDUSTRIAL DEVELOPMENT CO. PLANNING DEPARTMENT MAY 1934 INTEGRATED INDUSTRIAL AREAS 1. SAN JUAN AREA 2. PONCE AREA 3. CAGUAS-HUMACAO AREA 5. MAYAGUEZ AREA 5. MANATI-VEQA 8AJA AREA 6. AGUADILLA AREA GUAYAMA AREA ARECIBO AREA H 9. FAJAROO AREA 10. YAUCO AREA 11. CAYEY AREA 12. LOCAL INOUSTRIAL CENTERS PRIDCO - MASTER PLANNING DIVISION MAY 1955 28 centre of Puerto Rico. However, the groups of towns shown i n Figure I were those among which there were more frequent day-to-day contacts. The evidence of this pattern of economic relationships was sought i n the study of the following key regional factors: Topography t The degree to which towns are related to one another i s often dictated by t h e i r regional topographic r e l a t i o n s h i p . For towns on Puerto Rico's northern and southern' coastal p l a i n s , topography was found to be less important than distance, but the relationship of towns i n the highlands to the selected i n d u s t r i a l centres was found to be determined by topography and the ease of access between them. The C o r d i l l e r a Central and the great valleys which lead down from i t to the seas surrounding the Island are the main features of the topography of the country. The central mountain spine makes a. sharp physical demarcation between north and south, and the easiest communication routes are down the valleys from the highland towns to the coastal c i t i e s . The l a t e r a l ridges extending from the central mountains to the east and west coasts serve as ba r r i e r s to separate groups of coastal towns from one another. The lo c a t i o n of larger urban centres and the l i n e s of communica-t i o n from them to the smaller v i l l a g e s were l a r g e l y deter-mined by this configuration. 29 Highway Connections Highway connections are the basic factor which determines economic and s o c i a l intercourse among towns, for the extent of these a c t i v i t i e s i s measured by the amount of movement between them. In the mountainous areas, as has been pointed out above, road connections are almost completely dictated by topography. In easier t e r r a i n , highway l o c a t i o n tends to be a continuous process. The improved access generates a s t i l l greater volume of movement which i n turn creates a demand f o r further improvement i n the highway f a c i l i t i e s . The r e s u l t of this process i s that the centres become increasingly important and th e i r growth i s more rapid r e l a t i v e to the surrounding towns. The grouping of towns around regional centres, therefore, was found to r e f l e c t the e x i s t i n g pattern of highway connections. Average Daily T r a f f i c Plows Average d a i l y t r a f f i c flows were taken as another evidence of the economic relationship between towns. The volume of flow of passenger and commercial t r a f f i c between towns i s proportional to t h e i r importance as centres of economic a c t i v i t y and to the strength of the economic t i e s between them. In this regard, the Development Company received assistance from the Department of Public Works which maintains a continuous system of t r a f f i c surveys along the major highways of Puerto Rico. Their t r a f f i c flow maps represented the r e l a t i v e volumes of vehicle movement 30 between towns by varying band widths. These maps were con-sidered i n the process of delineating the i n d u s t r i a l regions. Passenger Transport Services The pattern of transportation services r e f l e c t s a l l of the above fa c t o r s . "Topography influences the layout of the highway system and the physical connections between towns, and economic relationships between them are r e f l e c t e d i n the demand for transportation services and the number of c a r r i e r s which become available i n response to t h i s demand."3 A f i e l d survey was undertaken to determine the pattern of passenger transportation services between towns. The purpose of this survey was to document general know-ledge as to the c i t i e s which are t r i b u t a r y to them and the pattern of i n d u s t r i a l development regions r e f l e c t s the findings of the survey. Commercial Banking Services Further evidence of economic t i e s between communities was sought i n the geographic d i s t r i b u t i o n of banks and the areas served by each. A survey of commercial banking services was made and the d i s t r i b u t i o n of these banks was a factor considered i n the delineation of the Integrated I n d u s t r i a l Areas. ^Ibid., p. 16. 31 P o t e n t i a l i t y as Centre of I n d u s t r i a l and Residential Services The delineation of the i n d u s t r i a l regions was intended not only to accommodate the e x i s t i n g pattern of relationships among towns but also to serve as a planning tool by which i n d u s t r i a l development might be fostered. The d i v i s i o n of the Island into i n d u s t r i a l regions would permit more detailed studies of the resources and needs of each area and help to reveal i t s c h a r a c t e r i s t i c s and p o t e n t i a l i t i e s . In terms of pos i t i v e action to f o s t e r i n d u s t r i a l develop-ment i n the towns outside of the San Juan Metropolitan Area, i t was recommended that additional and r e s i d e n t i a l services should be provided i n the centres. This would increase the p o t e n t i a l i t y f o r i n d u s t r i a l l o c a t i o n of a l l the surrounding towns within easy access. An important consideration i n grouping the towns was, therefore, the service p o t e n t i a l i t y of each central town and the surrounding area which i t would be able to serve. The Resulting Pattern The r e s u l t of the various studies and considera-tions discussed above was the delineation of eleven Integrated I n d u s t r i a l Areas and twenty-eight Local I n d u s t r i a l Centres to serve as the basis f o r planning the future i n d u s t r i a l i z a t i o n . These are shown In Figure I. The Integrated I n d u s t r i a l Areas were delineated so as to include adjoining municipalities which, because of 32 topography, transportation routes, population concentration, and e x i s t i n g economic development were seen as providing a homogeneous area within which concentrated i n d u s t r i a l development would take place i n the future. These areas would develop so as to permit, within each area, a ready exchange of manufacturing labour, goods, and services between the municipalities included therein. These areas would be the major centres of industry i n Puerto Rico. The twenty-eight Local I n d u s t r i a l Centres comprised those municipalities which were not included i n the Inte-grated I n d u s t r i a l Areas. These centres, because of t h e i r i s o l a t i o n , rugged t e r r a i n , poor transportation routes, and scattered population, would not support a very extensive i n d u s t r i a l development. Most of the Local I n d u s t r i a l Centres are i n the mountainous i n t e r i o r section of the Island, with a few along the coast. These coastal Local Centres might l a t e r be added to adjacent Integrated Areas or might develop Into separate Areas. Taken together, the Integrated In d u s t r i a l Areas and the Local In d u s t r i a l Centres formed a, regional pattern fo r the entire Island by which the future i n d u s t r i a l i z a t i o n would be guided i n such a way as to s a t i s f y area needs by area resources. The aim was to achieve the goals of the development programme with the least wastage of the l i m i t e d resources available. For each i n d u s t r i a l region, the types of indus-t r i a l a c t i v i t y that would be economically advantageous were 33 selected; i n d u s t r i a l locations were also selected; and such supporting f a c i l i t i e s necessary f o r i n d u s t r i a l operation as u t i l i t i e s and highways, housing, schools, and hospi t a l s , were also considered. In addition, the need f o r co-operation between both the public agencies and the private entre-preneurs was also emphasized. Such a r a t i o n a l approach to the predetermination of i n d u s t r i a l l o c a t i o n within a regional framework i s h e l p f u l i n the general planning and development of Puerto Rico, since the approach permits the country to examine i n d e t a i l the p o t e n t i a l i t i e s of the various areas. Summary In order to enable a l l the various areas of Puerto Rico to benefit by i n d u s t r i a l development, the Puerto Rican i n d u s t r i a l 'Master Plan' subdivided the country into indus-t r i a l regions. In t h i s regard, eleven Integrated Industrial Areas and twenty-eight Local Centres were delimited, based on the following c r i t e r i a : population; e x i s t i n g i n d u s t r i a l development; trade centre for surrounding towns; e x i s t i n g i n d u s t r i a l and r e s i d e n t i a l services and f a c i l i t i e s ; and a c c e s s i b i l i t y to surrounding towns as centres f o r new services and f a c i l i t i e s . After the i n d u s t r i a l centres were selected, towns with which these centres had primary economic relationships were i d e n t i f i e d . The evidence of t h i s pattern of such regional factors as topography, highway connections, average d a i l y t r a f f i c flows, passenger transportation 34 services, and commercial banking services. As a resu l t of the study of these regional factors, eleven Integrated In d u s t r i a l Areas and twenty-eight Local Centres were delimited as regions within which i n d u s t r i a l l o c a t i o n f o r s p e c i f i c industries would be predetermined. CONCLUSION The concept of predetermined i n d u s t r i a l l o c a t i o n within a regional framework has not yet been either com-prehensively investigated or applied i n either the developed or the developing countries. However, Puerto Rico's exper-ience provides a method of approach to the inv e s t i g a t i o n of the concept and i t s application i n the developing countries so that these countries may achieve t h e i r i n d u s t r i a l i z a t i o n goals. There i s no available information concerning the extent to which the application of the concept has been successful i n Puerto Rico, but i t can be said that such a regional approach to i n d u s t r i a l l o c a t i o n i s h e l p f u l to Puerto Rico since the approach enables the country to examine close l y the needs and resources of each region; the develop-ing countries can learn a lesson from Puerto Rico's experience. Puerto Rico was subdivided into Integrated Indus-t r i a l Areas and Local Centres, owing to the country's p e c u l i a r topography and d i s t r i b u t i o n of resources, Such c r i t e r i a , namely^ the topography and the d i s t r i b u t i o n of resources may not necessarily be the same i n a l l the developing countries, 3 5 and f o r t h a t r e a s o n , n o t a l l t h e d e v e l o p i n g c o u n t r i e s w o u l d f i n d i t n e c e s s a r y t o be s u b d i v i d e d i n t o i n t e g r a t e d a r e a s a n d i n d u s t r i a l c e n t r e s . H o w e v e r , t h e g e n e r a l a p p r o a c h , t h a t i s t o s a y , t h e s u b d i v i s i o n o f a l l t h e d e v e l o p i n g c o u n t r i e s i n t o i n d u s t r i a l r e g i o n s w o u l d h e l p t h e s e c o u n t r i e s t o a c h i e v e t h e i r i n d u s t r i a l i z a t i o n g o a l s . P r i o r t o d e m o n s t r a t i n g how p r e d e t e r m i n e d i n d u s t r i a l l o c a t i o n w i t h i n a r e g i o n a l f r a m e -w o r k w i l l h e l p t h e d e v e l o p i n g c o u n t r i e s t o a c h i e v e t h e i r i n d u s t r i a l i z a t i o n g o a l s , i t i s n e c e s s a r y t o c o n s i d e r t h e p r o b l e m s e n t a i l e d i n i n d u s t r i a l l o c a t i o n . CHAPTER III PROBLEMS OF INDUSTRIAL LOCATION A private i n d u s t r i a l i s t may conceive of the problems of i n d u s t r i a l l o c a t i o n as mainly problems of l o c a t i o n a l s e l e c t i o n . His goal, namely p r o f i t maximization, i s c l e a r l y known to him, and he does not need to i d e n t i f y i t . He may have i n mind the type of industry he wants to operate to r e a l i z e his goal. A government, on the other hand, trying to influence the lo c a t i o n of industries or develop them i t s e l f , cannot regard problems of l o c a t i o n a l s e l e c t i o n as the only problems of i n d u s t r i a l l o c a t i o n . Every government i s presumed to function f o r the benefit of the society as a whole. For th i s reason, the moment a government enters into i n d u s t r i a l development, It i s presumed that i t has a view to achieving complex s o c i a l and economic goals. These goals must be i d e n t i f i e d so as to enable the government to know the types of industries to be developed and where to locate them. In th i s sense, the problems of i n d u s t r i a l location include the i d e n t i f i c a t i o n of the national i n d u s t r i a l i z a t i o n goals; problems of selection of industries and of locations; and problems of providing supporting f a c i l i t i e s to keep industries healthy on the s i t e s chosen. NATIONAL INDUSTRIALIZATION GOALS National i n d u s t r i a l i z a t i o n goals are only some of the national goals In economic development. The I n d u s t r i a l -37 i z a t i o n g o a l s must be i d e n t i f i e d f o r a d e v e l o p i n g c o u n t r y t o know what t y p e s of i n d u s t r i e s t o s e l e c t and where t o l o c a t e them. W h i l s t i t would be i m p o s s i b l e t o l i s t a l l the d e v e l -o p i n g c o u n t r i e s and t h e i r r e s p e c t i v e i n d u s t r i a l i z a t i o n g o a l s , i t can be s a i d i n g e n e r a l terms t h a t the main g o a l s f o r w h i c h most d e v e l o p i n g c o u n t r i e s embark on i n d u s t r i a l i z a t i o n a r e : i n c r e a s e i n income p e r c a p i t a ; e a r n i n g o r s a v i n g f o r e i g n exchange; and f u l l employment. I n c r e a s e i n Income P e r C a p i t a Income p e r c a p i t a I n the d e v e l o p i n g c o u n t r i e s i s low r e l a t i v e t o t h a t of the more developed c o u n t r i e s . ^ T h i s i s an obvio u s f a c t , f o r p r o d u c t i v i t y i s r e l a t i v e l y low I n t he d e v e l o p i n g c o u n t r i e s . The low p r o d u c t i v i t y can be a t t r i b u t e d t o l a c k of s k i l l , t o o many p e o p l e crowded on l a n d , l a c k of c a p i t a l and l a c k o f a d m i n i s t r a t i o n , and use of p r i m i t i v e f a r m implements. A g r i c u l t u r e can be de v e l o p e d , and i t i s b e i n g done i n many d e v e l o p i n g c o u n t r i e s , t o r a i s e incomes, b u t the r e l a t i v e l y h i g h incomes i n the i n d u s t r i a l i z e d c o u n t r i e s , such as the U n i t e d S t a t e s and t h e U n i t e d Kingdom, have shown t h a t incomes are h i g h e r i n i n d u s t r y t h a n i n a g r i c u l t u r e . 2 Hence, i n making p l a n s f o r I n d u s t r i a l •^Compare, f o r i n s t a n c e , the p e r c a p i t a incomes o f e c o n o m i c a l l y a c t i v e p o p u l a t i o n o f : I n d i a , $60 U.S.; P a k i s t a n , $70 U.S.; w i t h U n i t e d Kingdom, $780 U.S.; U n i t e d S t a t e s , $1870 U.S. (1952-51+ f i g u r e s ) . S o u r c e : Loeb, G.F., op. c i t . , p. II4.. 2 I b i d . , pp. 114.-18. 38 development, the developing countries have the objective of r a i s i n g the incomes of the people. This goal has been c l e a r l y stated by the framers of the Puerto Rican I n d u s t r i a l Development Plan: "The goal that has been set i s a minimum family income of $2,000 a year including the cost of govern-ment services." 3 I n d u s t r i a l projects which are economically sound i n the f i r s t place and properly administered can contribute immensely to the incomes of the people. The p o t e n t i a l f o r such projects exists i n almost a l l developing countries. The problem i s to f i n d the industries and help them to operate. But f o r every sound project which has the inherent p o t e n t i a l to make a s i g n i f i c a n t contribution to the per capita income, there may be some projects which have l i t t l e or no r e a l capacity f o r making a posit i v e economic contribu-t i o n . One of the most important aspects of i n d u s t r i a l development planning i s i d e n t i f y i n g and stopping such projects before the economy i s harmed. Earning or Saving Foreign Exchange Another basic goal most developing countries have i n t h e i r i n d u s t r i a l development programmes i s earning or saving foreign exchange through d i v e r s i f i c a t i o n . Most developing countries r e l y on the export of one or few products f o r much of t h e i r l i v e l i h o o d . These goods are sold i n highly competitive international markets where prices are unstable 3puerto Rico I n d u s t r i a l Development Company. op. c i t . , p. 1. 3 9 because of severe f l u c t u a t i o n s of b o t h s u p p l y and demand.^-Co n s e q u e n t l y , the u n i t p r i c e s f o r the e x p o r t s v a r y w i d e l y f r o m y e a r t o y e a r . The p h y s i c a l volume of the p r o d u c t s a v a i l a b l e f o r e x p o r t a l s o f l u c t u a t e s c o n s i d e r a b l y i f the i t e m i s a g r i c u l t u r a l , because c r o p s v a r y f r o m one y e a r t o a n o t h e r . W i t h the c o m b i n a t i o n o f crop f l u c t u a t i o n and p r i c e v a r i a t i o n s , the f o r e i g n exchange e a r n i n g s o f a c o u n t r y o v e r l y dependent on such e x p o r t s , and c o n s e q u e n t l y i t s n a t i o n a l income, are s u b j e c t t o extreme i n s t a b i l i t y . A U n i t e d N a t i o n s a n a l y s t has shown t h a t f r o m 1901 t o 1950, the average y e a r - t o - y e a r v a r i a t i o n s i n f o r e i g n exchange y i e l d of e i g h t e e n major cr o p s e x p o r t e d by some d e v e l o p i n g c o u n t r i e s was 23 p e r c e n t . ^ I n a d d i t i o n t o added s t a b i l i t y , i n d u s t r i a l i z a t i o n w h i c h e n a b l e s the c o u n t r y t o manufacture p r o d u c t s t o be s o l d c o m p e t i t i v e l y i n e x p o r t markets u s u a l l y b r i n g s about l a r g e r f o r e i g n exchange e a r n i n g s w h i c h r e s u l t i n i n c r e a s e d n a t i o n a l income. I n many development p l a n s the e a r n i n g o f f o r e i g n exchange t h r o u g h d i v e r s i f i c a t i o n i s s t r e s s e d as a b a s i c g o a l i n i n d u s t r i a l i z a t i o n . The P h i l i p p i n e s , i n v i e w of t h e i r g r e a t r e l i a n c e on a s m a l l number of e x p o r t s , e n v i s a g e the development of b a s i c i n d u s t r i e s t o change the " s t r u c t u r e of ^ F o r i n s t a n c e , about 80 p e r cen t of the P h i l i p p i n e s ' e x p o r t s c o n s i s t of l± commodities: sugar, c o p r a , abaca and t i m b e r (The Government of the P h i l i p p i n e s , The F i v e Y e a r  Economic and S o c i a l Development Programme. F i s c a l Y e a r  1957-1961. 1957. p. 1 8 ) . -^Department of Economic A f f a i r s , I n s t a b i l i t y i n  E x p o r t Markets of Underdeveloped C o u n t r i e s . New Y o r k . U n i t e d N a t i o n s " 1952, p. 36. 40 the economy so that there w i l l be more dependence on i n t e r n a l d i v e r s i f i e d production and less dependence on a few basic exports". I n d u s t r i a l i z a t i o n , which permits.the economic production of goods f o r domestic use which would otherwise be imported, has an equally good s t a b i l i z i n g e f f e c t . Such t o t a l manufacturing reduces demands on the country's foreig n exchange resources. In time of low earnings from exports, the consumption of the items continues instead of having to be c u r t a i l e d . Moreover, domestic production of manufactured goods, l i k e any creation of additional wealth, i s In I t s e l f an addition to the national Income. F u l l Employment F u l l employment of the unemployed or p a r t i a l l y employed can be another sound goal which i n d u s t r i a l i z a t i o n , 'under certa i n conditions, i s regarded by the developing countries as desirable. These conditions are that the unemployed people could not be used more productively i n agriculture or some other a c t i v i t y , and that the p a r t i c u l a r i n d u s t r i a l projects i n which they could be employed are sound enough to make a net contribution to the national income. F u l l employment Is not r e s t r i c t e d to human resources alone; natural resources can also be unemployed or under-employed, and industry i s meant to create markets f o r l o c a l ^Government of the Phil i p p i n e s . op. c i t . , p. 8. 41 raw materials, such as timber or a g r i c u l t u r a l or mineral products, which otherwise would be l a r g e l y or completely wasted. P u l l employment of both human and natural resources i s a goal emphasized i n many Development Plans. The Pakistan Five-Year Plan states t h i s goal i n t h i s way: The objective of providing f o r a maximum increase i n employment has been p a r t i c u l a r l y important i n framing the programme f o r small i n d u s t r i e s . The increase i n d i r e c t employment i n large-scale industry i s expected to be about 200,000; the increases i n small-scale industry and through i n d i r e c t e f f e c t s are very d i f f i c u l t to estimate but they would be larger.7 In the same way the Puerto Rican I n d u s t r i a l Plan alms at "the reduction of unemployment to i t s reasonable minimum of about 1+ per cent of the Labour Force". 8 Achieving such a goal i s d i f f i c u l t but not impos-s i b l e . E f f i c i e n t u t i l i z a t i o n of natural and human resources Involves costs of importing machinery to process the materials and also cost of t r a i n i n g the people. These costs must be borne by a developing country i f i t i s clear that there w i l l be a net gain to the economy, f o r unused or less e f f i c i e n t l y used resources are a waste to the country. In order to achieve such a goal, a survey of the quantity, quality, and the degree of u t i l i z a t i o n of the resources w i l l be needed. ^Government of Pakistan Planning Board. The F i r s t  Five-Year Plan, 1955-1960. Karachi. 1956, p. ?. ^Puerto Rico I n d u s t r i a l Development Company. op. c i t . p . l . 4 2 Summary Increase In income per capita, earning or saving foreign exchange, and f u l l employment of the employed or p a r t i a l l y employed are not the only goals which the devel-oping countries s t r i v e to achieve by means of i n d u s t r i a l i z a -t i o n , though these are very s i g n i f i c a n t ones. Nor can i t be said that every developing country has only one goal. Several goals may be combined i n a single i n d u s t r i a l i z a t i o n p o l i c y , but the emphasis on some goals may be greater than the emphasis on others, the degree of emphasis depending on the e x i s t i n g socio-economic conditions i n the country. The goals which a developing country has f o r i n d u s t r i a l i z a t i o n must determine the types of industries to be selected f o r development. SELECTION OF INDUSTRIES9 I n d u s t r i a l i z a t i o n i s not an end i n i t s e l f but a 9 So f a r there has been no attempt to define 'industry'. The term 'Industry' i s somewhat ambiguous. In Canadian terminology, p a r t i c u l a r l y i n s t a t i s t i c a l use, the term 'industry' refers to a l l economic a c t i v i t i e s ( c f . e.g. Dominion Bureau of S t a t i s t i c s , Department of Trade and Commerce. Census of Canada, 195l, Vol. IV: Occupation and Industries, Ottawa, 1953)• A less comprehensive d e f i n i t i o n commonly employed i n other countries includes under industry only such productive a c t i v i t i e s as are related to the trans-formation of materials. In general, industry also includes mining, public u t i l i t i e s and construction, although these are sometimes excluded ( c f . e.g. United Nations. World  Economic Situ a t i o n : I n d u s t r i a l i z a t i o n i n Egypt. I s r a e l and  Turkey. Pt. 1: Growth and Structure of Manufacturing Industry, New York. United Nations. 1951, p. D For the purpose of the thesis the term 'industry' i s used to mean only such productive a c t i v i t i e s as are related to the transformation of materials, and i t thus excludes mining, public u t i l i t i e s and construction. In short, 'industry' refers to manufacturing alone. 43 means to achieve special goals, which may be: increase i n the national income; s t a b i l i t y of foreign exchange; and maximum u t i l i z a t i o n of resources. In short, i n d u s t r i a l i z a -t i o n i s meant to raise the l i v i n g standards of people. Therefore, governments and a l l others involved i n the campaign to solve problems of the developing countries through indus-t r i a l growth need to consider the general i n d u s t r i a l i z a t i o n goals and problems and every s p e c i f i c project i n terms of value to the economy. In practice, how to Identify the types of industry which, from the viewpoint of the whole economy, w i l l be most b e n e f i c i a l , poses great problems. As an approach to the se l e c t i o n of industries i n the developing countries, several c r i t e r i a have been suggested by various research organizations and in d i v i d u a l economists. These c r i t e r i a purport to be guide-lines calculated to a s s i s t the developing countries to select I n d u s t r i a l a c t i v i t i e s , which w i l l bring the maximum benefit to t h e i r economies. Some of these c r i t e r i a are: factor i n t e n s i t y ; plant size and complexity; foreign exchange benefits; and u t i l i z a t i o n of raw materials. Factor Intensity The fac t o r Intensity c r i t e r i a has two opposite sides: the labour i n t e n s i t y c r i t e r i o n and the c a p i t a l i n t e n s i t y c r i t e r i o n . Unemployment, under-employment, and shortage of c a p i t a l are c h a r a c t e r i s t i c of most developing economies. For this reason i t has been suggested that the 44 d e v e l o p i n g c o u n t r i e s must s e l e c t i n d u s t r i e s which make maximum use of the abundant f a c t o r , labour, and minimum use of the scarce f a c t o r , c a p i t a l . T h i s viewpoint has been expressed by a U n i t e d Nations r e p o r t In t h i s way: Other t h i n g s b e i n g equal, t h e r e f o r e , i n most underdeveloped c o u n t r i e s , i t i s l a b o u r i n t e n s i v e r a t h e r than c a p i t a l i n t e n s i v e i n d u s t r i e s t h a t would appear l i k e l y to possess the g r e a t r e l a t i v e c ompetitive advantage even when the p r o d u c t i v i t y of l a b o u r i s somewhat lower than i n the more advanced countries.10 Buchanan and E l l i s have expressed the same viewpoint i n t h i s way: Since the most p e r v a s i v e economic f e a t u r e of the underdeveloped c o u n t r i e s i s the abundance of labour i n c o n t r a s t to the shortage of c a p i t a l , s trong presumption e x i s t s t h at c a p i t a l should be used s p a r i n g l y r e l a t i v e t o l a b o u r whenever there Is a choice i n the methods of p r o d u c t i o n . i l The l a b o u r i n t e n s i t y c r i t e r i o n i s u s e f u l i n i d e n t i f y i n g such i n d u s t r i e s as w i l l demand l e s s c a p i t a l , w h i l s t at the same time u t i l i z i n g the unemployed and the under-employed r u r a l and urban l a b o u r . T h i s c r i t e r i o n has been recommended i n the Puerto R i c o I n d u s t r i a l Development P l a n . The p l a n n e r s p o i n t out t h a t unemployment i s a problem i n the country, and, f o r that reason, the establishment of " L a b o u r - o r i e n t e d I n d u s t r i e s , such as home needlework, a p p a r e l manufacture »^12 m u s t be an important o b j e c t i v e of l O u n i t e d N a t i o n s . Processes and Problems of I n d u s t r i a l -i z a t i o n i n Underdeveloped C o u n t r i e s . New York. U n i t e d N a t i o n s . 1955, p. 69. ^Buchanan, N.S. and E l l i s , H.S., Approaches t o Economic  Development. New York. The Twentieth Century Fund, Inc. 1955, p. 6LL. Puerto Rico I n d u s t r i a l Development Company. op. c i t . . p. 26. 45 I n d u s t r i a l development. As time goes on, however, mechaniza-t i o n and a u t o m a t i o n may be i n t r o d u c e d . The answers t o the q u e s t i o n n a i r e , drawn by the U n i t e d N a t i o n s Economic Commis-s i o n f o r A s i a and the F a r E a s t (ECAFE) show t h a t "the a b s o r p t i o n of s u r p l u s l a b o u r I s a l s o an i m p o r t a n t c o n s i d e r a -t i o n i n the s e l e c t i o n o f i n d u s t r i e s i n many c o u n t r i e s o f the r e g i o n , as shown by the emphasis on ' c o t t a g e * i n d u s t r y , p a r t i c u l a r l y c o t t o n handloom weaving i n I n d i a " . ^ The l a b o u r - i n t e n s i t y c r i t e r i o n has much t o commend i t s e l f , b u t i t must be used q u i t e s e l e c t i v e l y . An i n d u s t r y s h o u l d not be s e l e c t e d j u s t because i t c r e a t e s employment; i t i s i m p o r t a n t t o r e l a t e the advantages a r i s i n g because an i n d u s t r y i s l a b o u r - i n t e n s i v e t o the advantages and d i s -advantages of the o t h e r t h i n g s w h i c h are p a r t of the same package. Too o f t e n those who advocate a p r o j e c t on the grounds of i t s i m p o r t a n c e i n c r e a t i n g employment n e g l e c t the p r o j e c t ' s o t h e r economic f e a t u r e s , w h i c h may cause i t s t o t a l i mpact t o be much l e s s f a v o u r a b l e , o r even h a r m f u l t o the economy. An o p p o s i t e , though l e s s o f t e n s u g g e s t e d , c r i t e r i o n i s s t r e s s e d by some e c o n o m i s t s . T h i s i s the c a p i t a l i n t e n s i t y c r i t e r i o n . The a d v o c a t e s of t h i s c r i t e r i o n a s s e r t t h a t c a p i t a l i n t e n s i v e p r o j e c t s may have such g r e a t advantages i n p r o d u c t i v i t y and e f f i c i e n c y t h a t t h e l o s s t h r o u g h s t r e s s i n g the use o f s c a r c e c a p i t a l r a t h e r t h a n abundant l a b o u r I s more ! 3 u n i t e d N a t i o n s Economic Development and P l a n n i n g I n  A s i a and the F a r E a s t - I n d u s t r i a l i z a t i o n . New Y o r k . U n i t e d N a t i o n s . 1958, p. 5 0 . 46 t h a n o f f s e t . G a l e n s o n and L e i b e n s t e i n e x p r e s s the c a p i t a l i n t e n s i t y case i n t h i s way: The c o r r e c t c r i t e r i o n f o r a l l o c a t i n g i n v e s t m e n t must be t o choose f o r each u n i t o f i n v e s t m e n t t h a t a l t e r n a t i v e t h a t w i l l g i v e each worker g r e a t e r p r o d u c t i v e power t h a n any o t h e r a l t e r n a t i v e . To a c h i e v e t h i s r e s u l t we must maximize the amount o f c a p i t a l p e r worker our t h e s i s , b a d l y , i s t h a t s u c c e s s f u l economic development under p r e s e n t c o n d i t i o n s , p a r t i c u l a r l y i n the f a c e o f g r o s s backwardness. h i n g e s l a r g e l y upon as l a r g e a s c a l e as p o s s i b l e . W h i l s t c a p i t a l - i n t e n s i v e i n d u s t r i e s do not s o l v e t h e problems o f unemployment and under-employment, t h e i r i mportance i n c o n t r i b u t i n g t o the n a t i o n a l income and a c c e l e r a t i n g the growth o f o t h e r i n d u s t r i e s s h o u l d n o t be ' o v e r l o o k e d . The importance o f c a p i t a l - i n t e n s i v e i n d u s t r i e s has been emphasized by the I n d i a n P l a n i n t h i s way: r a p i d i n d u s t r i a l i z a t i o n and d i v e r s i f i c a t i o n o f t h e economy i s the core o f development. B u t , i f i n d u s t r i a l i z a t i o n i s to be r a p i d enough, the c o u n t r y must aim a t d e v e l o p i n g b a s i c i n d u s t r i e s w h i c h make machines t o make the machines needed f o r f u r t h e r development . 1 5 E v i d e n c e o f employment b e n e f i t s i n p r o j e c t s w h i c h are l a b o u r i n t e n s i v e i s worthy o f a t t e n t i o n , as i s e v i d e n c e o f t e c h n o l o g i c a l e f f i c i e n c y i n p r o j e c t s w h i c h are c a p i t a l -i n t e n s i v e . I n i t s e l f , n e i t h e r s h o u l d be c o n s i d e r e d an economic j u s t i f i c a t i o n f o r a p r o j e c t ; e v e r y p r o j e c t must be weighed t o determine i t s n et advantage t o the economy. ^ G a l e n s o n , ¥. and L e i b e n s t e i n , H. "Investment C r i t e r i a , P r o d u c t i v i t y and Economic Development". Q u a r t e r l y J o u r n a l  o f Economics. V o l . 69. 1955, p. 35l. l^The Government o f I n d i a , op. c i t . , p. 392. 47 P l a n t S i z e and C o m p l e x i t y A n o t h e r c r i t e r i o n s u g g e s t e d as the prime t e s t o f s u i t a b i l i t y o f i n d u s t r i a l p r o j e c t s i s t h a t o f the s i z e and degree o f c o m p l e x i t y i n v o l v e d . T h i s might be termed t h e ' s t e p p i n g - s t o n e t h e o r y ' , f o r i t s t r e s s e s t h a t an i n d u s t r i a l l y d e v e l o p i n g c o u n t r y must p r o g r e s s from s m a l l , s i m p l e i n d u s t r i a l o p e r a t i o n s t o l a r g e r and more c o m p l i c a t e d o p e r a t i o n s as s k i l l s , c a p i t a l and e x p e r i e n c e are a c q u i r e d . B r o z e n p u t s t h i s v iew i n t h i s way: I n g e n e r a l , i n e a r l y s t a g e s o f development, the e n t e r p r i s e s w h i c h are o f a t y p e c a l c u l a t e d t o develop e n t r e p r e n e u r s h i p s h o u l d be encouraged. Those w h i c h are s m a l l , use r u d i m e n t a r y p r o d u c t i o n t e c h n i q u e s , and g i v e immediate r e t u r n s are more l i k e l y t o a c c o m p l i s h t h i s a t the e a r l i e r s t a g e . L a r g e s c a l e e n t e r p r i s e s u s i n g more c o m p l i c a t e d t e c h n i q u e s and y i e l d i n g d i s t a n t r e t u r n s must w a i t f o r a l a t e r s tage when s i m p l e e n t r e p r e n e u r i a l s k i l l s and a t t i t u d e s have been l e a r n e d The e v o l u t i o n may be thought o f as from the s i m p l e to the complex. S i m p l i c i t y may be measured i n terms o f f i n a n c e , p r o d u c t i o n , and r e t u r n . 1 ° I n i t s r e p o r t t o the U n i t e d S t a t e s Congress on o v e r s e a s economic o p e r a t i o n s , the Hoover Commission s t r o n g l y s u p p o r t e d the s m a l l - s c a l e i n d u s t r y approach: The most v a l u a b l e c o n t r i b u t i o n to w o r l d economic s t a b i l i t y can be made by improvement o f s m a l l m a n u f a c t u r i n g i n d u s t r i e s i n n o n - i n d u s t r i a l i z e d c o u n t r i e s I n the ' A s i a n - A f r i c a n A r c ' , w i t h the p o s s i b l e e x c e p t i o n o f J a p a n , no m a n u f a c t u r i n g o r l a r g e - s c a l e i n d u s t r i a l development p r o j e c t s s h o u l d be u n d e r t a k e n , and i n d u s t r i a l a i d s h o u l d be c o n f i n e d t o s m a l l i n d u s t r i e s I n d u s t r i a l 1 " B r o z e n , Y., i n Economic Development. P r i n c i p l e s and  P a t t e r n s . B r o z e n , Y., W i l l i a m s o n , H.P., and B u t t r i c k , P., ( E d s . ) . Englewood C l i f f (N.J.) P r e n t i c e - H a l l I n c . 1 9 9 + , p. 1 8 . 4 8 p r o j e c t s s h o u l d not be u n d e r t a k e n i n c o u n t r i e s w h i c h do not a l r e a d y have an i n d u s t r i a l back-ground. I n these c o u n t r i e s t h e r e i s l i t t l e l o c a l c a p i t a l a v a i l a b l e f o r p a r t i c i p a t i o n , and the v a s t background o f t r a n s p o r t , m a r k e t i n g , t e c h n i c a l and e x e c u t i v e s k i l l i s - . l a c k i n g . Large i n d u s t r i a l p r o j e c t s cannot succeed a g a i n s t t h i s background and i n any event cannot a f f e c t the s t a n d a r d o f l i v i n g f o r many y e a r s to come.17 I n i t s recommendation t o the Ceylonese Government on the t y p e s o f i n d u s t r i e s to be s e l e c t e d , the I n t e r n a t i o n a l Bank f o r R e c o n s t r u c t i o n and Development s t a t e d c l e a r l y t h a t u n t i l t r a i n i n g f a c i l i t i e s were g r e a t l y improved, new i n d u s -t r i e s s h o u l d be e i t h e r t h o s e not c a l l i n g f o r u n u s u a l amounts of s k i l l e d l a b o u r , o r ones e m p l o y i n g t e c h n i q u e s w h i c h c o u l d be l e a r n e d e a s i l y and rapidly.1® I n f a c t , the advantages o f s m a l l , s i m p l e p r o j e c t s are as numerous as they are o b v i o u s . S m a l l p r o j e c t s are l e s s demanding o f the t h i n g s a d e v e l o p i n g c o u n t r y u s u a l l y l a c k s : c a p i t a l , management, and t e c h n i c a l s k i l l s . G e n e r a l l y t h e y use more l a b o u r i n r e l a t i o n to c a p i t a l t h a n l a r g e p r o j e c t s . They can u s u a l l y be b u i l t q u i c k l y and p u t i n t o o p e r a t i o n t o produce r e t u r n s . They f a c i l i t a t e d e c e n t r a l i z a -t i o n , w h i c h e n a b l e s p e o p l e i n v a r i o u s a r e a s to have c o n t a c t ^ o v e r s e a s Economic O p e r a t i o n s . Report t o the C o n g r e s s . U.S. Commission on O r g a n i z a t i o n o f the E x e c u t i v e B r a n c h o f the Government. Washington, D.C. 1955, p. 107. • ^ I n t e r n a t i o n a l Bank f o r R e c o n s t r u c t i o n and Development. The Economic Development o f C e y l o n . B a l t i m o r e . The Hopkins P r e s s . 1953, pp. 598-599. 4 9 with industry. They often can raise c a p i t a l more e a s i l y , i n the absence of c a p i t a l market, through d i r e c t contact between the project sponsor and other l o c a l investors. They can provide a reduction of f i n a n c i a l r i s k through d i v e r s i f i c a t i o n , thus lessening the magnitude of o v e r a l l loss through the f a i l u r e of any one project. A l l these advantages show that i n d u s t r i a l develop-ment can be f a c i l i t a t e d by establishing small, simple indus-t r i e s . However, the development of these types of industries should not be thought of as an alternative to the e s t a b l i s h -ment of medium-sized and large industries, where i t i s clear that they can be operated economically. A country does not need to choose between small industries and other ind u s t r i e s , f o r generally the two types tend to be complementary. Where the market, raw materials and trainable labour e x i s t , i t i s possible to e s t a b l i s h a large plant around which can be located smaller plants supplying the larger plant with too l s . It i s necessary that decisions i n regard to plant size should not be made on p o l i t i c a l or emotional grounds, or on the basis of t h e o r e t i c a l prejudgments as to the d e s i r a b i l i t y of plants of a c e r t a i n size or complexity i n a given environ-ment, but only on a measurement of the costs and benefits of the various alternatives to the economy. Foreign Exchange Benefits In the course of t h e i r development, most developing countries encounter foreign exchange d i f f i c u l t i e s , ' a r i s i n g , 50 probably, from crop f a i l u r e or heavy capital-goods imports. It i s not surprising, therefore, that the c r i t e r i o n often applied i n judging the economic merits of i n d u s t r i a l pro-jects i s that of foreign exchange benefits. I n d u s t r i a l projects are often accepted s o l e l y on the evidence, or at least the b e l i e f , that they w i l l be substantial net savers or earners of foreign exchange. For instance, i t was recommended by Ricardo Roque that i n selecting i n d u s t r i e s , the Philippines Government should give high p r i o r i t y to: Industries that are either dollar-saving or dollar-earning. Industries where the r a t i o of l o c a l to imported raw materials i s higher.19 The United Nations Economic Commission for Asia and the Far East, from the answers to i t s questionnaire sent to the various governments of the region, concludes i n this way: A common feature i n the s e l e c t i o n of projects, and more p a r t i c u l a r l y of industries, i n the countries of the region i s the p r i o r i t y to import-substitution and u t i l i z a t i o n of available domestic raw materials. This i s due c h i e f l y to balance of payment d i f f i c u l t i e s . 2 0 In p a r t i c u l a r , the Government of the Republic of China pointed out to the Commission that "the u t i l i z a t i o n of a v a i l -able domestic raw materials w i l l i n most instances have resulted i n producing import substitutes and i n saving foreign exchange." 2! 'Roque, P.R. Present-Day Philippine Economic Problems  and Their Solutions"! Manila. 1950, p. k 9 . 2 0 U n i t e d Nations, op . c i t . , p. L L 9 . 2 1 I b i d . , p. L L 9 . 5 1 I f there i s good reason to consider the exchange c r i s i s to be a short-term phenomenon with good long-term prospects, there i s no j u s t i f i c a t i o n for d i r e c t i n g develop-ment toward acceptance of otherwise uneconomic projects as a crash programme to help solve a temporary problem which may be over soon afte r the projects are i n operation. I f , on the other hand, the exchange c r i s i s seems to l a s t f o r a long time, considering the country's e x i s t i n g means of o f f s e t t i n g i t , the development of new foreign exchange earners or savers i s of basic importance i n correcting a s t r u c t u r a l f a u l t i n the economy. It may be noted, however, that the development of import-substituting industries may require considerable import of semi-finished goods and new raw materials. More-over, i n the consideration of foreign exchange earners or savers, comparative advantages should not be neglected; but, i n cases where i t i s j u s t i f i e d from a long-run point of view, protection may be granted to 'infant industries' during the i n i t i a l stage. The U t i l i z a t i o n of Raw Materials Most developing countries s t i l l export the greater part of t h e i r raw materials because there are few f a c i l i t i e s to process them l o c a l l y . Ghana's main cash crop, cocoa, which i s wholly processed outside the country, i s a case i n point. Hence, i t has been suggested that i n se l e c t i n g industries, the developing countries should give high 52 p r i o r i t y t o i n d u s t r i e s w h i c h can u t i l i z e the l o c a l raw m a t e r i a l s . F o r i n s t a n c e , among the t y p e s o f p r o j e c t s emphasized by the P u e r t o R i c o I n d u s t r i a l Development P l a n are " i n d u s t r i e s u s i n g l o c a l a g r i c u l t u r a l p r o d u c t s , such as s u g a r , bagasse, tobacco ",22 and i n d u s t r i e s u s i n g l o c a l m a t e r i a l s , such as c l a y , sand, cement. The case f o r the raw m a t e r i a l s u t i l i z a t i o n c r i t e r i o n i s a s t r o n g one. Sometimes a raw m a t e r i a l may l i e i d l e because i t i s not e x p o r t a b l e , c o n s i d e r i n g the t r a n s p o r t c o s t s i n v o l v e d . I n d u s t r i e s a r e , t h e r e f o r e , needed to u t i l i z e them a t t h e s o u r c e . Even where the m a t e r i a l can be e x p o r t e d , i t s l o c a l u t i l i z a t i o n i s i m p o r t a n t i n c r e a t i n g employment. However, an i n d u s t r y s h o u l d not be c r e a t e d a t once m e r e l y because a raw m a t e r i a l i s a v a i l a b l e . P r o d u c t i o n s h o u l d b e g i n o n l y when i t i s e c o n o m i c a l l y j u s t i f i e d . Summary The v a r i o u s c r i t e r i a s u g g e s t e d f o r the s e l e c t i o n o f i n d u s t r i e s i n the d e v e l o p i n g c o u n t r i e s i n c l u d e : f a c t o r i n t e n s i t y ; p l a n t s i z e and c o m p l e x i t y ; f o r e i g n exchange b e n e f i t s ; and u t i l i z a t i o n of raw m a t e r i a l s . The c h o i c e o f each o f these c r i t e r i a w i l l , o f c o u r s e , depend upon the g o a l s w h i c h the d e v e l o p i n g c o u n t r y concerned has s e t i n i t s i n d u s t r i a l i z a t i o n p o l i c y , each g o a l i n t u r n depending upon 22puerto R i c o I n d u s t r i a l Development Company. op. c i t . , p. I4.3. 53 the e x i s t i n g s o c i a l and economic conditions. While some projects may be c l e a r l y unsound and thus deserve elimina-t i o n , considering the ex i s t i n g conditions, there i s every degree of v a r i a t i o n i n projects which may warrant approval. The objective must be not just to obtain desirable projects, but to secure projects which rank highest i n what they can provide f o r the developing economy. Whatever c r i t e r i o n i s used f o r the sel e c t i o n of the indu s t r i e s , i t i s necessary to consider the p o s s i b i l i t y of loc a t i n g the industries to operate economically. SELECTION OP INDUSTRIAL LOCATIONS Industries selected f o r operation i n the develop-ing countries w i l l not f l o u r i s h properly unless some con-sideration i s given to where these industries are to be located. As has often been repeated above, the developing countries look to i n d u s t r i a l i z a t i o n as a means of r a i s i n g t h e i r standard of l i v i n g . In t h i s sense, t h e i r e f f o r t s must include a determination of where to locate the industries so as to re s u l t i n the maximum benefit to the economy. In t h e i r process of selecting i n d u s t r i a l locations, the developing countries must consider the factors of lo c a -t i o n . These factors generally influence the decision of i n d u s t r i a l i s t s when they want to select locations for t h e i r i n d u s t r i e s . Several i n d u s t r i a l l o c a t i o n theorists have 54 i d e n t i f i e d a number o f f a c t o r s w h i c h a f f e c t the s u i t a b l e l o c a t i o n o f i n d u s t r i e s . F o r i n s t a n c e , M c K i n l e y Conway, e d i t o r and p u b l i s h e r o f ' I n d u s t r i a l Development', has p u b l i s h e d a check l i s t o f as many as 700 p l a n t l o c a t i o n f a c t o r s , w h i c h may e n t e r i n t o a p l a n t l o c a t i o n d e c i s i o n . 2 3 A l l t hese f a c t o r s cannot be c o n s i d e r e d h e r e , owing t o the scope o f the s t u d y . However, the major i n d u s t r i a l l o c a t i o n f a c t o r s , such as t r a n s p o r t a t i o n , raw m a t e r i a l s o u r c e , m a r k e t s , l a b o u r , and energy are b a s i c and are a n a l y z e d here f o r the d e v e l o p i n g c o u n t r i e s t o know the problems e n t a i l e d i n t he s e l e c t i o n o f i n d u s t r i a l l o c a t i o n s . These f a c t o r s have been c o n s i d e r e d most i m p o r t a n t by the l o c a t i o n t h e o r i s t s and have appeared most o f t e n i n e m p i r i c a l s t u d i e s . Here, the f a c t o r s a r e d i s c u s s e d i n g e n e r a l terms. T r a n s p o r t a t i o n T r a n s p o r t a t i o n i s one o f the most i m p o r t a n t l o c a t i o n f a c t o r s w h i c h the d e v e l o p i n g c o u n t r i e s must c o n s i d e r i n s e l e c t i n g an i n d u s t r i a l l o c a t i o n . Edward L y n c h of the U n i t e d S t a t e s N a t i o n a l Resources P l a n n i n g Board p o i n t s out t h a t the p e c u l i a r importance o f t r a n s p o r t a t i o n as a l o c a t i o n f a c t o r a r i s e s from the f a c t t h a t l o c a t i o n i s a m a t t e r o f s p a t i a l c o n s i d e r a t i o n s , and t h a t t r a n s p o r t a t i o n 2 3conway, McK. , J r . "700 P l a n t L o c a t i o n Factors'". I n d u s t r i a l Development, i , : 17-20, No. 11, O c t o b e r , 1957. See a l s o A ppendix 1. 55 costs are the price f o r overcoming distance. 2-h Assuming that a l l costs to an industry, except those of transportation, are constant and the same at any loc a t i o n , the choice of l o c a t i o n i s determined by ascertain-ing the s i t e with the lowest transportation cost. Prom this standpoint, the industry would then locate either near the market or near the source of the raw material i n order to reduce the transportation cost. The choice of the p a r t i c u l a r s i t e w i l l depend on the r e l a t i v e cost of transporting the raw materials and the fini s h e d products. Processing w i l l take place near the market i f i t costs less to transport the raw materials than the products, and near the source of material i f the s i t u a t i o n i s reversed. Here, i t i s assumed that there i s l i t t l e or no gain or loss to the products during the manu-facturing process. However, where there i s considerable weight loss during f a b r i c a t i o n , such as i s the case with the manufacture of pulp from wood, the l o c a t i o n a l p u l l towards the source of material w i l l be greater. On the other hand, when a weight-giving process i s involved, such as the manu-facture of drinks, the plant tends to be attached to the market. In an industry, which uses several raw materials and s e l l s to d i f f e r e n t markets, the problem of seeking the point of minimum transportation cost i s not simple, though 2^Lynch, E.S. Transportation, I n d u s t r i a l Location,  and Natural Resources. Washington, U.S. National Resources Planning Board. U.S. Government P r i n t i n g O f f i c e . 19li3, p. 186. 56 the same p r i n c i p l e s , as o u t l i n e d above, a p p l y . "To the e x t e n t t h a t one m a t e r i a l o r one p r o d u c t i n v o l v e s g r e a t e r c o s t o f movement t h a n o t h e r s , i t s source o r market w i l l have a c o r r e s p o n d i n g l y g r e a t e r i n f l u e n c e . " 2 ^ I n t h i s c a s e , however, c o m p e t i t i o n among p r o d u c e r s may be l e s s d i r e c t and the p r e s s u r e on t r a n s p o r t a t i o n c o s t somewhat r e d u c e d . 2 ^ The problem of s e e k i n g the p o i n t o f minimum t r a n s p o r t a t i o n c o s t i s f u r t h e r c o m p l i c a t e d by the f a c t t h a t t r a n s p o r t a t i o n c o s t i s dependent upon o t h e r f a c t o r s . F i r s t , i t v a r i e s w i t h the medium u s e d , t h a t i s , by w a t e r , r a i l , r o a d , o r a i r . Hoover p o i n t s out t h a t t r a n s p o r t a t i o n by w ater i s g e n e r a l l y the cheapest where time i s n o t an i m p o r t a n t f a c t o r , w h i l s t t r a n s p o r t a t i o n by a i r i s the most e x p e n s i v e . 2 ^ Which o f the media used w i l l depend m a i n l y upon the time r e q u i r e d f o r the raw m a t e r i a l s t o r e a c h the p l a n t o r the f i n i s h e d p r o d u c t s t o r e a c h the market i n r e l a t i o n t o the c o s t o f t r a n s p o r t a t i o n . The a v a i l a b i l i t y o f w ater t r a n s p o r t a t i o n may be an i m p o r t a n t element i n p l a n t l o c a t i o n where l a r g e q u a n t i t i e s o f low v a l u e m a t e r i a l s have t o be moved a t c o s t . The impor-tance o f P i t t s b u r g h i n s t e e l making i s a t t r i b u t e d l a r g e l y t o waterways. R a i l l i n e s a l s o p l a y an i m p o r t a n t r o l e i n the 2 % b i d . , p. 187. ^ M c L a u g h l i n , M. and Robock, S. Why I n d u s t r y Moves  Sou t h . Washington, N a t i o n a l P l a n n i n g A s s o c i a t i o n o f the S o u t h . 191.9, p. 8 5 . ^ H o o v e r , E.M. op. c i t . , pp. 15-25. ^ G r e e n h u t , M. P l a n t L o c a t i o n i n Theory and P r a c t i c e . C h a p e l H i l l . U n i v e r s i t y o f N o r t h C a r o l i n a P r e s s . 1956, p. 36. 5 7 transportation of other heavy materials, such as coal, ores, etc., while the a i r l i n e s handle high-value commodities and expedited shipments. 2 9 Rapid transportation i s esse n t i a l i n some industries i n order to minimize interest charges on c a p i t a l t i e d up, and also on storage costs. Lynch cites zinc and e l e c t r o l y t i c copper as a case i n p o i n t . T h i s product i s customarily sold at delivered prices including the intere s t charges on the value of i t while i n t r a n s i t . Cost of transportation i s also dependent on the rate structure. Rates not only vary f o r d i f f e r e n t products, but they also tend to decline as the distance of the haul increases. This makes the t o t a l transportation charges lower i f the plant i s located near the raw material source or at the market than anywhere else, since the t o t a l cost of the two short hauls i s greater than that of a single long haul. Thus, unless processing costs at some other point are low enough to a f f e c t the difference i n transportation cost, manufacture w i l l tend to occur near either the market or the source of material.3 1 As rates are usually higher f o r f i n i s h e d products than f o r raw materials, there i s a tendency for manufacturing to be located away from the material source and close to the 'McLaughlin, M. and Robock, S., op. c i t . , p. 9 0 . 3°Lynch, E.S., op. c i t . , p. 1 8 7 . 3 1 l b i d . , p. 1 8 8 . 58 market.32 Because of the r e l a t i v e immobility of resources, changes i n fre i g h t rates do not usually have an immediate ef f e c t on i n d u s t r i a l l o c a t i o n , although i n some cases i t may cut o f f some producers altogether. An increase i n transportation costs may, f o r example, be borne either by the producer, by his suppliers, his customers, or shared by a l l , without changing the l o c a t i o n of manufacturing.33 But with time, changes i n f r e i g h t rates, i n p a r t i c u l a r the differences i n rate between materials and f i n i s h e d goods, and changes i n the form of service, may a l t e r the geograph-i c a l pattern of industry. 3i| To sum up, i t may be said that transportation i s an important factor determining the l o c a t i o n of an indus-t r i a l a c t i v i t y and f o r this reason i t must be considered by the developing countries when selecting i n d u s t r i a l l o c a t i o n . Whilst the costs of transportation vary i n dif f e r e n t locations f o r d i f f e r e n t i n d u s t r i e s , they determine whether an industry should locate at the source of the raw material or near the market. The determination of the point of minimum transportation cost i s complicated by such factors 3 2 i b i d . , p. 188. 33ibid., p. 190. 31+McLa.ughlin, M. and Robock, S., op. c i t . , p. 95. 59 as the medium of transportation used, the rate structure, the market served, and the m u l t i p l i c i t y of the materials used. Transportation i s only one of the i n d u s t r i a l l o c a t i o n factors which can influence the l o c a t i o n a l decisions of the developing countries. Others, such as raw materials, market, and labour, are also important i n l o c a t i o n a l con-siderations as they a f f e c t the costs and receipts of an industry. Raw Material Source t Another factor which affects i n d u s t r i a l l o c a t i o n , and which the developing countries must consider when selecting i n d u s t r i a l locations i s raw material source. H i s t o r i c a l l y , as Yaseen points out, the l o c a t i o n of indus-t r i e s has been greatly influenced by the proximity to raw material sources.35 Today, however, technological advance, which brings with i t the p o s s i b i l i t y of u t i l i z i n g synthetic materials and rapid transportation, has greatly reduced the importance of the raw material source as a l o c a t i o n f a c t o r . Yet, i n some indu s t r i e s , because of the i r s p e c i a l character-i s t i c s , the source of raw materials i s c r i t i c a l i n i n d u s t r i a l l o c a t i o n considerations. Only i n certain regions of the world can there be found r e l i a b l e and adequate food surplus above l o c a l con-3^Yaseen, L.C. Plant Location. New York.American Research Council, 1956, p . 26. 60 s u m p t i o n , and i n d u s t r i a l e s t a b l i s h m e n t s u t i l i z i n g f o o d s t u f f s w i l l r e g a r d problems o f s u p p l y and procurement as i m p o r t a n t i n i n d u s t r i a l l o c a t i o n c o n s i d e r a t i o n s . I n the same way, i n d u s t r i a l p r o c e s s e s , w h i c h draw on the p r o d u c t s o f o t h e r m a n u f a c t u r i n g f o r t h e i r raw m a t e r i a l s w i l l c a r e f u l l y b a l a n c e the advantages o f a l o c a t i o n c l o s e t o t h e i r s u p p l i e r s a g a i n s t those a t some o t h e r p o i n t , " i n e v e r y c a s e , the a v a i l a b i l i t y , r e l i a b i l i t y and c o s t s o f m a t e r i a l procurement must be con-s i d e r e d , a l t h o u g h the power o f such c o n s i d e r a t i o n s t o i n f l u e n c e l o c a t i o n d e c i s i o n s may v a r y a c c o r d i n g t o a v a r i e t y o f c i r c u m s t a n c e s a p a r t from mere procurement c o s t s . " 3 ° I n d u s t r i e s u t i l i z i n g m a t e r i a l s w h i c h l o s e w e i g h t i n the course o f the p r o c e s s i n g t e n d t o be a t t r a c t e d t o the source o f the m a t e r i a l s i n o r d e r t o reduce t r a n s p o r t a t i o n c o s t s . F o r example, p u l p and p a p e r , n e w s p r i n t , and o t h e r paper m a n u f a c t u r i n g i n d u s t r i e s tend t o l o c a t e n e a r the p l a c e where pulp-wood i s a v a i l a b l e . 3 7 o t h e r i n d u s t r i e s u s i n g low-v a l u e d , heavy, and b u l k y raw m a t e r i a l s a l s o t e n d t o l o c a t e i n the p r o x i m i t y o f t h e i r raw m a t e r i a l s s o u r c e . Among these are b r i c k m a n u f a c t u r i n g from c l a y , the g i n n i n g o f c o t t o n , o o and the sawing o f lumber. 36E s t a l l , R.C. and Buchanan, R.O. I n d u s t r i a l A c t i v i t y  and Economic Geography. London. H u t c h i n s o n U n i v e r s i t y L i b r a r y . 1961, p. 2 5 . 37 E s t a l l and Buchanan g i v e examples o f the e x t e n t t o w h i c h some raw m a t e r i a l s l o s e weight i n the cour s e o f t h e i r p r o c e s s i n g : Raw sugar i s about 1/8 o f the m a t e r i a l s u s e d ; p u l p and p a p e r , 2/5 o f the p u l p ; w e i g h t o f p i g i r o n i s about t o 1/3 o f the m a t e r i a l s charged. I b i d . , p. 26. 38smith, R., P h i l l i p s , 0., and S m i t h , T. I n d u s t r i a l and Commercial Geography. New Yo r k . Henry H o l t and Company. 1955, P- 2/0. 61 P e r i s h a b i l i t y of the materials has been mentioned by McLaughlin and Robock as another factor which causes certa i n i n d u s t r i a l establishments to locate near the raw material source.39 Examples of these are vegetable canning and processing, dairying, and meat packing industries. Generally, where the industries are predominantly raw material users, the source of the materials has a d e f i n i t e raw material a t t r a c t i o n . The United States Bureau of Census defines raw material consuming industries as those i n which the expenditures f o r raw materials are more than half of the t o t a l , k-0 The l o c a t i o n a l p u l l to the source of raw materials i s greater i n industries using materials of low value than i t i s f o r industries using materials of high value. The United States National Resources Planning Board reports that fo r manufacturing industries the percentage of material cost to the f i n i s h e d product value i n 1939 ranged from 31.5 to 77.1 per cent. Pood products, tobacco manufactures, petroleum products, nonferrous metals and t h e i r products, automobile and automobile equipment belong to those indus-t r i e s where the cost of material i s highly s i g n i f i c a n t . Thus, these industries tend to locate t h e i r processing f a c t o r i e s near the sources of the raw materials.k^ 3 9McLaughlin. op. c i t . , p. 1 8 . ^ N a t i o n a l Resources Planning Board, op. c i t . , p. 1 3 3 . Ip-Ibid., p. 129. 62 Where many d i f f e r e n t raw materials are involved i n a single processing procedure, the l o c a t i o n a l influence of the source of materials w i l l depend on t h e i r r e l a t i v e importance. A strong l o c a t i o n a l p u l l of one may be countered by an equally strong p u l l of a second material.' The ir o n and s t e e l industry uses several important raw materials, and the plant locations based on r e l a t i v e access to coal or to ore or to scrap can be found.^ 2 In general, the greater the combination of materials required, the less i s the l o c a t i o n a l influence of any one factor.^-3 This may r e s u l t i n more emphasis being given to l o c a t i o n a l factors other than raw materials. When other l o c a t i o n f a c t o r s , such as transportation, labour, or market are considered together with raw materials, i t i s the cost of the l a t t e r which demands a major considera-t i o n . In this cost i s included the cost of transporting the raw materials to the processing s i t e . I t can be said, i n summary, that the importance of the source of raw materials has declined as a l o c a t i o n a l factor due to technological advance. However, i t s influence i s s t i l l i n the forefront of, l o c a t i o n a l consideration of industries i n which the cost, a v a i l a b i l i t y , r e l i a b i l i t y , p e r i s h a b i l i t y , and bulk of the materials are a l l c r i t i c a l . ^ EstalT, R.C. and Buchanan, R.O. op. c i t . , p. 27. ^ N a t i o n a l Resources Planning Board, op. c i t . , p. 136. 63 Where d i f f e r e n t kinds of materials are involved i n a single processing, the p u l l of one material source i s reduced by the p u l l of the other material sources. When other factors are considered with raw materials the cost of the materials i s considered the most important. Markets While the influence of the source of raw materials on i n d u s t r i a l l o c a t i o n decisions has been declining over the years, as a re s u l t of advances i n technology, the importance of markets as a l o c a t i o n factor s t i l l remains great. In recent times, i n p a r t i c u l a r , the importance of the markets has very much increased owing to the change i n the character of industry as a whole, and the present necessity of speedy and regular delivery of goods.^ This brings out the importance of markets as a l o c a t i o n factor which must be taken into account when the developing countries are select-ing i n d u s t r i a l locations. Harris points out that although the i r o n and s t e e l industry i s a raw material processing Industry, i t has now become more and more market-oriented. The P a i r l e s s Steel Works on the Delaware River i n New York State, f o r example, i s located there because of the low cost of water transporta-t i o n and the nearness of the markets.^ ^ - P o l i t i c a l and Economic Planning, op. c i t . , p. 72. ^ H a r r i s , C , "The Market as a Factor i n the Location of Industry i n the United States. 8 Appraisal Journal. January, 1956. pp. 57-86. 64 Markets are made up of the ultimate consumers, i n d u s t r i a l consumers, and other organizations which handle the commodities f o r further d i s t r i b u t i o n . 1.6 E s t a l l and Buchanan give several reasons why an industry may be influenced to locate near the market. Most of these reasons are the converse of the forces a t t r a c t i n g an industry to i t s major raw materials. In the f i r s t place, where the transportation charges form a large percentage of the s e l l i n g price of the fin i s h e d products when they are transported over a great distance, an industry w i l l tend to locate near the market i n order to minimize transportation cost. Hence, industries whose fin i s h e d products are bulkier than the raw materials are market-oriented. Among such industries are the manu-facture of a g r i c u l t u r a l machinery, p r i n t i n g presses and large machine t o o l s A t y p i c a l example of loc a t i n g near the market to maximize transportation costs i s the l o c a t i o n of a 'du Pont' sulphuric acid plant at Richmond, V i r g i n i a , which i s mainly to provide i t s company with sulphuric acid, the manufacture of which involves a weight-gaining process.^9 l ^ I b i d . , p. 57. ^ E s t a l l , R.C. and Buchanan, R.O. op. c i t . , pp. 31-35. ^ 8 I b i d . , p. 32. ^•%cLaughlin, M. , and Robock, S. op. c i t . , p. 32. 65 P e r s o n a l c o n t a c t between consumer and p r o d u c e r , and s e c u r i n g an i n c r e a s e d share i n the b u s i n e s s have a l s o been c i t e d as reasons why market o r i e n t a t i o n i s v e r y necessary.%Q Any i n d u s t r y w h i c h makes a r t i c l e s 'to measure' g a i n s from market o r i e n t a t i o n . " T h i s a p p l i e s not o n l y t o " r e t a i l bespoke garment i n d u s t r y , b u t to many m a n u f a c t u r i n g concerns w h i c h s p e c i a l i z e i n the p r o d u c t i o n o f s m a l l ' t a i l o r made' p a r t s f o r o t h e r e n t e r p r i s e s o r f o r p r i v a t e customers." I n - t h e same way, i n d u s t r i e s s uch as p h o t o e n g r a v i n g , news-paper p u b l i c a t i o n , and v a r i o u s r e p a i r i n d u s t r i e s , where customers' s p e c i f i c a t i o n s must be s a t i s f i e d , need t o l o c a t e n ear the market to s e c u r e an i n c r e a s e d share i n the b u s i n e s s Where the p r o d u c t o f an i n d u s t r y i s p e r i s h a b l e , market l o c a t i o n i s a t t r a c t i v e i f not e s s e n t i a l . Market-o r i e n t e d i n d u s t r i e s s uch as i c e , i c e cream, and beverage i n d u s t r i e s b e l o n g t o those where the p e r i s h a b i l i t y o f the f i n i s h e d p r o d u c t i s o f major importance i n d e c i d i n g on a l o c a t i o n . The market under c o n s i d e r a t i o n may be l o c a l i z e d t o a c e r t a i n e x t e n t o r s p r e a d over a l a r g e a r e a . I n o t h e r words, i t may be l o c a l , r e g i o n a l , n a t i o n a l , o r even i n t e r -n a t i o n a l i n s c o p e . ^ I n the l a s t t h r e e cases a compromise ^°Estall, R.C. and Buchanan, R.O. op. c i t . , p. 33. ^ I b i d . , p. 32. 52TJ. S. N a t i o n a l Resources P l a n n i n g B o a r d , op. c i t . , p. 220. 5 3 I b i d . , p. 220. ^ M c L a u g h l i n , M. and Robock, S. op. c i t . , p. 31. 66 solution to the loc a t i o n problem may have to be taken. For example, i f the fi n i s h e d goods are sold a l l over the country, i t would not be possible to locate the plant near a l l i t s markets. Two ways are open. The plant could either be located at a point where the transportation costs for i t s p a r t i c u l a r group of markets are minimized, or i t could go to the place where the major market i s situated. In both cases, however, something must be s a c r i f i c e d . In the f i r s t case, i t loses the ready access f o r service to the customers, whereas i n the second case the transportation charges are l i k e l y to be higher. In conclusion, i t may be said that markets are also a factor which the developing countries must consider when selecting i n d u s t r i a l locations. Market l o c a t i o n i s c r i t i c a l l y important for industries whose products are weight-gaining, f r a g i l e or perishable. Where the f i n i s h e d goods are sold to several markets, a lo c a t i o n near a l l the markets, however desirable, i s te c h n i c a l l y not f e a s i b l e . In this case, the i n d u s t r i a l i s t would have to be s a t i s f i e d with a compromise solution. Labour OUR HUMAN RESOURCES are the most valuable resources we have. So-called 'natural resources' are never worth very much without the energy, drive and ambition of people. HENRY FORD II It has been contended by Yaseen that the selection of a general geographic area for the l o c a t i o n of a plant i s based on raw material costs, market a c c e s s i b i l i t y , and 67 economic consideration, but that the labour factor deter-mines the p a r t i c u l a r community i n which the industry should be located.$ 5 I t i s true that the influence of labour as a l o c a t i o n factor has declined due to mechanization.£° But the fact that no industry can possibly operate without labour makes labour consideration c r i t i c a l i n the i n d u s t r i a l loca-t i o n decision process. In the labour-oriented i n d u s t r i e s , i n p a r t i c u l a r , the importance of the labour market can hardly be over-emphasized. E s t a l l and Buchanan give three reasons why the l o c a t i o n decision of every i n d u s t r i a l i s t can be affected by labour considerations.Bl The reasons are that: f i r s t , . labour varies i n costs from one place to another; secondly, there are geographical variations i n labour supply; and, f i n a l l y , labour varies i n s k i l l s from one area to another. Labour Costs Labour costs are a s i g n i f i c a n t feature of the labour s i t u a t i o n i n the industries where labour costs take a greater proportion of the t o t a l production costs. Under thi s circumstance, the industry w i l l choose between the ^Yaseen, L.C. op. c i t . , p. 50. 5 6 I b i d . , p, 52. ^ E s t a l l , R.C. and Buchanan, R.O. op. c i t . , p. 81+. 68 a r e a s o f h i g h and l o w wage r a t e s . The U n i t e d S t a t e s N a t i o n a l R e s ources P l a n n i n g Board p o i n t s out t h a t wage r a t e s v a r y between towns and c i t i e s , and s u g g e s t s t h a t the d i f f e r e n c e s are a r e f l e c t i o n o f d i f f e r e n c e s i n c o s t o f l i v i n g , i n o t h e r non-monetary advantages, o r d i f f e r e n c e s i n b a r g a i n i n g power, .each o f w h i c h i s o f t e n s u f f i c i e n t t o r e s t r i c t m o b i l i t y o f l a b o u r , t h e r e b y b a r r i n g e q u a l i z a t i o n o f wage l e v e l s . ^ 8 A low wage r a t e i n any p a r t i c u l a r a r e a does n ot n e c e s s a r i l y a t t r a c t i n d u s t r y . I n o r d e r t h a t t h i s may be s o , the r a t i o o f the l a b o u r c o s t t o the t o t a l c o s t o f the p r o d u c t must be s u f f i c i e n t l y h i g h t o o v e r r i d e o t h e r l o c a t i o n f a c t o r s . Labour a t t i t u d e i s a n o t h e r f a c t o r w h i c h can l e a d t o h i g h l a b o u r c o s t s . I n the more e s t a b l i s h e d i n d u s t r i a l a r e a s , t r a d e u n i o n a c t i v i t i e s , s u ch as s t r i k e , can l e a d t o stoppage o f work, and thus r e s u l t i n h i g h c o s t s . An i n d u s t r i a l i s t w i l l n a t u r a l l y t h i n k b e f o r e he p u t s h i s p l a n t i n such an a r e a . I n t h e i r book, 'Why I n d u s t r y Moves S o u t h ' , M c L a u g h l i n and Robock, e x a m i n i n g the reasons f o r t h e l o c a t i o n d e c i s i o n o f e i g h t y - e i g h t f i r m s , show t h a t , almost w i t h o u t e x c e p t i o n , the f i r m s concerned made a t h o r o u g h s t u d y o f the h i s t o r y o f labour-management r e l a t i o n i n the areas t h e y were c o n s i d e r i n g b e f o r e t h e y made a f i n a l d e c i s i o n . % 9 Labour a t t i t u d e s can a l s o a f f e c t p r o d u c t i v i t y and thus r e s u l t i n h i g h p r o d u c t i o n c o s t s . T h i s happens e s p e c i a l l y where t r a d e u n i o n members are opposed t o i n n o v a t i o n and i n c r e a s e d 'work l o a d ' , w h i c h - ^ N a t i o n a l Resources P l a n n i n g Board, op. c i t . , p. 221. ^ ^ M c L a u g h l i n and Robock. op. c i t . , p. 36. 69 could be made possible by mechanization.^0 Many present-day i n d u s t r i a l i s t s consider labour turn-over as one of the measurable indicators of labour-management re l a t i o n s i n a community.^1 Yaseen suggests that a monthly net turn-over rate i n the average manufacturing establishment should not be more than f i v e per cent, although i n such industries as logging or ship building this figure may go up to as high as eleven to twelve per cent.^ 2 To sum up, where labour costs are s i g n i f i c a n t i n t o t a l production costs, an industry w i l l tend to locate i n a community where cost of labour can be kept to the minimum. This can be possible by a careful consideration of wage rates, size of towns, and the labour-management r e l a t i o n s . Labour Supply Labour supply, also, can influence an i n d u s t r i a l i s t i n his l o c a t i o n decision. The size of the labour force varies from one community to another. Generally, the largest labour markets are i n large c i t i e s with t h e i r correspondingly higher wage rates rather than i n smaller towns. However, for a labour-oriented industry a large labour market makes i t r e l a t i v e l y easy to select, r e c r u i t , and lay o f f workers without d i f f i c u l t y that may accompany such a decision i n a small or one-industry town. E s t a l l and 6 o I b i d . , p. 3 7 . 6 l I b i d . , p. 3 8 . 62yaseen, L.G. op. c i t . , p. J6. 70 Buchanan c i t e an instance i n A u s t r a l i a , "where, at Broken H i l l , many employees, made redundant by a (possibly temporary) decline i n demand fo r lead i n 1958 and 1959, were carried on the companies' p a y r o l l because there was no alternative employment i n the town".^3 The quantity of labour i s not the only factor that affects labour supply considerations. "The type of labour i s also important, i t s age, sex structure, the l e v e l of i n d u s t r i a l c a p a b i l i t y , and so on. Male and female labour are generally i n 'joint supply', that i s , where the one exists the other w i l l often be available. Thus, an area with industries employing a large percentage of males may well be a favourable place for industries u t i l i z i n g female labour. The o r i g i n a l cause of the l o c a t i o n of the female-oriented rayon industries i n the Pennsylvania anthracite region has been attributed to the already e x i s t i n g large male labour force. 65 Labour oriented industries can draw upon a large pool of s a t i s f a c t o r y labour i n most advanced i n d u s t r i a l areas. Reared i n an i n d u s t r i a l environment, the population possess a minimum of i n d u s t r i a l s k i l l and technical 'know how'. They can adapt themselves r e a d i l y , comparably, to the various requirements of i n d u s t r i a l work. The t r a i n i n g period can be generally short i n the majority of jobs i n s t a l l , R.C. and Buchanan, R.O. op. c i t . , p. 89. 6 [KEbid., p. 89. 6 5 l b i d . , p. 90. 71 industry. The s i t u a t i o n i s quite d i f f e r e n t i n a less indus-t r i a l l y developed area, where i n d u s t r i a l labour supply i s a problem. "Here even the most basic elements of i n d u s t r i a l 'know how' are often lacking, and i n d u s t r i a l l i f e i s com-p l e t e l y foreign to the vast majority of the people."66 The industry which locates i n such an area has to incur cost of tra i n i n g , and i f there i s a choice between developed and less developed areas i t would be economically u n j u s t i f i a b l e to select the l a t t e r . Where the industry has to locate i n the less developed area, mechanization may be substituted for labour. The present-day change from labour to machines i n India, i n spite of the country's cheap labour, i s a case i n point.^7 Labour supply can also be affected by i n s t i t u t i o n a l f a c t o rs. These i n s t i t u t i o n a l factors may be of a l e g a l or organizational nature. For instance, there may be l e g a l r e s t r i c t i o n s on the use of labour, the hours of work, standard of employment, minimum wage and minimum age for employment, and other l e g a l requirements a f f e c t i n g labour supply. Trade unions can also r e s t r i c t labour supply by the operation of the 'close shop'. Such a practice can check inter-industry mobility of labour and thus make labour r e l a t i v e l y scarce. These i n s t i t u t i o n a l factors can influence an i n d u s t r i a l i s t ' s l o c a t i o n a l decision since they are related to cost of production. 6 6 I b i d . , p. 90. 6 7 i b i d . , p. 91. 72 Consideration of labour supply must be i n the fore-front of the l o c a t i o n decision of i n d u s t r i a l i s t s e s p e c i a l l y where t h e i r industries are labour-oriented. In every industry i n s t i t u t i o n a l factors demand great consideration i n s k i l l so f a r as they a f f e c t labour supply and cost. S k i l l S k i l l i s another c h a r a c t e r i s t i c of the labour market that may a f f e c t a l l firms, though i n d i f f e r e n t degrees. Recent technological advances are reducing the r e l a t i v e importance of s k i l l as a l o c a t i o n factor. In the cotton industry, f o r instance, many operations which used to be performed by hand are now mechanized. 0 0 However, i n some industries, e s p e c i a l l y where manual s k i l l i s needed, the influence of s k i l l as a l o c a t i o n a l factor i s great. 'The Report on the Location of Industry i n Great B r i t a i n ' states that "the process of replacement of s k i l l e d labour by machinery has not diminished the demand f o r s k i l l e d labour so much as changed the nature of demand".°9 Superskilled men are required f o r the maintenance of i n t r i c a t e plants and other spec i a l i z e d jobs such as tool-making. The a v a i l -a b i l i t y of these men may have some influence on i n d u s t r i a l l o c a t i o n . However, i t i s believed that t h e i r l o c a t i o n a l influence tends to be neutralized as they are considered " " P o l i t i c a l and Economic Planning, op. c i t . , p. 65. 6 9 I b i d . , p. 66. 73 t h e most m o b i l e o f a l l c l a s s e s o f l a b o u r . ' u D e s p i t e t h e f a c t t h a t i t s i m p o r t a n c e as a l o c a t i o n f a c t o r has d e c l i n e d due t o t e c h n o l o g i c a l c h a n g e s , l a b o u r c o n s i d e r a t i o n s t i l l i n f l u e n c e s a l l i n d u s t r i e s , t h o u g h i n v a r y i n g d e g r e e s , b e c a u s e a l l i n d u s t r i e s n e e d some l a b o u r . I n t h e l a b o u r - o r i e n t e d i n d u s t r i e s , i n p a r t i c u l a r , t h e i n f l u e n c e o f l a b o u r i s i n t h e f o r e f r o n t o f a l o c a t i o n a l d e c i s i o n . The i m p o r t a n c e o f l a b o u r c o n s i d e r a t i o n s a r i s e s f r o m t h e f a c t t h a t t h e r e a r e g e o g r a p h i c a l v a r i a t i o n s i n l a b o u r c o s t s , s u p p l y , and s k i l l . On t h e w h o l e , l a b o u r i s the most c o m p l i c a t e d o f a l l t h e l o c a t i o n a l f a c t o r s c o n s i d e r e d so f a r , b e c a u s e , v a r y i n g w i t h the g e o g r a p h i c a l d i s t r i b u t i o n o f p o p u l a t i o n , w h i c h a l s o makes up t h e u l t i m a t e c o n s u m e r s , i t s i n f l u e n c e c a n h a r d l y be s e p a r a t e d f r o m the i n f l u e n c e o f the m a r k e t . I n a d d i t i o n , i t s i n f l u e n c e i s u n p r e d i c t a b l e f o r i t s n a t u r e c a n change w i t h t i m e : i t s s u p p l y c a n change w i t h changes i n p o p u l a t i o n ; i t s c o s t s c a n change t h r o u g h i n s t i t u t i o n a l a c t i v i t i e s ; a nd i t s s k i l l c a n change t h r o u g h t r a i n i n g . The U n i t e d S t a t e s N a t i o n a l R e s o u r c e s P l a n n i n g B o a r d sums t h i s up by s a y i n g t h a t : t h e d i s a d v a n t a g e s o f l o c a t i n g an i n d u s t r i a l p l a n t away f r o m t h e s o u r c e s o f l a b o u r a r e so i n t e r -m i n g l e d w i t h p e r h a p s e v e n s t r o n g e r d i s a d v a n t a g e s w i t h r e s p e c t t o the o t h e r l o c a t i o n a l f o r c e s , t h a t no a c c u r a t e e s t i m a t e c a n be made o f t h e i n d e p e n d e n t e f f e c t o f l a b o u r on l o c a t i o n . 7 1 7 ° I b i d . , p . 68. '''•'•National R e s o u r c e s P l a n n i n g B o a r d , op. c i t . , p . 231. 74 Energy A n o t h e r l o c a t i o n f a c t o r w h i c h the d e v e l o p i n g c o u n t r i e s must c o n s i d e r when s e l e c t i n g i n d u s t r i a l l o c a t i o n s i s energy. T h i s f a c t o r has always been an i m p o r t a n t f a c t o r i n i n d u s t r i a l l o c a t i o n d e c i s i o n . I n G reat B r i t a i n i n the • e i g h t e e n t h and n i n e t e e n t h c e n t u r i e s , and i n the U n i t e d S t a t e s and Europe i n the n i n e t e e n t h c e n t u r y , energy source d e t e r m i n e d the g e o g r a p h i c a l d i s t r i b u t i o n o f m a n u f a c t u r i n g , f i r s t , on the s i t e c l o s e t o w ater power, as shown by the e a r l y c o n c e n t r a -t i o n o f i n d u s t r i e s i n P e r t h s h i r e , 7 2 S c o t l a n d , and L o w e l l , Lawrence and P a t t e r s o n i n the U n i t e d S t a t e s . 7 3 L a t e r , w i t h advances i n t e c h n o l o g y r e s u l t i n g i n the p r o d u c t i o n o f steam power and n a t u r a l gas, the ' p u l l ' o f w a t e r power d e c l i n e d . Ik Today, development i n e l e c t r i c power, w h i c h i s u n i q u e l y m o b i l e o v e r l i m i t e d d i s t a n c e s , f l e x i b l e i n a p p l i c a t i o n , and r a v a i l a b l e a t the f l i c k o f the s w i t c h , are r e d u c i n g the i n f l u e n c e o f energy on i n d u s t r i a l l o c a t i o n d e c i s i o n . B u t , i t i s s t i l l an i m p o r t a n t f a c t o r o f l o c a t i o n because a l l i n d u s t r i e s need power and f u e l , though i n d i f f e r e n t d e g r e e s , and because a r e a s v a r y i n energy s u p p l y . The l o c a t i o n a l a t t r a c t i o n o f energy depends on the 72Turner, W.H.K. I'The S i g n i f i c a n c e o f Water Power i n I n d u s t r i a l L o c a t i o n " . S c o t t i s h G e o g r a p h i c a l Magazine. V o l . LXXIV No. 2. September, 1958, p. 36. 7 3 E s t a l l , R.C. and Buchanan, R.O. op. c i t . , p. %k-7i+ibid. , pp. 51+-55. 75 e x t e n t t o w h i c h energy i s used i n a m a n u f a c t u r i n g p r o c e s s . F o r c e r t a i n e l e c t r o p r o c e s s i n d u s t r i e s where energy consumption forms a l a r g e p a r t o f the v a l u e o f the p r o d u c t , power c o s t s are d e f i n i t e l y a d o m i n a t i n g , a l t h o u g h not n e c e s s a r i l y the s o l e , l o c a t i o n a l c o n s i d e r a t i o n s . Among the s e i n d u s t r i e s a r e : c a l c i u m c a r b i d e , aluminum, e l e c t r o l y t i c z i n c , magnesium, and e l e c t r o l y t i c soda. The p r o d u c t i o n o f aluminum m e t a l by e l e c t r o l y s i s o f f u s e d a l u m i n a , e s p e c i a l l y , r e q u i r e s cheap h y d r o e l e c t r i c power more t h a n a n y t h i n g e l s e , whereas f o r the p r o d u c t i o n o f magnesium, cheap power stands about on an e q u a l f o o t i n g w i t h a v a i l a b i l i t y o f m a t e r i a l s . 75 Low-cost power a l o n e i s , however, n o t s u f f i c i e n t t o c r e a t e an i n d u s t r i a l a r e a w i t h a wide range of d i v e r s i f i c a -t i o n , as t h e r e are o n l y a few s p e c i f i c a l l y p o w e r - o r i e n t e d i n d u s t r i e s . But when cheap power and raw m a t e r i a l s s u i t a b l e f o r e l e c t r o p r o c e s s i n g i n d u s t r i e s o c c u r c o n c u r r e n t l y , a b a s i s may e x i s t f o r i n d u s t r i a l i z a t i o n on a s u b s t a n t i a l s cale.76 The N a t i o n a l Resources P l a n n i n g Board g i v e s f o u r c a t e g o r i e s i n w h i c h energy p l a y s a r o l e , w i t h d i f f e r e n t d e g r e e s , i n the l o c a t i o n d e c i s i o n . 7 7 I n the f i r s t p l a c e , the i n d u s t r i e s i n w h i c h energy o r i e n t a t i o n i s the dominant f a c t o r are the consumers of f u e l s as raw m a t e r i a l s . I n t h i s group are the coke and c a r b o n b l a c k i n d u s t r i e s . I n a second group of i n d u s t r i e s , f u e l has ^ N a t i o n a l Resources P l a n n i n g B oard, op. c i t . , p. 177. 7 6 i b i d . , p. 180. 7 7 I b i d . , pp. 167-180. 7 6 played an important role i n plant l o c a t i o n together with consideration f o r the factors of raw materials and markets. Belonging to this group are industries such as glass, which uses natural gas as f u e l ; clay products, which use coal or gas; metal r e f i n i n g and f a b r i c a t i o n and chemicals, which use coal and gas as f u e l . In a t h i r d group, materials and markets are the dominant fac t o r s , but raw materials are so widely available that f u e l costs also play some role i n l o c a t i o n a l decisions. This group i s represented by the paper, cement, and lime industries. And f i n a l l y , there i s a fourth group i n which other factors override the f u e l factor i n importance, although the industries concerned consume a great deal of f u e l . Typical examples are manufactured i c e , which i s market-oriented, and naval stores and s a l t , which are raw material-oriented. 7°" To sum up, i t may be said that energy i s an important l o c a t i o n factor which the developing countries must take into consideration when selecting locations f o r i n d u s t r i e s . The importance of energy w i l l be greatly f e l t e s p e c i a l l y where the envisaged industry i s a large energy consumer. Summary Problems of selecting an i n d u s t r i a l l o c a t i o n have been examined by considering the factors which generally a f f e c t i n d u s t r i a l l o c a t i o n . Examples of the importance of each l o c a t i n g factor have been c i t e d from the more developed 7°Ibid., p. 180. 777 countries, such as Great B r i t a i n and the United States,' because, having developed through i n d u s t r i a l i z a t i o n , these countries have encountered and solved problems i n the selec-t i o n of i n d u s t r i a l l ocations. The developing countries can l e a r n from t h e i r mistakes and successes. In summary, i t may be noted that the developing countries can appreciate the problems of l o c a t i o n a l s e l e c t i o n when such i n d u s t r i a l l o c a t i o n factors as transportation, raw materials, markets, labour, and energy are considered. These, however, are not the only factors, though they are the most s i g n i f i c a n t ones; other factors are taxation, attitudes of the community, and climate, which may not s i g n i f i c a n t l y affect the decision of a country bent upon i n d u s t r i a l development. Nor can i t be said that any one of the more s i g n i f i c a n t f actors, discussed above, overrides a l l others i n importance i n a l o c a t i o n decision, except i n some few industries which are oriented either to the market, raw materials, labour, or energy. In most cases several of the l o c a t i o n factors together influence the f i n a l s e l e c t i o n of a l o c a t i o n with none of the factors playing an all-important r o l e . The cutlery industry i n the S h e f f i e l d d i s t r i c t has been ci t e d i n 'The Report on I n d u s t r i a l Location i n B r i t a i n ' as a good example of this interplay of factors: The cutlery industry began i n the S h e f f i e l d d i s t r i c t some four or f i v e hundred years ago. An i r o n industry based on l o c a l coal-measure ironstones, charcoal supplies and water power had existed long before, but s p e c i a l i z a t i o n i n cutlery was made possible by the excellent grind stone material 78 p r o v i d e d by the l o c a l m i l l s t o n e g r i t , and i t was encouraged by the advent i n the s i x t e e n t h c e n t u r y o f s k i l l e d F l e m i s h s e t t l e r s . S k i l l tended t o accumulate i n the d i s t r i c t and the i n d u s t r y has remained h i g h l y l o c a l i z e d t h e r e . The d i s c o v e r y o f s t a i n l e s s s t e e l by S h e f f i e l d m a n u f a c t u r e r s some t w e n t y - f i v e y e a r s ago has emphasized the supremacy o f the d i s t r i c t i n c u t l e r y manufacture.79 H e r e , t h r e e o f the p r i m a r y f a c t o r s , raw m a t e r i a l s , w a t e r power, and s k i l l e d l a b o u r , have combined t o l o c a t e the c u t l e r y i n d u s t r y i n S h e f f i e l d . The d e v e l o p i n g c o u n t r i e s must a l s o be aware o f the c h a n g i n g importance of the l o c a t i o n f a c t o r s . I n d u s t r i a l t r a f f i c h as, o v e r the y e a r s , r e l i e d ' on waterway, r a i l w a y , and r o a d t r a n s p o r t a t i o n . Today, a i r t r a n s p o r t a t i o n i s a l s o becoming i m p o r t a n t f o r s p e c i a l k i n d s o f p r o d u c t s . These changes i n i n d u s t r i a l t r a n s p o r t a t i o n , r e s u l t i n g i n speed and l o w e r p r o d u c t i o n c o s t s , are l i k e l y t o reduce the i n f l u e n c e o f t r a n s p o r t a t i o n as a l o c a t i o n a l f a c t o r . L i k e w i s e , the s h i f t f r o m water power, t h r o u g h steam power, t o e l e c t r i c i t y , w h i c h can be t r a n s m i t t e d o v er a d i s t a n c e , i s r e d u c i n g the energy i n f l u e n c e on l o c a t i o n a l d e c i s i o n . L a bour a l s o has d e c l i n e d i n importance as a l o c a t i o n f a c t o r owing to m e c h a n i z a t i o n o f p r o c e s s e s . I n the d e v e l o p i n g c o u n t r i e s , however, where the p e o p l e l a c k the b a s i c i n d u s t r i a l 'know how' the f a c t o r l a b o u r can be c r i t i c a l i n i n d u s t r i a l l o c a t i o n d e c i s i o n . The l a c k o f t e c h n i c a l know-l e d g e can be overcome by t r a i n i n g . F i n a l l y , the s o u r c e of raw m a t e r i a l s has d e c l i n e d i n importance as a l o c a t i o n f a c t o r 7 9 P o l i t i c a l and Economic P l a n n i n g , op. c i t . , p. 86. because the chain of processing between raw materials and the f i n a l products has become longer and longer, and, also, because the tendency of any plant to use semi-processed materials continues to grow.^O A l l these examples i l l u s t r a t e the changing nature of the i n d u s t r i a l l o c a t i o n f a c t o r s , which the developing countries must consider very c a r e f u l l y . Thus, i t may be concluded that the problems of l o c a t i o n a l s e l e c t i o n are complicated by the d i v e r s i t y of the factors involved and the nature of these f a c t o r s . A l l these make i t d i f f i c u l t , i f not impossible, to use any formula f o r sele c t i n g an i n d u s t r i a l l o c a t i o n . Dr. Turner concludes: In appraising the i n d u s t r i a l l o c a t i o n p o s s i b i l i t i e s of an area, i t i s important that the p a r t i c u l a r factors a f f e c t i n g that area be studied and analyzed, rather than attempting to apply some magic formula that i s not applicable or appropriate.°1 FACILITIES SUPPORTING INDUSTRIAL LOCATION As f a r as the developing countries are concerned, an examination of the problems of i n d u s t r i a l l o c a t i o n can hardly lose sight of the f a c i l i t i e s , such as transportation and communication f a c i l i t i e s , u t i l i t i e s , i n d u s t r i a l parks, housing, i n d u s t r i a l education and t r a i n i n g , commercial f a c i l i t i e s , and other community services, which support C h i n i t z , B. and Vernon, R., "Changing Forces i n Ind u s t r i a l Location". Harvard Business Review, Vo l . 3 8 , January-February, I960, pp. 126 - 1 3 6 . ^ T u r n e r , O.D., Industrial Location Factors i n Wyoming, A Functional Analysis. An unpublished doctoral d i s s e r t a t i o n , The University of Texas, January, 1 9 5 8 , p. 2 1 8 . 80 industry. In these countries, these supporting f a c i l i t i e s and services are either absent, or e x i s t i n g but poorly developed. Industries cannot operate well where the support-ing f a c i l i t i e s are of low standard; hence, the provision of the f a c i l i t i e s i s very e s s e n t i a l . Some of these are needed fo r the actual manufacturing process, others f o r the manu-facturing employees, and some fo r both process and employees. Transportation In i t s broadest sense, transportation f a c i l i t i e s r elated to i n d u s t r i a l l o c a t i o n include harbours, railways, highways, and airports.^2 The lesson taught by the indus-t r i a l i z e d countries i s that these f a c i l i t i e s are e s s e n t i a l to the e f f i c i e n t operation of industry. Harbours Harbours are needed es p e c i a l l y where the raw materials required for domestic processing are imported or where the products are intended for the overseas markets. Under such circumstances, harbours are necessary f o r assem-b l i n g the materials or the products. Industries u t i l i z i n g heavy or bulky imported raw materials would tend to locate at or near the harbours, thus creating i n d u s t r i a l concentra-t i o n from which the industries can gain by supplying one another with materials and services. Breese, G., In d u s t r i a l Site Selection. Princeton, N. J . The Bureau of Urban Research. 1951+, p. 23. 81 R a i l w a y s R a i l w a y s a re a l s o v e r y i m p o r t a n t t r a n s p o r t a t i o n f a c i l i t i e s w h i c h s u p p o r t i n d u s t r i e s . I n the n i n e t e e n t h c e n t u r y B r i t a i n , r a i l w a y s a l l o w e d a r e a d i e r movement o f raw m a t e r i a l s t o a g r e a t e r v a r i e t y o f l o c a t i o n s , and p r o d u c t s t o many m a r k e t s . Today, they are s t i l l i m p o r t a n t i n a l l i n d u s t r i a l a r e a s as c a r r i e r s o f i n d u s t r i a l t r a f f i c , e s p e c i a l l y o v e r l o n g d i s t a n c e s . 8 3 i n the d e v e l o p i n g c o u n t r i e s , r a i l w a y s are needed t o connect i n d u s t r i a l a r e a s and raw m a t e r i a l s o u r c e s , and a l s o , i n d u s t r i a l a r e a s and the ma r k e t s . Highways I n the t w e n t i e t h c e n t u r y , r o a d t r a n s p o r t a t i o n has become i m p o r t a n t as c a r r i e r o f i n d u s t r i a l goods. To many modern i n d u s t r i e s , b o t h l i g h t and heavy, the f l e x i b i l i t y o f t r u c k i n g i s v e r y v a l u a b l e i n the procurement o f raw m a t e r i a l s , and the d i s t r i b u t i o n o f the f i n i s h e d goods. I n the U n i t e d S t a t e s , f o r i n s t a n c e , a l t h o u g h d i s t a n c e s c o v e r e d are l o n g and, t h e r e f o r e , more f a v o u r a b l e t o movement o f o t h e r f o r m s , r o a d t r a n s p o r t a t i o n has been g a i n i n g ground s t e a d i l y . ^ k - T r a n s p o r t a t i o n o f employees t o work i n r e c e n t y e a r s has a l s o made r o a d t r a n s p o r t a t i o n e x t r e m e l y important.®^ A l l these examples show t h a t w e l l l a i d - o u t roads a re e s s e n -t i a l t o i n d u s t r i a l development. Good roads g i v e i n d u s t r y < E s t a l l , R.G. and Buchanan, R.O. op. c i t . , p. 1|3. 8 1 + I b i d . , p. LLLL. 85lbid., p. k$-82 more f r e e d o m i n s i t e s e l e c t i o n and more f l e x i b i l i t y i n work s c h e d u l i n g . Good r o a d s , p r o p e r l y m a i n t a i n e d , and w i t h r e a s o n a b l e r e g u l a t i o n s f o r t h e i r u s e , a r e t h u s o f c o n s i d e r a b l e i m p o r t a n c e i n the h e a l t h y o p e r a t i o n o f t h e i n d u s t r i e s . A i r p o r t s F i n a l l y , a i r p o r t s , s e r v i n g b o t h i n t e r n a l and e x t e r n a l a i r t r a f f i c , a r e a l s o needed t o f a c i l i t a t e t h e s p e e d y t r a n s p o r t a t i o n o f m a n a g e r i a l p e r s o n n e l and h i g h q u a l i t y g o o d s . H a v i n g a i r p o r t f a c i l i t i e s a c c e s s i b l e f o r p e r s o n n e l t r a n s p o r t a t i o n p e r m i t s f l e x i b i l i t y i n management o f d i s p e r s e d o p e r a t i o n s and t h u s d e c e n t r a l i z a t i o n o f l a r g e m a n u f a c t u r i n g u n i t s . I t i s e f f e c t i v e i n p r o v i d i n g r a p i d c o n t a c t s w i t h d i s p e r s e d b u y i n g and s e l l i n g r e p r e s e n t a t i v e s . Time s a v i n g s a f f e c t e d by t h e u s e o f a i r w a y s a r e c o n s i d e r a b l e f o r h i g h - s a l a r y and s t r a t e g i c p e r s o n n e l .86 I n summary, i t may be s a i d t h a t t r a n s p o r t f a c i l i t i e s , s u c h as h a r b o u r s , r a i l w a y s , r o a d s , and a i r p o r t s , s u p p o r t i n d u s t r i e s t o o p e r a t e e f f i c i e n t l y . T h e i r p r o v i s i o n m u s t , t h e r e f o r e , be g i v e n g r e a t c o n s i d e r a t i o n by t h e d e v e l o p i n g c o u n t r i e s i n t h e i r i n d u s t r i a l d e v e l o p m e n t programmes. The p r o v i s i o n o f t h e s e f a c i l i t i e s w i l l n e c e s s i t a t e c o m p r e h e n s i v e p l a n n i n g and a g r e a t c o - o r d i n a t i o n b e t w e e n i n d u s t r i a l and t r a n s p o r t a u t h o r i t i e s . ' B r e e s e , G. o p . c i t . , p . 26. 8 3 Communication I n most d e v e l o p i n g c o u n t r i e s t o d a y , communication systems e x i s t but are r e l a t i v e l y u ndeveloped. Moreover, the d i s t r i b u t i o n i s r e s t r i c t e d t o the few towns and c i t i e s , l e a v i n g the r u r a l a r e a s u n s e r v i c e d . The low s t a n d a r d and r e s t r i c t e d d i s t r i b u t i o n o f communication f a c i l i t i e s i n P u e r t o R i c o , as p o i n t e d out by the f r a m e r s o f the P u e r t o R i c o I n d u s t r i a l P l a n , i s a, case i n p o i n t . ^ 7 Improvement and e x t e n s i o n o f the e x i s t i n g communica-t i o n system, and a d d i t i o n s t o t h e system, where i t i s d e f i c i e n t w i l l be n e c e s s a r y t o s u p p o r t f u t u r e i n d u s t r i a l development. Adequate t e l e p h o n e and t e l e g r a p h s e r v i c e i s an e s s e n t i a l r e q u i r e m e n t o f a h i g h l y d e v e l o p e d economy. F r e q u e n t and e f f i c i e n t communication i s a m a t t e r o f n e c e s s i t y f o r p r a c t i c a l l y a l l types o f b u s i n e s s and i n d u s t r y . U t i l i t i e s I n d u s t r i e s are v e r y s e n s i t i v e t o a v a i l a b i l i t y o f u t i l i t i e s n e c e s s a r y t o t h e i r o p e r a t i o n . $ 8 P a r t i c u l a r l y c r u c i a l are water and e l e c t r i c i t y . Water Water i s an e s s e n t i a l r e q u i r e m e n t o f a l l i n d u s t r i a l p l a n t s and a v i t a l raw m a t e r i a l i n many, b e i n g used v a r i o u s l y ^ P u e r t o R i c o I n d u s t r i a l Development Company. op. c i t . , p. 131. 8 8 B r e e s e , G. op. c i t . , p. I4.O. 84 i n processing, i n steam r a i s i n g and i n cooling. I n d u s t r i a l use of water has grown rapidly i n this century and several United Nations publications have suggested that the use of water per capita outside of agriculture could be a good index of the standard of l i v i n g . 8 9 This points out the importance of water i n i n d u s t r i a l areas. The supply of water, that i s , i t s quantity and q u a l i t y , must be adequate f o r industry. Industries, such as metal and chemical in d u s t r i e s , needing a large amount of water for processing, cooling, and washing, may have to locate near a water source. But for a large number of plants, water must be brought to i n d u s t r i a l s i t e s . Mater i s a natural resource, and to take advantage of I t , i t i s necessary that action be taken to protect and develop the future water supply. Groundwater surveys must be undertaken to determine the quantity and q u a l i t y of the supply. The p o t e n t i a l surface supplies must be protected by the control of development within the reservoir s i t e s and i n the watersheds tr i b u t a r y to these s i t e s . E l e c t r i c i t y "Among those u t i l i t i e s indispensable to economic development, e l e c t r i c i t y i s one which aids general develop-ment most d i r e c t l y and which, therefore, i s given a high 8 9See, f o r instance, United Nations. Department of Economic and So c i a l A f f a i r s . Water f o r Industry. New York. United Nations. 1958, p. 17. 8 5 p r i o r i t y . T h e use o f e l e c t r i c power i s becoming u n i v e r s a l i n p r e s e n t - d a y i n d u s t r y owing to t r a n s p o r t a b i l i t y and i n -c r e a s e s i i i the t r a n s m i s s i o n v o l t a g e o f e l e c t r i c i t y . I n Sweden, f o r example, e l e c t r i c i t y g e n e r a t e d a t H a r s p r a n g e t i s s e n t , a t 380,000 v o l t s a l t e r n a t i n g c u r r e n t , s i x hundred m i l e s t o the s o u t h w i t h o n l y a seven p e r cent l o s s i n t r a n s p o r t a t i o n . 9 1 F o r t h i s r e a s o n , e l e c t r i c i t y makes i t p o s s i b l e f o r i n d u s t r i e s t o be d i s t r i b u t e d away from the source o f energy. I t i s t r u e , as E s t a l l and Buchanan p o i n t o u t , t h a t e l e c t r i c power i s j u s t a n o t h e r way o f u t i l i z i n g the p r i m a r y energy sources", 92 D U t the f a c t t h a t e l e c t r i c i t y can be produced from water makes e l e c t r i c power worthy o f c o n s i d e r a -t i o n i n i n d u s t r i a l development programme. Water i s more a v a i l a b l e i n most r e g i o n s t h a n o t h e r s o u r c e s o f e n e r g y , such as c o a l . What the d e v e l o p i n g c o u n t r i e s must do i s t o f i n d the p o s s i b l e ways of h a r n e s s i n g t h e i r w ater s u p p l y t o produce h y d r o - e l e c t r i c power t o c a t e r t o the needs of i n d u s t r y . I n d u s t r i a l P a r k s I n d u s t r i a l p a r k s o r p l a n n e d i n d u s t r i a l d i s t r i c t s , as t h e y are known i n t h e U n i t e d S t a t e s , are a l s o s u p p o r t e r s 9°Puerto R i c o I n d u s t r i a l Development Company, op. c i t . , p. 127. 9 l E s t a l l , R.C. and Buchanan, R.O. op. c i t . , " p. 6J4.. 9 2 i b i d . , p. 61. 86 o f i n d u s t r y . The i n d u s t r i a l p a r k i s a r e l a t i v e l y new concept i n t he f i e l d o f i n d u s t r i a l development. A l t h o u g h a few such i n d u s t r i a l p a r k s were i n o p e r a t i o n i n 1900, th e y have come i n t o s i g n i f i c a n t use o n l y s i n c e 19^-0, e s p e c i a l l y i n t h e U n i t e d S t a t e s and Gr e a t B r i t a i n . I n the U n i t e d S t a t e s , the importance o f an i n d u s -t r i a l p a r k t o the e f f i c i e n t o p e r a t i o n o f i n d u s t r y can h a r d l y be over-emphasized. An i n d u s t r i a l p a r k can g i v e a p r o s p e c -t i v e i n d u s t r y many advantages n ot o t h e r w i s e a v a i l a b l e i n an i s o l a t e d , u n d e v e l o p e d , o r a c e n t r a l l o c a t i o n . I t can o f f e r , t r a n s p o r t a t i o n f a c i l i t i e s , u t i l i t i e s , custom d e s i g n e d b u i l d i n g s , f i n a n c i a l a s s i s t a n c e , o f f - s t r e e t p a r k i n g , and freedom from encroachment by o t h e r u s e s . F o r a community, an i n d u s t r i a l p a r k o f f e r s the advantage o f i n d u s t r i a l c o n c e n t r a t i o n i n a r e a s most appro-p r i a t e t o i t s o p e r a t i o n , thus e a s i n g the problem o f p r o v i d i n g c i t y s e r v i c e s and t r a f f i c c o n t r o l , and e l i m i n a t i n g the n u i s a n c e s i n h e r e n t i n s m a l l i n d u s t r i a l s i t e s . P l e a s a n t e x t e r i o r d e s i g n .allows the p a r k t o b l e n d w i t h i t s n e i g h b o u r s , and p l a n n e d i n d u s t r i a l w o r k i n g space p r o v i d e s a h i g h e r s t a n d a r d o f w o r k i n g c o n d i t i o n s f o r employees. To sum up, i t may be s a i d t h a t i n d u s t r i a l i z a t i o n i n the d e v e l o p i n g c o u n t r i e s would be f a c i l i t a t e d by the e s t a b l i s h m e n t o f i n d u s t r i a l p a r k s by the development a g e n c i e s . These p a r k s may be g i v e n out t o p r i v a t e i n d u s t r i a l i s t s t o r e n t , o r may be used by the a g e n c i e s themselves t o o p e r a t e t h e i r i n d u s t r i e s . 87 Housing The importance of housing to i n d u s t r i a l l o c a t i o n i s obvious; the labour force must be well housed to keep i t at that l o c a t i o n . The provision of housing f a c i l i t i e s includes housing of an adequate design, and suitable f o r several c l a s s i f i c a t i o n s of manufacturing personnel. I f an area i s to be a successful l o c a t i o n for industry, i t must meet demands for housing from a l l employees whether at un s k i l l e d , s k i l l e d , or executive l e v e l s . Generally, as Breese points out, the bulk of the demand f o r housing i n terms of i t s ef f e c t on po t e n t i a l industry tends to centre around homes for the workman.93 "A factor that i s usually either overlooked e n t i r e l y , or at most given only inci d e n t a l attention, i s that executives need housing tool"9l+ An industry, considering a large c i t y as a poten t i a l l o c a t i o n , does not have to assign much weight to this f a c t o r , the urban area, o r d i n a r i l y having adequate supply of high-grade dwell-ings. But i n considering a l o c a t i o n i n smaller towns, this factor can be very important - indeed, even decisive - i n view of the sometimes a r b i t r a r y nature of the decision-making process. It i s necessary that the l o c a t i o n of public and private low cost housing projects for i n d u s t r i a l workmen "-^Breese, G., op. c i t . , p. I4.9. 9 ^ l b i d . , p. 1.9. 88 should provide ease of access from r e s i d e n t i a l areas to the proposed i n d u s t r i a l s i t e s . This i s necessary to reduce transportation costs and w i l l r e s u l t i n making available a. greater number of i n d u s t r i a l workers. In the larger c i t i e s , the l o c a t i o n of i n d u s t r i a l worker residences convenient to th e i r place of employment w i l l reduce the s t r a i n on urban transportation systems and thereby reduce urban t r a f f i c congestion. Commercial F a c i l i t i e s I n d u s t r i a l workers naturally need food, clothing and other basic n e c e s s i t i e s . For this reason, lack of adequate commercial f a c i l i t i e s would give r i s e to d i f f i c u l -t i e s i n procuring the necessities and thereby r e s u l t i n the low standard of l i v i n g of the workmen. Moreover, private i n d u s t r i a l i s t s are reluctant to locate t h e i r plants outside the larger c i t i e s because of the l i m i t e d commercial f a c i l i t i e s available to them and t h e i r families.95 For a l l these reasons, i n d u s t r i a l i z a t i o n would be benefited d i r e c t l y from improvements i n commercial f a c i l i t i e s . Improved d i s t r i b u t i o n and improvements i n the range and q u a l i t y of commercial goods, p a r t i c u l a r l y food, w i l l a i d the economic development programme i n r a i s i n g the l e v e l of l i v i n g . In addition, improved commercial f a c i l i t i e s w i l l help to s t a b i l i z e the population of the smaller towns and 9^Puerto Rico In d u s t r i a l Development Company, op. c i t . , P. 132. 8 9 c i t i e s by making them more a t t r a c t i v e to t h e i r inhabitants and thereby reducing the population flow to the larger urban areas with attendant s t r a i n on the urban f a c i l i t i e s . Recreation, Health, Education, and Welfare F a c i l i t i e s Like commercial f a c i l i t i e s , r e c r e a t i o n a l , health, education, and welfare f a c i l i t i e s keep i n d u s t r i a l workers at an i n d u s t r i a l l o c a t i o n . Lack of schools, hospi t a l s , parks and community centres affect the t o t a l economic programme i n general, and industry i n p a r t i c u l a r . In most developing countries, some of these f a c i l i t i e s are provided, but only i n the larger towns. 9^ The people i n the r u r a l areas become conscious of t h e i r lack of these f a c i l i t i e s and are, therefore, influenced to move to the larger c i t i e s , where these f a c i l i t i e s are more a v a i l -able. This population movement exerts a considerable s t r a i n on the larger urban areas. Sometimes th i s s t r a i n i s re-f l e c t e d i n mushrooming slum areas, depleted water resources, overtaxed school and health f a c i l i t i e s and urban congestion i n general. I f i n d u s t r i a l d i s t r i b u t i o n i s needed, i t i s necessary that the standards of these f a c i l i t i e s i n the smaller towns are raised. Where they do not e x i s t , they mu3t be provided so as to keep the labour force stable at the i n d u s t r i a l s i t e s , to s t a b i l i z e the urban population of ^Puerto Rico's s i t u a t i o n i s a case i n point. Ibid., P. 133. 90 the smaller c i t i e s and towns, and thereby reduce the s t r a i n on the larger c i t i e s . Vocational Training and Education In most developing countries today, labour supply i s a major problem, not because the labour force i s scanty but because i t i s l a r g e l y untrained. Here, even the most basic elements of i n d u s t r i a l 'know how' are often lacking, and i n d u s t r i a l l i f e i s completely foreign to the vast majority of the p e o p l e . 9 7 Such circumstances pose great problems i n i n d u s t r i a l development. Vocational t r a i n i n g and education are important i n o f f s e t t i n g these obstacles to i n d u s t r i a l i z a t i o n . Vocational schools f o r production workers, and professional t r a i n i n g f o r management and supervisory personnel are the means to providing trained men f o r industry. In addition, there would be need for creating an ' i n d u s t r i a l i z a -t i o n state of mind'. People must be educated to accept industry as a f i e l d i n which they can earn a l i v i n g . The framers of the 'Puerto Rico I n d u s t r i a l Development Master Plan' put the importance of i n d u s t r i a l education i n t h i s way: i t i s not the raw material of the Island, but the i n d u s t r i a l s k i l l , w i l l , and interest of the people that will^support future i n d u s t r i a l i z a t i o n . C a pital w i l l venture where there are opportunities, but f i r s t there must be willingness to make these opportunities p o s s i b l e . 9 " 9 7 E s t a l l , R.C. and Buchanan, R.O. op. c i t . , p. 90. 98puerto Rico I n d u s t r i a l Development Company, op. c i t . , P. 13i| . 91 I n d u s t r i a l t r a i n i n g and education are basic services which must be provided so that industry may have s k i l l e d personnel. The acceptance of industry as an occupation, made possible by i n d u s t r i a l education, can resu l t i n a higher productivity, since absenteeism can be kept to a minimum. Summary Supporting f a c i l i t i e s have been considered i n terms of transport and communication, u t i l i t i e s , housing, commercial f a c i l i t i e s , r e c r e a t i o n a l , health and welfare f a c i l i t i e s , and i n d u s t r i a l education. Some of these are needed f o r the actual manufacturing process, whilst others are needed to keep i n d u s t r i a l workers at i n d u s t r i a l l o c a -t i o n s . In thi s sense, t h e i r absence or inadequacy pose great problems for the e f f i c i e n t operation of industry. In summary, i t may be said that i t i s necessary that the developing countries give considerable thought to the supporting f a c i l i t i e s i n t h e i r development programmes. The f a c i l i t i e s may be more expensive than the industries which they support but they must be provided i f industries are to operate e f f e c t i v e l y . Most of the f a c i l i t i e s e x i s t i n the towns but are absent or inadequate i n the v i l l a g e s . The problem Is one of comprehensive planning f o r industry, together with supporting f a c i l i t i e s , i f regional d i s t r i b u t i o n of industry i s to be achieved. 92 CONCLUSION Problems of i n d u s t r i a l l o c a t i o n i n the developing countries are a complex set of problems. They include the i d e n t i f i c a t i o n of national i n d u s t r i a l i z a t i o n goals; problems of se l e c t i n g industries; problems of selecting i n d u s t r i a l locations; and problems of providing supporting f a c i l i t i e s to a s s i s t the e f f i c i e n t operation of the in d u s t r i e s . Every developing country has s p e c i f i c goals which i n d u s t r i a l i z a t i o n i s presumed to achieve. These goals must be i d e n t i f i e d s p e c i f i c a l l y so that the country concerned may know the types of industries to select i n order to achieve i t s goals. Most developing countries have i d e n t i f i e d one or a combination of the following i n d u s t r i a l i z a t i o n goals: an increase i n income per capita, earning or saving foreign exchange, and f u l l employment of both human and natural resources. Some of these goals may be emphasized more than others i n a single i n d u s t r i a l i z a t i o n programme. Clear i d e n t i f i c a t i o n of the goals i s , therefore, necessary f o r a r a t i o n a l s e l e c t i o n of industries. For a s e l e c t i o n of industries to operate i n the developing countries, various c r i t e r i a have been suggested by some international bodies and development economists. Some of the criteria'' suggested are: factor i n t e n s i t y ; plant size and complexity; foreign exchange benefit; and the u t i l i z a t i o n of raw materials. These c r i t e r i a must be given considerable thought when the developing countries are select-ing i n d u s t r i e s . The use of any c r i t e r i o n must be re l a t e d to 9 3 the goals which the developing country concerned decides to achieve. Industries are selected f o r operation i n the developing countries. For this reason, the s e l e c t i o n of i n d u s t r i a l locations demands great consideration. In s e l e c t i n g i n d u s t r i a l locations, the developing countries must consider the factors which generally a f f e c t locations. The most s i g n i f i c a n t factors are: transportation, raw materials, markets, labour, and energy. The influence of most of these factors on l o c a t i o n a l decisions i s declining owing to technological advances. Nevertheless, these factors are s t i l l i n the forefront of a l l l o c a t i o n a l decisions, and, as such, they must be considered so that the industries may be located i n areas where i n d u s t r i a l operation may be economic. Having selected i n d u s t r i a l locations, the develop-ing countries must consider the p o s s i b i l i t y of providing f a c i l i t i e s that normally support industries to operate h e a l t h i l y . Examples of such f a c i l i t i e s are: transportation and communication f a c i l i t i e s , u t i l i t i e s , i n d u s t r i a l parks, housing, community services, etc. These are needed by both the industries and the workmen. I n d u s t r i a l i z a t i o n w i l l , therefore, be benefited by the provision of these f a c i l i t i e s . In conclusion, i t may be said that, as f a r as the developing countries are concerned, problems of i n d u s t r i a l l o c a t i o n are complex. They are complex i n the sense that they involve d i f f e r e n t sets of problems. Each set must be considered thoroughly i f i n d u s t r i a l l o c a t i o n i s to be predetermined within a regional framework. CHAPTER IV INDUSTRIAL LOCATION IN THE ACCRA PLAINS (GHANA) In the preceding chapter an analysis was made of the various i n d u s t r i a l l o c a t i o n problems, which the develop-ing countries must consider i n t h e i r endeavour to develop ind u s t r i e s . This chapter i s intended to demonstrate that predetermined i n d u s t r i a l l o c a t i o n within a framework of a region, such as the Accra Plains, w i l l a s s i s t Ghana to achieve her i n d u s t r i a l i z a t i o n goals. As an i n t e g r a l part of the thesis, and to appre-ciate more f u l l y the problems involved i n t h i s regional approach to i n d u s t r i a l l o c a t i o n , an analysis w i l l be made, f i r s t , of the goals which Ghana has i d e n t i f i e d i n her indus-t r i a l development p o l i c y . Secondly, the settlement pattern i n the region w i l l be put into perspective i n order to determine the extent to which some of the towns i n the region could be suitable locations for i n d u s t r i e s . T h i r d l y , the economy of the region w i l l be analyzed to show the extent of the d i s p a r i t y i n l i v i n g standards between the urban and the r u r a l areas, and how f a r the d i s p a r i t y could be reduced by i n d u s t r i a l i z a t i o n of the whole region. F i n a l l y , a regional development plan, prepared f o r the region, w i l l be c r i t i c a l l y examined to show: f i r s t , the degree to which this regional approach has been neglected; secondly, the l i k e l y • consequence a r i s i n g from such a neglect; and f i n a l l y , what must be done to achieve the national i n d u s t r i a l i z a t i o n goals. 9 5 GHANA'S INDUSTRIALIZATION GOALS Ghana's goals i n i n d u s t r i a l development, as they are contained i n the various Government documents and i n statements issued at press conferences, are: f u l l employment; increase i n national income; and maintenance of a strong balance of payments. F u l l Employment Between October 31 and November 12, I960, about 93,000 persons were registered throughout Ghana as unemployed, including 25,000 women.^ The proportion of the unemployed to the g a i n f u l l y employed i n the same period was about t h i r t y per cent. "Some 60,000 of these, however, would be better described as under-employed rather than unemployed." 2 These figures show the degree of unemployment and under-employment i n the country. These two phenomena are prevalent i n both the urban and the r u r a l areas, thus rendering able-bodied men and women unproductive economically. For these reasons, f u l l employment has become one of the goals which the Govern-ment of Ghana hopes to achieve by i n d u s t r i a l i z a t i o n . The •Programme of the Ruling Convention Peoples' Party f o r Work and Happiness' emphasizes this goal i n the following way: The Party and Government inherited from the Colonial Power large pockets of unemployment i n the urban areas and hidden unemployment and an under-employed labour force i n the r u r a l areas. ^Central Bureau of S t a t i s t i c s . Economic Survey, I960. Accra. The Government P r i n t i n g Department. 1961, p. 58. 2 I b i d . , p. 58. 9 6 T h i s r e f l e c t e d t h e a g r a r i a n c h a r a c t e r o f t h e economy, t h e l a c k o f b a s i c i n d u s t r i e s as w e l l as o v e r a l l n a t i o n a l e c o n o m i c p l a n n i n g . The P a r t y w i l l change t h i s s i t u a t i o n and p u r s u e a p o l i c y o f p o s i t i v e and c o n s c i o u s a b o l i t i o n o f u n e m p l o y m e n t . 3 I n p r e s e n t i n g a m o t i o n t o the N a t i o n a l P a r l i a m e n t f o r a p p r o v a l o f h i s M i n i s t r y ' s e s t i m a t e s f o r t h e f i n a n c i a l y e a r 1962-1963, M r . Imoru E g a l a . , the M i n i s t e r o f I n d u s t r i e s , s a i d , among o t h e r t h i n g s , t h a t h i s M i n i s t r y ' s i n d u s t r i a l scheme was d e s i g n e d b o t h t o p r o v i d e employment f o r t h e p e o p l e i n t h e r u r a l a r e a s and t o c h e c k the phenomenal m i g r a t i o n o f t h e y o u t h o f the r u r a l a r e a s t o t h e b i g towns.k P u l l e m p l o y m e n t , t h e n , i s one o f G h a n a ' s i n d u s -t r i a l i z a t i o n g o a l s . The employment o p p o r t u n i t i e s needed a r e f o r b o t h t h e u r b a n and the r u r a l a r e a s . I n c r e a s e i n N a t i o n a l Income A n o t h e r o f G h a n a ' s i n d u s t r i a l d e v e l o p m e n t g o a l s i s " t o i n c r e a s e n a t i o n a l income and t h e r e v e n u e s o f the S t a t e i n o r d e r t o r a i s e t h e l i v i n g s t a n d a r d s o f the p e o p l e , and e x p a n d and i m p r o v e t h e s o c i a l s e r v i c e s " . ^ T h i s i s one o f t h e g o a l s w h i c h have i n f l u e n c e d the s t a t e t o . p a r t i c i p a t e d i r e c t l y i n i n d u s t r i a l i z a t i o n , r a t h e r t h a n t o a l l o w f o r e i g n and l o c a l p r i v a t e e n t r e p r e n e u r s t o u n d e r t a k e a l l i n d u s t r i a l 3Quoted f r o m E v e n i n g News, F e b r u a r y 11, 1963, p . 6. ^ • E g a l a , I . , " P o l i c y on I n d u s t r i e s " , Ghana T o d a y , V o l . 6, N o . 18, November 7, 1962, p . ^ ' G h a n a ' s E c o n o m i c P o l i c y ' . New G h a n a , A u g u s t 1, 1962, p . 9. 97 development i n the country. The increase i n the national income i s t i e d up with the increase i n the per capita income of a l l persons i n both urban and r u r a l areas, as enunciated i n the 'National Physical Plan': " I t i s necessary to bridge the deep gap between the f i r s t form of cash economy which benefits only a few places, and the poor subsistence economy which prevails everywhere else."7 Maintenance of a Strong Balance of Payments F i n a l l y , Ghana looks to i n d u s t r i a l i z a t i o n as a means of maintaining a strong balance of payments. Ghana r e l i e s quite heavily on a single crop, cocoa, i n her export trade. In the f i n a n c i a l year 1959-1960, for instance, cocoa occupied about 58.8 per cent of the t o t a l value of exports.8 As pointed out by Bauer and Paish, referred to i n an e a r l i e r chapter, the prices of primary products are unstable due to fluctuations i n supply and demand of the products,9 thus giving r i s e to balance of payments d i f f i c u l t i e s to a country, which r e l i e s on such products. I n d u s t r i a l i z a t i o n would reduce such overdependence on a single export crop, by help-ing the country produce other export commodities. On the 6 I b i d . , p. 10. 7The Government of Ghana. National Physical Development  Plan. Prepared with the assistance of United Nations Regional Planning Mission. Accra. January 2, 1963, p. 1. ^Central Bureau of S t a t i s t i c s , op. c i t . , p. 89. ^Paish, S. and Bauer, J . op. c i t . , p. 750.. 98 import s i d e , i t may be noted that food and t e x t i l e s alone form about 3 1 -k- P e r > cent of the country's i m p o r t s . 1 0 Most of these items c o u l d be produced at home and thus reduce the ex c e s s i v e p r e s s u r e s on the country's f o r e i g n exchange. In o u t l i n i n g the Government's i n d u s t r i a l i z a t i o n programme i n Parliament i n October, 1962, the M i n i s t e r o f I n d u s t r i e s s a i d t h a t Ghana must manufacture w i t h i n her own bo r d e r s , as e a r l y as p o s s i b l e , a l l her requirements of food and c l o t h i n g , s i n c e these two items accounted f o r approx-i m a t e l y o n e - f o u r t h of her t o t a l overseas payments at the cu r r e n t r a t e . H Maintenance o f a, s t r o n g balance of payments, then, i s another of Ghana's goals i n i n d u s t r i a l i z a t i o n . By st r e n g t h e n i n g her balance o f payments through the p r o d u c t i o n of food and c l o t h i n g , Ghana may be i n a p o s i t i o n to import heavy machinery f o r f u r t h e r i n d u s t r i a l i z a t i o n . Summary Ghana's main goals i n i n d u s t r i a l i z a t i o n a re: f u l l employment; i n c r e a s e i n n a t i o n a l income, which takes account of i n c r e a s e i n per c a p i t a incomes of a l l people; and maintenance of a s t r o n g balance of payments. In order to achieve the l a s t g o a l , namely, maintenance of a s t r o n g l O c e n t r a l Bureau of S t a t i s t i c s , op. c i t . , p. 81|. 1 1 "Imoru E g a l a T e l l s Parliament of Ghana's I n d u s t r i a l -i z a t i o n Programme.» Ghana Today. V o l . 6 , No. 22. January 2, 1 9 6 3 , P. k-9 9 balance of payments, i t may not matter much where the indus-t r i e s are located, i f only the factors of l o c a t i o n are available or would be provided to make the industries operate economically. But, to achieve the other goals, namely, f u l l employment and increase i n the per capita income of a l l people, both the urban and the r u r a l areas must be considered i n the country's i n d u s t r i a l i z a t i o n p o l i c y . This consideration and thus the achievement of the goals can be made possible only i f the region i s taken as a framework within which i n d u s t r i a l l o c a t i o n i s predetermined. SETTLEMENT PATTERN The Accra Plains l i e i n the south-eastern corner of Ghana. They form a complete geographic region with a character of i t s own. Stretching from Accra to Ada along the Guinea Coast, and extending from Ada on the south along the River Volta to Akosombo on the north, the region i s hemmed i n by the sea on the south, by the lower Akwapim-Togo Ranges i n the west and north-west, and by the Volta River on the east and north-east (See Figure I I ) . The region includes two well-distinguished areas: the coastal section and the i n t e r i o r section. The coastal p l a i n s , embracing the Volta flo o d plains to the east, f a l l gradually from $00 feet at the foot of the Akwapim-Togo Ranges to the sea. The i n t e r i o r p l a i n s , on the other hand, are higher, r i s i n g to 1,5>00 feet i n elevation. In addition, whereas the coastal plains are marked by a succession of spoon-shaped valleys 100 Figure I I . The Accra Plains i n a Regional Setting mi separated by low ridges, the i n t e r i o r plains are generally f l a t and almost featureless. Size and Location of Settlements In the region, as many as about 1 + 8 0 , 0 0 0 people are dis t r i b u t e d over an area of about 1 , 1 0 0 square m i l e s . ^ 2 The population density of the region i s I4.36 persons per square mile as compared with the o v e r a l l national population density of 7 3 . The r e l a t i v e l y high regional figure i s due to the large population concentration i n the Accra-Tema metro-p o l i t a n area. Accra, the largest c i t y i n the region, and also the administrative c a p i t a l of the country, has a population of 3 5 0 , 0 0 0 . 1 3 Tema, l y i n g f i f t e e n miles east of Accra, i s the second largest c i t y i n the region and has a population of about 3 5 , 0 0 0 . The Accra-Tema metropolitan area alone occupies about eighty per cent of the region's population and has a density of about 3 , 8 0 0 persons per square mile. The other twenty per cent of the population l i v e i n towns and v i l l a g e s with less than 1 0 , 0 0 0 persons. The general picture of the size and l o c a t i o n of the settlements i n the region can be seen from Figure III on the next page. In the south-western corner of the region l i e s Accra, the largest urban centre, on which a l l the l^The population was calculated from the i 9 6 0 Ghanaian Census. See «• Highlights of Census Report", Ghana Today, Vol. . 6 , No. 2 2 . January 2 , 1 9 6 3 , pp. 6 - 7 . 1 3 i b i d . , p. 6 . Figure I I I . Size and Location of Settlements i n the Accra Plains 103 r e g i o n ' s t r a n s p o r t a t i o n routes converge. S i t u a t e d on the c o a s t , and w i t h a s t r a t e g i c p o s i t i o n , Accra began as a s m a l l town formed by c o l o n i a l f o r t s which were b u i l t as t r a d i n g p o s t s i n the seventeenth century. In r e c e n t times, A c c r a has grown i n t o a l a r g e c i t y mainly along the roads l e a d i n g from the o r i g i n a l nucleus to the h i n t e r l a n d . A s s o c i a t e d w i t h Accra i s Tema, which has been developed i n t o a new p o r t and i n d u s t r i a l c i t y , t a k i n g advantage of i t s marine l o c a t i o n . The s m a l l e r urban centres l i e on the two major highways of the r e g i o n . Along the Accra-Dodowa-Senchi road, at the f o o t of the Togo h i l l s , are Dodowa, Somanya, Odumasi and S e n c h i . On the Accra-Ada road are Prampram and Ada. In a d d i t i o n , there are towns on the V o l t a R i v e r , namely, Akuse and Kpong. These are the o n l y settlements w i t h a p o p u l a t i o n of over 5,000. They are s t r u n g along t r a n s p o r t a -t i o n routes f o r the ease of communication. Most of these urban c e n t r e s are l o c a t e d i n the north-western corner of the r e g i o n where the f o r e s t i s r e l a t i v e l y dense. I n t h i s corner the s p a c i n g between the urban centres i s r e l a t i v e l y narrow, r a n g i n g from f i v e to f i f t e e n m i l e s , as compared to the s p a c i n g between the s m a l l e r urban centres along the c o a s t , where i t i s predominantly g r a s s l a n d . Apart from the urban c e n t r e s , the r e g i o n c o n t a i n s many s m a l l e r settlements d o t t i n g the p l a i n s here and t h e r e . As E. A. Boateng p o i n t s out, the p o s i t i o n s of these s m a l l e r s e t t l e m e n t s "are determined mainly by the a v a i l a b i l i t y of 1 0 4 water, communications and other special economic advantages, such as s i t u a t i o n along the Sea". Consequently, the number of settlements i s comparatively large i n the 'spring zone' at the foot of the Akwapim-Togo Ranges, along the main roads and along the sea. Elsewhere, settlements usually occur near wells or water holes scattered over the p l a i n s , or along pipe l i n e s l i k e that between Accra and Achimota, where regular water supply i s assured. It i s d i f f i c u l t to e s t a b l i s h any relationship between the size and l o c a t i o n of the settlements i n the region and the national goals. However, i t may be said that the.ever-increasing growth of Accra, which has r e l a t i v e l y many employment opportunities, i s at the expense of the country i n general and the region i n p a r t i c u l a r . In 1891, the c i t y ' s population was 16,262; the population rose to 26,622 i n 1901; 29,602 i n 1911; 1+2,803 i n 1921; 60,726 i n 1931; and 135,926 i n 191+8.15 Today, the population i s about 350,000. No figures are available to show the growth of the surrounding towns and v i l l a g e s but i t can be said that t h e i r growth has been r e l a t i v e l y slow due to constant migration of people from these towns and v i l l a g e s to Accra f o r jobs. These phenomena, namely, the ever-increasing growth of the c i t i e s and the depopulation of the countryside, have become l^Bo ateng, E.A., A Geography of Ghana. Cambridge. The University Press. 195 97 P • 11+5. l ^ i b i d . , p. 11.7. 105 apparent, and the Government has decided to check them by creating employment opportunities i n both the urban and the ru r a l areas. Therefore, any i n d u s t r i a l l o c a t i o n p o l i c y which seeks to concentrate industries s o l e l y i n the c i t i e s i s contrary to Ghana's i n d u s t r i a l i z a t i o n goals of f u l l employment and increase i n the per capita income of a l l persons. In predetermining the lo c a t i o n of industries i n the region, consideration of both the size and the l o c a t i o n of the various settlements would be quite important. Indus-t r i e s , e s p e c i a l l y those u t i l i z i n g a large supply of labour, would require locations with a large pool of labour force. In this case, the larger centres, Accra and Tema, would be i n a better p o s i t i o n to a t t r a c t such labour-oriented indus-t r i e s than would the smaller centres, where the labour force i s scanty. These l a t t e r centres, however, would tend to att r a c t l i g h t industries operated on a small scale. Consideration of the spacing of the towns would also be important i n determining whether some of the smaller towns could be turned into i n d u s t r i a l centres to which people from the surrounding towns and v i l l a g e s would t r a v e l to work. For instance, the concentration of urban centres i n the north-western corner of the region would make possible the estab-lishment i n one town of medium-sized industries, r e l y i n g on the labour force i n the l o c a l i t y . 106 Service Centres Already, there are .about a dozen urban centres which serve t h e i r various hinterlands. These centres are now mostly market and c u l t u r a l centres, and t h e i r present importance i n the region depends upon the functions they perform. The largest of them, as has been pointed out above, i s Accra, upon which most of the region depends for higher education f a c i l i t i e s ; professional services, such as dentistry, banking and insurance; and recreational and c u l t u r a l f a c i l i t i e s , such as cinemas and l i b r a r i e s . In addition, the c i t y i s a large trading market centre, where such things as a g r i c u l t u r a l equipment and high-quality t e x t i l e s can be obtained. The farmers i n the region also s e l l t h e i r produce here. The present importance of Accra as a large market centre would make i t important as a l o c a t i o n f o r many indus-t r i e s , f o r they can get an e x i s t i n g market to dispose of t h e i r products. In addition, industries would tend to locate here because of the existence of r e l a t i v e l y more educated, and hence more trainable, labour force, and also because of the presence of the various professional services which i n d u s t r i a l i s t s may need. Other towns serving l i m i t e d hinterlands i n the region are Dodowa, Odumasi and Somanya. Dodowa, with a population of about 6,000, has a hi s t o r y of being an important 107 commercial centre, serving the port of Prampram. I t was also the seat of the defunct Joint P r o v i n c i a l Council of Chiefs. Today, i t i s a market centre where the farmers s e l l t h e i r a g r i c u l t u r a l produce and buy t h e i r d a i l y r e t a i l needs. In addition, Dodowa i s now the seat of the l o c a l council of the Shai Native State. In i n d u s t r i a l l o c a t i o n considerations, this town would be important, since i t s population could serve as the i n d u s t r i a l labour force. Odumasi, with a population of about 8,000 would also be important i n i n d u s t r i a l l o c a t i o n consideration because of i t s r e l a t i v e l y well-educated labour force. In th i s town there are four elementary schools, two secondary schools and a teacher t r a i n i n g college serving a large part of the region. Another important town i s Somanya, where there i s already a considerable business a c t i v i t y , serving the whole of the north-western part of the region. It i s linked d i r e c t l y to Akuse, which used to be a very busy commercial centre when the Volta was the most crowded transport artery of the country. With i t s population of about 10,000, which can be a source of labour and market, and with a r e l a t i v e l y less a g r i c u l t u r a l population, Somanya would a t t r a c t indus-t r i e s whose operation would be f a c i l i t a t e d by the present e f f i c i e n t transportation network, l i n k i n g the town and the northern and eastern parts of the country. 108 Summary The consideration of the settlement pattern i n the region, as related to i n d u s t r i a l l o c a t i o n , has been based on the size and l o c a t i o n of the various towns and v i l l a g e s , and the importance of the market centres as p o t e n t i a l i n d u s t r i a l l ocations. These are the aspects of the settlement pattern which must be considered so that Ghana may achieve her indus-t r i a l i z a t i o n goals of f u l l employment and increase i n per capita income of a l l persons i n both urban and r u r a l areas. The size of the various centres shows t h e i r r e l a t i v e impor-tance as centres of labour supply and market; and the l o c a t i o n and spacing between the settlements show the extent to which some towns could be made into i n d u s t r i a l centres to which people from the surrounding v i l l a g e s would t r a v e l to work. ECONOMY Consideration of the economy of the region i s important i n bringing out the economic a c t i v i t i e s engaged i n by the inhabitants of the region. The a c t i v i t i e s would suggest where industries must be located to d i v e r s i f y the economy. Also, consideration of the economy would bring out the extent to which the resources i n the region can support e f f i c i e n t operation of the industries. Urban Economic A c t i v i t i e s Figures are not available to show the r e l a t i v e 109 importance of the various urban economic a c t i v i t i e s , either by way of employment or by incomes derived from the a c t i v i -t i e s . However, i t may be said, as pointed out by lone Acquah, that trade figures quite l a r g e l y i n the economic a c t i v i t i e s of the urban centres, such as Accra, Dodowa, Odumasi and Somanya,. 16 j n the smaller centres, shops are owned by the l o c a l people, but i n Accra commercial firms are to a, large extent owned by foreigners. Petty traders, or hawkers, mostly women, also engage i n this a c t i v i t y . Acquah ci t e s 5,890 petty traders i n Accra i n February, 1955, of whom only 379 were males.!? Because Accra i s the administrative c a p i t a l of the country, a large labour force i s engaged i n administrative services of both national and l o c a l governments. For instance, i n 1952, the national government employed llj.,610 persons, and the municipal council, together with the public boards, employed 3,700, including employees of a l l cate-g o r i e s . ! 8 There are v i r t u a l l y no industries i n the urban centres, apart from Accra and Tema. Industries, not necessarily manufacturing, that are i n Accra, are predom-inantly l i g h t , and they include: those manufacturing food products, beverages, tobacco, shoes and sandals; b u i l d i n g , 16 Acquah, I. A.ccra Survey, London. University of London Press Ltd. 1958, p. 63. 1 7 I b i d . , p. 63. l 8 I b i d . , p. 63. 110 i n c l u d i n g b r i c k and t i l e s , c a r p e n t r y and f u r n i t u r e ; l a u n d r y and dry c l e a n i n g ; p r i n t i n g , p u b l i s h i n g and a l l i e d i n d u s t r i e s ; and motor v e h i c l e r e p a i r s , p a i n t i n g and d e c o r a t i n g . Tema, on the other hand, has been planned as a p o r t and i n d u s t r i a l c i t y , and, as such, has a r e l a t i v e l y l a r g e number of e x i s t i n g and p o t e n t i a l heavy and l i g h t i n d u s t r i e s . These i n d u s t r i e s are shown i n Tables I and I I on the f o l l o w i n g page. As shown i n the t a b l e s , some of these i n d u s t r i e s are owned by the Government and others are owned by p r i v a t e e n t r e p r e n e u r s . T h i s p r i v a t e ownership of i n d u s t r i e s i s an i n d i c a t i o n t h a t the Government wants to encourage p r i v a t e e n t e r p r i s e i n the country. A l s o shown i n the t a b l e s are acreages a l l o c a t e d to the v a r i o u s i n d u s t r i a l p l a n t s i n a r a t i o n a l manner so that these p l a n t s may not be l o c a t e d haphazardly. In o r d e r t h a t the i n d u s t r i e s may operate h e a l t h i l y , f a c i l i t i e s s u p p o r t i n g i n d u s t r i a l l o c a t i o n , such as t r a n s -p o r t a t i o n , communication, and housing have been p r o v i d e d by the Government. When the p o t e n t i a l i n d u s t r i e s are f u l l y developed, Tema w i l l become a l a r g e i n d u s t r i a l centre to which people from a l l over the r e g i o n would go f o r employment. I t must be p o i n t e d out that t h i s l a r g e i n d u s t r i a l development i n Tema without any r e g a r d f o r the surrounding s m a l l e r urban centres and the r u r a l areas, w i l l tend to cause d e p o p u l a t i o n of these areas. The Government must c o n s i d e r the p o s s i b i l i t y of s e t t i n g up i n d u s t r i e s i n the surrounding areas so as to prevent t h e i r d e p o p u l a t i o n . I l l TABLE I INDUSTRIES ALREADY ESTABLISHED IN TEMA Name Product and Use Acreage U.A.C. of Ghana Ltd. Assembly of Vehicles 10.81+ Gaisie (W.A.) Ltd. Suitcases and Mattresses May & Baker Ltd. Warehouse for Drugs 1.55 I . C . I . (Export) Ltd. Insecticide LL.I Ghana Aluminum Products Ltd. Aluminum Roofing Sheets 2.0 Ghana Pioneer Aluminum Factory Ltd. Aluminum U t e n s i l s , etc. 2.1+8 Sanco Consolidated Corp. Metal Works 2.01+ Menkoadze Fisheries Cold Storage and Ice 1.60 Production Tema Stone Quarry Ltd. Concrete Works 2.78 Parkinson Howard Ltd. Workshop 1+.09 Presby P r i n t i n g Press P r i n t i n g Warehouse 3.97 Ghana Te x t i l e s Manufac-1+.83 turing Co. Ltd. T e x t i l e Manufacture Swiss A f r i c a n Trading Co. Storage 1.1+0 A. Lang Limited Builders Yard 3.10 Ghana Plant Hire Ltd. Hiring of Plant 2.50 Ghana Paints Corporation Manufacture Paints Comet Construction Co. Furniture Manufacture 7.08 Source: A l e t t e r received from the Acting Chief Executive O f f i c e r , Tema Corporation, September 29, 1962. TABLE II INDUSTRIES IN THE PLANNING OR CONSTRUCTION STAGE Name Product and Use Acreage Gaisie (W.A.) Ltd. Mattresses Factory 2.1+9 Grand Tobacco Corp. Ltd. Manufacture of Cigarettes 0.90 I.D.C. In d u s t r i a l Estate T e x t i l e Factory 81+.29 Government P r i n t i n g Dept. P r i n t i n g Press 1.11+ Addotey Annang & Co. Storage 13.80 Government Transport Dept. Transport Depot 11.60 Central Medical Stores Stores 6.59 Ghaip O i l Refinery 321.75 Kwame Nkruma Steel Works Corporation Steel Industry 100.00 Source: A l e t t e r received from the Acting Chief Executive O f f i c e r , Tema Corporation, September 29, 1962. 112 R u r a l E c o n o m i c A c t i v i t i e s A g r i c u l t u r e , s t o c k r a i s i n g , a n d f i s h i n g a r e t h e m a i n e c o n o m i c a c t i v i t i e s i n t h e r u r a l a r e a s . A g r i c u l t u r e A s i n most r u r a l a r e a s i n Ghana, a g r i c u l t u r e i n t h e A c c r a P l a i n s i s , t o a. l a r g e e x t e n t , o f a s u b s i s t e n c e n a t u r e , a n d s u c h t r o p i c a l f o o d - s t u f f s as c a s s a v a , m a i z e , p e p p e r s , t o m a t o e s , o k r o e s , a n d g a r d e n e g g s a r e p r o d u c e d . The s u r p l u s o v e r - c o n s u m p t i o n i s s o l d i n t h e l a r g e r s e t t l e -m e n t s , w h i c h do n o t engage i n a g r i c u l t u r e . The f a r m s a r e r a r e l y o v e r t h r e e a c r e s i n s i z e , a n d a r e g r o u p e d a r o u n d s m a l l v i l l a g e s d o t t i n g t h e p l a i n s , o r s t r u n g a l o n g m o t o r r o a d s f o r e a s e o f c o m m u n i c a t i o n w i t h t h e b u y i n g c e n t r e s w i t h i n t h e r e g i o n . Some m e c h a n i z a t i o n h a s b e e n i n t r o d u c e d b y t h e g o v e r n m e n t a g r i c u l t u r a l a g e n c i e s , e s p e c i a l l y i n t h e c o a s t a l a r e a s , b u t , f o r t h e most p a r t o f t h e r e g i o n , a g r i c u l t u r e i s s t i l l i n t h e p r i m i t i v e s t a g e , c u t l a s s a n d hoe b e i n g t h e m a i n f a r m i n g i m p l e m e n t s . Programmes f o r t h e m e c h a n i z a t i o n o f a g r i c u l t u r e a r e u n d e r way and t h e s e w i l l t i e i n w i t h t h e i r r i g a t i o n p r o j e c t s d e c i d e d u p o n b y t h e G o v e r n m e n t f o r t h e r e g i o n . 1 9 M e c h a n i z a t i o n o f a g r i c u l t u r e w o u l d h a v e g r e a t i m p a c t o n t h e i n d u s t r i a l i z a t i o n o f t h e a r e a . I t w o u l d l ^ D o x i a d i s A s s o c i a t e s , A ccra-Tema-Akosombo R e g i o n a l  Programme a n d P l a n . V o l . 2. I 9 6 0 , p. 250. • 113 r e l e a s e p a r t o f the a g r i c u l t u r a l l a b o u r f o r c e f o r the b e n e f i t o f i n d u s t r y . M o r e o v e r , m e c h a n i z a t i o n w o u l d r e s u l t i n g r e a t e r o u t p u t o f f o o d t o f e e d the i n d u s t r i a l workmen. L i v e s t o c k L i v e s t o c k b r e e d i n g o r r a i s i n g i s a l s o a n o t h e r r u r a l e c o n o m i c a c t i v i t y i n t h e r e g i o n . S t o c k r a i s i n g i s f a c i l i -t a t e d b y t h r e e f a c t o r s i n w h i c h the r e g i o n has g r e a t a d v a n t a g e . I n t h e f i r s t p l a c e , the r e g i o n i s f r e e f r o m t s e t s e f l i e s , w h i c h p r e v e n t o t h e r r e g i o n s i n Ghana f r o m e n g a g i n g i n t h i s a c t i v i t y . S e c o n d l y , t h e p a s t u r e s , e s p e c i a l l y t h o s e i n t h e e a s t e r n s e c t i o n , c o n s i s t i n g o f s h o r t G u i n e a g r a s s , a r e s u i t a b l e f o r l i v e s t o c k b r e e d i n g . T h i r d l y , t h e Government V e t e r i n a r y S t a t i o n a t N u n g u a , l y i n g between A c c r a and Tema, i s a g r e a t s o u r c e o f h e l p t o t h e b r e e d e r s . S i n c e 193L(-> r i n d e r p e s t , a d a n g e r o u s c a t t l e d i s e a s e , has b e e n e l i m i n a t e d as a r e s u l t o f t h e a c t i v i t i e s o f t h e v e t e r i n a r y s t a t i o n . 2 0 G r e a t e r i n c r e a s e i n o u t p u t o f c a t t l e , a r i s i n g o u t o f s c i e n t i f i c m e t h o d s , w o u l d make p o s s i b l e t h e e s t a b l i s h m n e t o f m e a t - p a c k i n g and d a i r y i n g i n d u s t r i e s i n t h e r e g i o n . P i s h i n g P i s h i n g i s e v e n more i m p o r t a n t t h a n a g r i c u l t u r e and s t o c k r a i s i n g i n the r e g i o n . T h i s a c t i v i t y t a k e s p l a c e a l o n g the c o a s t , s t r e t c h i n g f r o m A c c r a t o A d a , and a l s o i n t h e c o a s t a l l a g o o n s and a l o n g t h e l o w e r V o l t a w i t h i n t h e 2 0 B o a t e n g , E . A . o p . c i t . , p . 114 i n t e r i o r p l a i n s . A t p r e s e n t , f i s h i n g i s done p r e d o m i n a n t l y b y t h e t r a d i t i o n a l c a n o e s . A c c o r d i n g t o the r e s u l t s o f a r e c e n t census t a k e n by t h e F i s h e r i e s D i v i s i o n , t h e number o f t h e s e canoes i s a b o u t 8,000 f o r t h e whole c o u n t r y . They employ a t o t a l o f 50,000 p e r s o n s o f whom 2,000 a r e i n t h e A c c r a - T e m a a r e a . ^ l T a k i n g the o t h e r f i s h i n g c e n t r e s i n t o a c c o u n t , t h e employment i n f i s h i n g may be as h i g h as 3,000. P l a n s a r e u n d e r way t o c o n v e r t t h e t r a d i t i o n a l canoes i n t o e n g i n e - p o w e r e d c r a f t , w h i l s t , a t t h e same t i m e , t h e Government w o u l d e n c o u r a g e the u s e o f e n g i n e - p o w e r e d canoes o f a l a r g e r s i z e .22 F i s h i n g i n the r e g i o n w o u l d be f a c i l i t a t e d a l s o b y the r e c e n t l y - o p e n e d f i s h i n g p o r t a t Tema, w h i c h , a p a r t f r o m p r o v i d i n g b e r t h s f o r a l a r g e number o f s m a l l e n g i n e - p o w e r e d f i s h i n g b o a t s , w o u l d be the most i m p o r t a n t p o r t i n the c o u n t r y , c a p a b l e o f s h e l t e r i n g l a r g e open sea f i s h i n g c r a f t s . The e f f e c t w h i c h t h e d e v e l o p m e n t o f f i s h i n g w o u l d have u p o n i n d u s t r y w o u l d be c o n s i d e r a b l e . M e c h a n i z a t i o n o f f i s h i n g , j u s t l i k e t h a t o f a g r i c u l t u r e , w o u l d r e s u l t i n a. g r e a t e r p r o d u c t i o n o f f i s h w h i c h c a n f o r m t h e raw m a t e r i a l s o f c a n n i n g i n d u s t r i e s , and a l s o c a t e r t o t h e needs o f t h e i n d u s t r i a l w o r k e r s . I n a d d i t i o n , m e c h a n i z a t i o n o f f i s h i n g D o x i a d i s A s s o c i a t e s , o p . c i t . , p . 35. 2 2 p o r a d e t a i l e d d i s c u s s i o n on t h e p o l i c y o f the F i s h e r i e s D i v i s i o n r e l a t i n g t o f i s h i n g i n t h e r e g i o n , see I b i d . , p . 35. 115 would release part of the labour force presently engaged i n this a c t i v i t y f o r industry. Both the urban and the r u r a l economic a c t i v i t i e s i n the region o f f e r great opportunities for i n d u s t r i a l i z a -t i o n of the region as a whole. In the urban areas, many people are unproductively engaged i n commerce, which takes the form of petty trading-, with i t s resultant meagre incomes of the traders. Industries would be assisted by u t i l i z i n g more productively such non-agricultural labour force. In the r u r a l areas, a g r i c u l t u r a l , l i v e s t o c k , and f i s h i n g products can form the raw materials of food-processing, meat packing and canning industries respectively. Resources The main resources of the region are human and water. The human resource, that i s to say the population, has been considered under the sub-heading 'Settlement Pattern'. The Volta River, l y i n g to the east of the region, i s a great natural resource which w i l l supply the region with e l e c t r i c power. At present, no town i n the region, apart from Accra and Tema, i s supplied with e l e c t r i c i t y . Accra-Legon i n I960 had i n s t a l l e d power of l6 , 8 6 1 i kilowatts and Tema had 1,660 k i l o w a t t s . 2 3 The amount of e l e c t r i c power, considering i n d u s t r i a l and domestic uses, i s low, Ibid., p. 39. 116 and thus becomes a serious obstacle to i n d u s t r i a l i z a t i o n . Tema w i l l improve i t s share when the 1|.5>,000 kilowatt Thermal power station, now under construction, i s completed. The whole region w i l l be supplied with e l e c t r i c i t y , when the Volta River Project, situated i n the northern part of the region, i s implemented. This project w i l l supply abundant and cheap power, and thus a s s i s t i n d u s t r i a l operation i n the region. I t has been estimated that a f t e r the requirements of the aluminum factory to be established i n Tema, have been accom-modated, there w i l l s t i l l be l e f t i n the Volta Project a surplus of 120,000 kilowatts of i n s t a l l e d capacity, capable of meeting the country's requirements for many years to come.2^ Thus, industries established i n both urban and r u r a l areas can obtain cheap power. Summary The economy of the region has been considered i n terms of the region's economic a c t i v i t i e s and resources. Part of the large labour force employed In petty trading i n the urban centres can be productively u t i l i z e d by i n d u s t r i e s . In the same way, mechanization of agriculture and f i s h i n g can release part of the labour force for the i n d u s t r i e s , whilst at the same time r e s u l t i n g i n increased output, which would serve as raw materials for canning, meat packing, and food-processing industries. I n d u s t r i a l operation would be f a c i l i t a t e d by the implementation of the Volta River Project, 2 ^ I b i d . , p. 1.0. 117 intended to supply the whole country i n ge n e r a l , and the reg i o n i n p a r t i c u l a r , w i t h e l e c t r i c power. 1 ACCRA - TEMA - AKOSOMBO REGIONAL PROGRAMME AND PLAN'^ The 'Accra-Tema-Akosombo Regional Programme and Plan ' was prepared by a planning c o n s u l t i n g f i r m , the Doxiadis A s s o c i a t e s , i n August, I960, f o r the case study area. The p l a n i s a comprehensive one, d e a l i n g w i t h a l l the development aspects of the re g i o n : a g r i c u l t u r e , f i s h i n g f o r e s t r y , l i v e s t o c k r a i s i n g , energy, i n d u s t r y , communication e t c . Not a l l these aspects w i l l be examined here, owing to the scope of the study. I t i s the purpose of t h i s s e c t i o n t analyze the part of the report d e a l i n g w i t h i n d u s t r y to help prove the hypothesis that only predetermined i n d u s t r i a l l o c a t i o n i n a r e g i o n a l framework w i l l help Ghana achieve her i n d u s t r i a l i z a t i o n goals. In predetermining i n d u s t r i a l l o c a t i o n i n t h e i r r e g i o n a l p l a n , the planning consultants examined three main problems: f i r s t , the degree of i n d u s t r i a l development to be achieved w i t h i n ten to twenty years; secondly, the s e l e c t i o n of i n d u s t r i e s to be developed, and the extent to which each would be developed; and f i n a l l y , the s e l e c t i o n of i n d u s t r i a l l o c a t i o n s . ^ A l l the di s c u s s i o n s on t h i s p l a n are based on I b i d . , pp. 258-266. 118 Degree o f I n d u s t r i a l Deve lopment The d e g r e e o f i n d u s t r i a l d e v e l o p m e n t t o be a c h i e v e d w i t h i n t e n t o t w e n t y y e a r s i s d i f f i c u l t t o d e t e r m i n e , the r e p o r t p o i n t s o u t , b e c a u s e o f l a c k o f b a s i c i n f o r m a t i o n . H o w e v e r , t h e e x i s t i n g f o r e i g n c a p i t a l , the i n d u s t r i a l p r o j e c t s by t h e I n d u s t r i a l D e v e l o p m e n t C o r p o r a t i o n and t h e p r i v a t e e n t e r p r i s e s , and t h e 600 f a c t o r i e s e n v i s a g e d i n t h e ' S e c o n d D e v e l o p m e n t P l a n ' (1959-1961).) show t h a t the e x t e n t o f t h e i n d u s t r i a l d e v e l o p m e n t o f the c o u n t r y w o u l d be g r e a t . R e l y i n g on t h e p l a n n e d 600 f a c t o r i e s o f v a r y i n g s i z e s , t h e c o n s u l t a n t s made a f o r e c a s t o f i n d u s t r i a l e m p l o y -ment and a d d i t i o n a l n a t i o n a l income f r o m t h e i n v e s t m e n t s . A s s u m i n g t h a t e a c h f a c t o r y w o u l d employ b e t w e e n t h i r t y and f o r t y workmen ( s m a l l - s i z e d f a c t o r i e s ) , a d d i t i o n a l employment w o u l d be f r o m 20,000 t o 25,000 i n f i v e y e a r s ' t i m e . I n due c o u r s e , most o f t h e d i f f i c u l t i e s e n c o u n t e r e d a t t h e i n i t i a l s t a g e s o f i n d u s t r i a l d e v e l o p m e n t w o u l d be o v e r c o m e , and t h e r a t e o f i n c r e a s e w o u l d be a c c e l e r a t e d . U n d e r s u c h c i r c u m -s t a n c e s , i n t e n y e a r s ' t i m e t h e a d d i t i o n a l employment w o u l d be as h i g h as 50,000 t o 60 ,000. The n a t i o n a l income w o u l d a l s o i n c r e a s e as a r e s u l t o f t h e e s t a b l i s h m e n t o f t h e i n d u s t r i e s . A s s u m i n g t h e v a l u e added by a new w o r k e r e m p l o y e d t o be 250 pounds s t e r l i n g ( t h a t i s o n e - t h i r d o f t h e v a l u e added i n the case o f B r i t a i n ) , t h e n t h e a d d i t i o n a l c o n t r i b u t i o n made by i n d u s t r y t o t h e n a t i o n a l income w o u l d be f i v e t o s i x m i l l i o n pounds i n f i v e 119 years, f i f t e e n to twenty m i l l i o n pounds i n ten years, and possibly seventy m i l l i o n pounds i n twenty years, I960 to 1980. It would not be extremely d i f f i c u l t to achieve a l l these increases i n employment and national income, provided the c a p i t a l needed to e s t a b l i s h the industries could be found, and the i n d u s t r i a l workers trained to increase t h e i r productivity. Already the 'Second Develop-ment Plan (1959-1961.) ' has been scrapped before i t s period ended, and a new 'Seven Year Development Plan' has been framed, because the former plan envisaged too many things fo r which money was not a v a i l a b l e . This i s a problem of implementation of plans, but such a problem i s c r i t i c a l i n any predetermination of i n d u s t r i a l l o c a t i o n , since the industries recommended for operation must be feasible economically. Selection of Industries The report recommends two d i f f e r e n t types of indus-t r i e s as f e a s i b l e for development. These are: f i r s t , export industries processing domestic raw materials; and secondly, industries serving the domestic market. Export Industries Processing Domestic Raw Materials Export industries u t i l i z i n g l o c a l materials could be economically established i n Ghana, provided that the transportation costs of the raw materials from foreign 120 markets are, for various reasons, higher than the cost of transporting the f i n i s h e d products. In other words, there are some types of industries, the transportation costs of whose imported raw materials are higher than the cost of transporting•their f i n i s h e d products. Such industries could be developed as export industries processing domestic raw materials. Examples of these types of ind u s t r i e s , c i t e d i n the report, are: metallurgical industries; the production of timber and o i l s ; and f r u i t and f i s h canning ind u s t r i e s . It has been pointed out i n the report that metal-l u r g i c a l industries consume large amounts of fuels and, f o r that reason, t h e i r establishment would necessitate the pro-duction of domestic energy. The Volta. River Scheme, which i s intended to supply the country with e l e c t r i c a l energy, would make possible the operation of the metallurgical industries, such as aluminum, whose raw material, bauxite, can be obtained i n large quantities i n Ghana. The production of timber, the report emphasizes, would not o f f e r great pros-pects, because the available raw materials would be exhausted In a few years. The successful production of o i l s , and f r u i t canning would depend on the corresponding production of the a g r i c u l t u r a l raw materials. It would not be possible to process cocoa i n the i n t e r i o r part of the country due to the unsuitable climatic conditions. Development of industries u t i l i z i n g domestic raw materials would help the country achieve two of i t s indus-121 t r i a l i z a t i o n g o a l s , namely, s t r e n g t h e n i n g i t s balance of payments, and c r e a t i o n of employment. Assuming t h a t imports would remain c o n s t a n t , i n c r e a s e i n Ghana's export trade through the development of export i n d u s t r i e s would-r e s u l t i n s t r e n g t h e n i n g her balance of payments. In a d d i t i o n , p r o c e s s i n g the domestic raw m a t e r i a l s i n the country, r a t h e r than i n a f o r e i g n country, would create employment f o r the l o c a l people. I n d u s t r i e s S e r v i n g Domestic Market The types of i n d u s t r i e s recommended i n the r e p o r t to serve the domestic market have g r e a t e r p r o s p e c t s than the export i n d u s t r i e s , c o n s i d e r i n g the l a r g e imports of manu-f a c t u r e d p r o d u c t s , such as food and t e x t i l e s , and a l s o c o n s i d e r i n g the e v e r - i n c r e a s i n g n a t i o n a l income. F i r s t , i n d u s t r i e s intended to serve the domestic market c o u l d be those types which u t i l i z e imported raw m a t e r i a l s whose t r a n s p o r t a t i o n cost i s h i g h e r than the t r a n s p o r t a t i o n cost of the f i n i s h e d p r o d u c t s . In t h i s case the t o t a l t r a n s p o r t a t i o n cost would be reduced when p r o d u c t i o n i s done d o m e s t i c a l l y . An example of such types of i n d u s t r i e s i s the p r o d u c t i o n of f l o u r i n Ghana, from imported wheat, because the f r e i g h t charges on f l o u r are much h i g h e r than those on wheat. Secondly, i t would be economic from the view- • p o i n t of t r a n s p o r t a t i o n c osts to process l o c a l raw m a t e r i a l s d o m e s t i c a l l y to meet Ghana's requirements, o n l y i f the 122 a v a i l a b l e raw m a t e r i a l s a r e o f s a t i s f a c t o r y q u a l i t y a n d c a n be s u p p l i e d a t i n t e r n a t i o n a l c o m p e t i t i v e m a r k e t s . F i n a l l y , t h e r e a r e some t y p e s o f i n d u s t r i e s whose raw m a t e r i a l t r a n s p o r t a t i o n c o s t s a r e a b o u t t h e same as t h e t r a n s p o r t a t i o n c o s t s o f t h e i r p r o d u c t s . I n s u c h i n d u s t r i e s , t r a n s p o r t a t i o n c o s t s a r e n o t a d e t e r m i n i n g f a c t o r i n t h e s e l e c t i o n o f i n d u s t r i e s , because t h e y f o r m an i n s i g n i f i c a n t p a r t o f t h e t o t a l p r o d u c t i o n c o s t s . S u c h i n d u s t r i e s c o u l d be p r o f i t a b l y d e v e l o p e d i n G h a n a , r e g a r d l e s s o f w h e t h e r o r n o t t h e raw m a t e r i a l s a r e a v a i l a b l e i n the c o u n t r y , p r o v i d e d t h e c o s t o f p r o d u c t i o n w o u l d be l o w . The i n d u s t r i e s i n t h i s c a t e g o r y w h i c h c a n o p e r a t e e c o n o m i c a l l y a t t h e i n i t i a l s t a g e o f the c o u n t r y ' s i n d u s t r i a l d e v e l o p m e n t a r e t h o s e r e q u i r i n g l e s s s k i l l , and p r o d u c i n g c o m p a r a t i v e l y s i m p l e c o m m o d i t i e s , b e c a u s e i n d u s t r i a l s k i l l i s l a c k i n g i n t h e c o u n t r y . E x a m p l e s o f s u c h t y p e s o f i n d u s t r i e s , c i t e d i n t h e r e p o r t , a r e : m a n u f a c t u r e o f a l a r g e number o f m e t a l g o o d s , s u c h as s i m p l e t o o l s and h o u s e h o l d u t e n s i l s ; l e a t h e r g o o d s , c h e m i c a l s and t e x t i l e s . I t i s e m p h a s i z e d i n the r e p o r t t h a t t h e s c a l e o f p r o d u c t i o n i n many i n d u s t r i e s w o u l d be r e s t r i c t e d b y t h e l i m i t e d s i z e o f t h e d o m e s t i c m a r k e t and l a c k o f m a n a g e r i a l o r o r g a n i z a t i o n a l s k i l l s . F o r t h e s e r e a s o n s , c e r t a i n i n d u s -t r i e s , w h i c h r e q u i r e l a r g e - s c a l e p r o d u c t i o n i n o r d e r t o a c h i e v e a l o w c o s t p e r u n i t o f o u t p u t , c a n n o t be e s t a b l i s h e d i n t h e c o u n t r y . I n v i e w o f t h e l i m i t e d s i z e o f t h e d o m e s t i c m a r k e t and t h e s h o r t a g e o f o r g a n i z a t i o n a l and e n t e r p r i s i n g 123 s k i l l s , i t i s stressed i n the report that i t would be advisable, i n order to achieve a low cost of production, "to concentrate production at a single point i n the country which w i l l supply the entire country at a r e l a t i v e l y low cost". It must be pointed out that i n d u s t r i a l production at a single point i n the country would not be i n the interest of the country since such an i n d u s t r i a l concentration would re s u l t i n the migration of people from a l l parts of the country, to the i n d u s t r i a l area for jobs, i n which case the national i n d u s t r i a l i z a t i o n goals of f u l l employment and higher incomes fo r a l l persons i n both the urban and the r u r a l areas would not be achieved. What i s needed i s the spread of i n d u s t r i a l production into a l l parts of the country. In summary, i t may be said that i t would be i n the interest of the nation to develop industries serving the domestic market, when the industries process both foreign and domestic raw materials, provided that the raw materials-are available and at a low transportation cost. The develop-ment of such industries would tend to reduce the excessive demand fo r imported manufactured goods, and thus help the nation achieve one of i t s i n d u s t r i a l i z a t i o n goals, namely, strengthening the balance of payments. Also processing the materials domestically would tend to create employment, which i s another nation goal i n i n d u s t r i a l i z a t i o n . However, i t would not be i n the interest of the nation to implement the suggestion that production should be concentrated at a 2 6 I b i d . . p. 261. 124 single point beca.use such an i n d u s t r i a l concentration would not a s s i s t the country to achieve i t s i n d u s t r i a l i z a t i o n goals. Selection of Location In considering the possible locations f o r indus-t r i e s i n the region, the planners s t a r t by working within the national framework. They point out that i t w i l l be i n the inte r e s t of the nation to concentrate a l l i n d u s t r i a l development i n the four p r i n c i p a l centres of Ghana, namely, Accra, Tema, Takoradi, and Kumasi (See Figure IV). Tamale, another p r i n c i p a l centre, however, does not o f f e r prospects for i n d u s t r i a l development at present because of i t s r e l a t i v e l y small population and poor market. It i s emphasized i n the report that i t would be advantageous economically to concentrate industries i n these four centres, rather than d i s t r i b u t i n g them into several areas, because industries need supporting or 'key' f a c i l i t i e s , which could be provided more cheaply i f few centres were chosen f o r th e i r locations. Concentration of industries i n these four centres possessing the supporting f a c i l i t i e s , states the report, would a t t r a c t private i n d u s t r i a l i s t s , since they would gain 'external economies' from such a concentration. F i n a l l y , i n these centres can be found a large unemployed and under-employed labour-force which can be u t i l i z e d by the ind u s t r i e s . A l l these reasons, the report emphasizes, show that i t i s necessary to concentrate 125 Figure IV. Urban Centres f o r I n d u s t r i a l Concentration 126 the industries i n the four centres. It must be pointed out that i n d u s t r i a l concentra-t i o n i n only four c i t i e s without any regard f o r the smaller urban centres and the r u r a l areas would r e s u l t i n migration of people from the neighbouring areas to the c i t i e s f or jobs, and thus i n turn res u l t i n the over-population of the c i t i e s , and depopulation of the r u r a l areas. In addition, the con-centration would widen s t i l l further the gap between the l i v i n g standards of the urban and the r u r a l areas. What i s needed, as has been pointed out above, i s the spread of industry into the smaller urban centres and the r u r a l areas so that the national i n d u s t r i a l i z a t i o n goals may be achieved. The Accra-Tema Area The greater part of the industries, continues the report, would, however, be concentrated i n the Accra-Tema metropolitan area because of special advantages this area has. In the f i r s t place, Tema has a deep-sea port, and since most of the industries would process imported raw materials, they would tend to locate close to the port. Secondly, the large population of Accra would serve as a source of labour fo r the indus t r i e s , and also as a market for the i n d u s t r i a l products. T h i r d l y , Accra i s the country's administrative c a p i t a l , and private i n d u s t r i a l i s t s would l i k e to locate t h e i r plants there f o r easy access to the state services. Fourthly, the greater part of i n d u s t r i a l investments under execution or 127 study by the In d u s t r i a l Development Corporation, which for a good many years would form a considerable proportion of the country's t o t a l i n d u s t r i a l investment, are at present con-centrated i n the Accra-Tema area. F i n a l l y , the area has an advantage over Kumasi and Takoradi from the viewpoint of climatic conditions. A l l these advantages, the report points out, j u s t i f y the concentration of industries i n the Accra-Tema area. In addition to the above advantages, i n d u s t r i a l development i n the Accra-Tema area would be f a c i l i t a t e d by the provision of e f f i c i e n t transport l i n k s with the i n t e r i o r of the country. The 'Volta River Project' would also a s s i s t i n d u s t r i a l development i n the area i n two ways: f i r s t , the project would supply the area with cheap and abundant e l e c t r i c a l energy; and thus attr a c t industries consuming large amounts of power; secondly, the construction of the 200 mile long a r t i f i c i a l lake, which i s part of the project, would f a c i l i t a t e i n d u s t r i a l t r a f f i c between the Accra-Tema area and the eastern and northern d i s t r i c t s of the country. A l l these advantages, the report emphasizes, show that i t would be uneconomic to d i s t r i b u t e industries through-out the country. E s p e c i a l l y , where the raw materials are imported, "one should preclude the establishment of indus-t r i e s either at Kumasi or at any other centre i n the i n t e r i o r on account of the higher transportation costs which such establishment would e n t a i l " . 2 7 i n t h i s case, i t i s recommended 2 7 l b i d . , p. 263. 128 that the selection of l o c a t i o n should be l i m i t e d to Takoradi, another harbour town, and the Accra-Tema area. But, "The economic a c t i v i t y of Takoradi depends today f o r the most part on the export of timber and ores - that i s to say, on a c t i v i t i e s which do not lend themselves to further development" 2 8 and so Takoradi would not be important. The Accra-Tema area, then, becomes the main i n d u s t r i a l area, capable of supplying i n d u s t r i a l products to the entire country and abroad. As a r e s u l t of the i n d u s t r i a l concentration i n the Accra-Tema area i t i s estimated that at least two-thirds of the increase i n the nation's i n d u s t r i a l employment would take place here. This means increase i n i n d u s t r i a l employ-ment of about 15>,000 i n f i v e years' time, 1+0,000 i n ten years' time, and perhaps ll+OjOOO i n twenty years' time. The corresponding estimated increase i n i n d u s t r i a l income i n the area are: between three and four m i l l i o n pounds s t e r l i n g i n f i v e years' time; between ten and twelve m i l l i o n pounds i n ten years' time; and about f i f t y m i l l i o n pounds i n twenty years' time. The Accra-Tema metropolitan area, according to the report, becomes the main point of i n d u s t r i a l concentration because of sp e c i a l advantages the area has over the rest of the country. As a, r e s u l t of the heavy i n d u s t r i a l concen-t r a t i o n , employment and income would increase i n the area. The l i k e l y consequences of such concentration have been 2 8 I b i d . , p. 26LL. 129 commented upon i n the discussion of i n d u s t r i a l concentration i n the four c i t i e s . Here i t may be pointed out that the i n d u s t r i a l concentration i n the Accra-Tema area would re s u l t i n increase i n population of this area at the expense of the whole country i n general, and the surrounding region i n p a r t i c u l a r . Already the population of Accra has been growing at a high rate. In 191+8, Accra's population was 135,926; the i960 census recorded about 350,000, an increase of over 100 per cent within twelve years. Tema, a new town, was established about 1956 and has a present population of 35,000. There i s no doubt that these increases i n population have been due to migration of people from the whole country, and the region which has great a f f i n i t i e s with the Accra-Tema area. This migration would be aggravated by this i n d u s t r i a l concentration, and thus check the growth of the r u r a l areas. D i s t r i b u t i o n of Industries Between Accra and Tema The consultants' f i n a l enquiry i s directed to the d i s t r i b u t i o n of industries betwe.en Accra and Tema. Accra i s now the administrative c a p i t a l of the country and Tema i s a newly established port and i n d u s t r i a l c i t y . But i t would be unsound, states the report, to argue that Accra must remain s o l e l y an administrative centre, and that a l l industries must be concentrated i n Tema. Such an i n f l e x i b l e p o l i c y must not be followed. Accra has a claim to i n d u s t r i a l establishments because: f i r s t , there are old industries which can form the basis of further development; and secondly, 130 Accra has a large unemployed and under-employed labour force which could be u t i l i z e d productively by industry. For these reasons i t would be economically and s o c i a l l y necessary to develop industries i n Accra. As a consequence of this i n d u s t r i a l development i n Accra, the c i t y ' s population would increase, and any proposal to move population from Accra to Tema must be precluded, considering the high costs of s o c i a l overheads i n the new town: "The establishment of industries i n places where the population i s dense i s not i n p r i n c i p l e a f i n a n c i a l l y disadvantageous p o l i c y , p a r t i c u l a r l y when one bears i n mind the high s o c i a l cost involved by the movement of p o p u l a t i o n " . 2 9 As regards the d i s t r i b u t i o n of the industries between Tema and Accra, " i t i s reasonable to e s t a b l i s h t h i s discrimination, namely, that Accra w i l l tend to attra c t l i g h t i ndustries, and Tema heavy i n d u s t r i e s " . 3 0 As f a r as the share of i n d u s t r i a l development i s concerned, i t i s assumed by the consultants that i n d u s t r i a l development would be equally divided between the two c i t i e s , that i s , half of i t would occur i n Accra, and the other half i n Tema. Upon the assumption that Tema would at t r a c t heavy industry and that Accra would at t r a c t l i g h t i n d u s t r i e s , i t is reasonable to assume that i n d u s t r i a l income would increase more i n Tema than i n Accra, considering that industries i n 2 9 I b i d . , p. 265. 3 0 I b i d . , p. 265. 131 t h e f o r m e r c i t y w o u l d i n v o l v e i n t e n s i v e u s e o f c a p i t a l , and t h a t p r o d u c t i o n p e r employed p e r s o n w o u l d be h i g h e r i n Tema t h a n i t w o u l d be i n A c c r a . U n d e r s u c h c i r c u m s t a n c e s Tema w o u l d d e v e l o p i n t o t h e m a i n i n d u s t r i a l c e n t r e o f G h a n a . Summary T h r e e p r o b l e m s o f i n d u s t r i a l l o c a t i o n , n a m e l y , the d e g r e e o f i n d u s t r i a l d e v e l o p m e n t , t h e s e l e c t i o n o f i n d u s t r i e s f o r d e v e l o p m e n t , and t h e s e l e c t i o n o f i n d u s t r i a l l o c a t i o n s a r e d i s c u s s e d b y t h e D o x i a d i s A s s o c i a t e s i n t h e i r d e v e l o p -ment p l a n p r e p a r e d f o r t h e s t u d y a r e a . The degree o f i n d u s t r i a l d e v e l o p m e n t t o be a c h i e v e d w i t h i n t e n t o t w e n t y y e a r s i n t h e whole n a t i o n w o u l d be h i g h , c o n s i d e r i n g t h e v a r i o u s p r o p o s a l s made b y some f o r e i g n and l o c a l e n t r e p r e n e u r s , t h e p r o j e c t s o f t h e I n d u s t r i a l D e v e l o p -ment C o r p o r a t i o n , and t h e a l r e a d y - s c r a p p e d ' S e c o n d F i v e Y e a r P l a n ' . . G r e a t i n c r e a s e s i n employment and income w o u l d r e s u l t f r o m t h e s e d e v e l o p m e n t s i f o n l y t h e c a p i t a l needed t o e s t a b l i s h the i n d u s t r i e s c a n be f o u n d , and t h e i n d u s t r i a l w o r k e r s t r a i n e d . The t y p e s o f i n d u s t r i e s s u g g e s t e d f o r d e v e l o p m e n t i n t h e c o u n t r y i n c l u d e e x p o r t i n d u s t r i e s p r o c e s s i n g d o m e s t i c raw m a t e r i a l s , and i n d u s t r i e s s e r v i n g t h e d o m e s t i c m a r k e t . T h e s e t y p e s o f i n d u s t r i e s w o u l d h e l p Ghana a c h i e v e h e r i n d u s -t r i a l i z a t i o n g o a l s , n a m e l y , c r e a t i o n o f employment and m a i n t e n a n c e o f a s t r o n g b a l a n c e o f p a y m e n t s . 132 Pour p r i n c i p a l centres, namely, Accra, Tema, Takoradi and Kumasi, are recommended as points of i n d u s t r i a l concentra-t i o n i n Ghana. However, i t i s further recommended that since the Accra-Tema area has many advantages over the rest of the centres, the Accra-Tema area must concentrate about two-thirds of the country's i n d u s t r i a l development: whereas Accra would be a centre for l i g h t i n d u s t r i e s , Tema would att r a c t heavy industries. Under such circumstances Tema would be the main i n d u s t r i a l centre of Ghana, where increase i n i n d u s t r i a l employment and income would be highest. CONCLUSION Ind u s t r i a l l o c a t i o n i n the Accra Plains has been considered by examining: Ghana's i n d u s t r i a l i z a t i o n goals, which should guide i n d u s t r i a l i z a t i o n i n th i s region; the settlement pattern, the economy of the region; and part of a development plan prepared for the region. Ghana's i n d u s t r i a l i z a t i o n goals have been i d e n t i f i e d as: f u l l employment f o r a l l people i n both the urban and the r u r a l areas; increase i n the national income and the per capita income of a l l persons; and maintenance of a strong balance of payments. Apart from the last-mentioned goal, namely, maintenance of a strong balance of payments, a l l the goals require that both the urban and the r u r a l areas must be considered i n every i n d u s t r i a l l o c a t i o n decision. The settlement pattern, that i s to say, the s i z e , l o c a t i o n , and the sphere of influence of the market centres, 133 together with the region's economy and resources show that industries can be established not only i n Accra and Tema, but also i n some of the smaller centres, such as Dodowa, Somanya and Odumasi. The unemployed people and part of the under-employed labour force engaged i n petty trading i n the urban areas, can be productively u t i l i z e d by the indus-t r i e s . In the r u r a l areas, greater application of s c i e n t i f i c methods i n agricult u r e , f i s h i n g and liv e s t o c k breeding would increase output and thus provide raw materials f o r food-processing, fish-canning, and meat-packing in d u s t r i e s . Mechanization of the r u r a l economic a c t i v i t i e s can also release part of the r u r a l labour force f o r the ind u s t r i e s . In addition, i n d u s t r i a l i z a t i o n i n both the urban and the r u r a l areas i n the region would be f a c i l i t a t e d by the com-p l e t i o n of the Volta River Project, which would supply the region with e l e c t r i c power. These urban and r u r a l poten-t i a l i t i e s must be considered together i n a l l i n d u s t r i a l l o c a t i o n decisions. These urban and r u r a l p o t e n t i a l i t i e s were not ; considered seriously by the Doxiadis Associates i n the i r development plan prepared f o r t h i s region. Working within the national framework, the planning consultants suggested that i t would be i n Ghana's interest i f four p r i n c i p a l centres i n the whole country, namely, Accra, Tema, Takoradi, and Kumasi were taken as points of i n d u s t r i a l concentration, considering that industries need supporting f a c i l i t i e s , which are now available i n these centres, but are lacking 134 i n the rest of the country. However, the consultants further stated that because the Accra-Tema area has many advantages, such as port f a c i l i t i e s , p o t e n t i a l e l e c t r i c power, and large population, at least two-thirds of the nation's i n d u s t r i a l development would tend to concentrate i n thi s area. It must be pointed out that only four centres i n the country were selected f o r i n d u s t r i a l concentration with complete disregard for the rest of the country because i n d u s t r i a l l o c a t i o n was predetermined within the national framework. I f the suggestions made by the consultants are implemented, the results would be the growth of these four centres, and the Accra-Tema. area In p a r t i c u l a r , at the expense of the whole country. The other urban centres and the r u r a l areas would be depopulated and the present gap between the l i v i n g standards i n these centres and the l i v i n g , standards i n the r u r a l areas would widen. Under such circumstances, the development of the rest of the country, e s p e c i a l l y the r u r a l areas, would be checked. In view of a l l t h i s , i t may be concluded that Ghana's i n d u s t r i a l i z a t i o n goals would be achieved i f regions, such as the Accra Plains, rather than the whole nation, or a l o c a l i t y , were taken as a framework within which i n d u s t r i a l l o c a t i o n should be predetermined. The use of this regional approach would help the nation appre-ciate the p o t e n t i a l i t i e s of both the urban and the r u r a l areas. For instance, the urban areas with t h e i r r e l a t i v e l y large populations can provide i n d u s t r i a l labour and market 1 3 5 f o r the ind u s t r i e s . The r u r a l areas, on the other hand, through t h e i r economic a c t i v i t i e s , such as agricul t u r e , f i s h i n g and li v e s t o c k breeding, can provide raw materials, which can be processed by industries, and thus create employment a.nd income i n the r u r a l areas. The supporting f a c i l i t i e s , lacking i n the r u r a l areas, can be provided by the State. The provision of these f a c i l i t i e s can a s s i s t the operation of the industries and also raise the standard of l i v i n g of the people. CHAPTER V AN EVALUATION OP THE REGIONAL APPROACH TO INDUSTRIAL LOCATION IN THE DEVELOPING COUNTRIES This concluding chapter serves a three-fold purpose. A review and summary of what has been said previously concerning i n d u s t r i a l l o c a t i o n i n the develop-ing countries i s presented. This i s followed by an evalua-t i o n of the regional approach to i n d u s t r i a l l o c a t i o n proposed for these countries. F i n a l l y , some recommendations are made i n r e l a t i o n to the developing countries i n order to make this proposed regional approach a r e a l i t y . SUMMARY The major purpose of this study was to investigate an approach which the developing countries must use i n order to achieve t h e i r i n d u s t r i a l i z a t i o n goals. With th i s purpose i n mind, i t was contended that the developing countries w i l l only achieve t h e i r i n d u s t r i a l i z a t i o n goals i f i n d u s t r i a l l o c a t i o n i s predetermined within a regional framework. The invest i g a t i o n was made because i n d u s t r i a l l o c a t i o n , l i k e the financing of industry, was f e l t to be one of the basic problems of the i n d u s t r i a l i z a t i o n process. The problem arises from the fact that there i s great temptation f o r the developing countries to select only a few c i t i e s as points of i n d u s t r i a l concentration with complete disregard f o r the smaller towns and the r u r a l areas, i n which case t h e i r 137 national i n d u s t r i a l i z a t i o n goals, namely, f u l l employment of a l l persons i n both the urban and r u r a l areas, increase i n per capita income, and earning or saving foreign exchange, would not have the maximum opportunity f o r achievement. In order to attack t h i s problem of developing a regional approach to i n d u s t r i a l l o c a t i o n i n the developing countries, i t was necessary to review some basic concepts involved i n thi s approach. These preliminary considerations were made i n Chapter I. It was found that the developing countries are those countries which have quite recently embarked upon economic development In order to achieve such goals as f u l l employment, increase i n incomes, r a i s i n g of the standards of s o c i a l amenities and f a c i l i t i e s . I t was noted that the role of i n d u s t r i a l i z a t i o n was important i n achieving some of these national goals, and for that reason, great importance i s attached to i n d u s t r i a l i z a t i o n as a means of economic development. The role of the State i n i n d u s t r i a l development was found to be c r i t i c a l because the developing countries r e a l i z e that t h e i r socio-economic problems are prevalent, not because resources are lacking for economic development, but because they are i n e f f i c i e n t l y u t i l i z e d . Only r a t i o n a l economic planning would stop this i n e f f i c i e n t u t i l i z a t i o n of the resources and thus a s s i s t i n the development of the countries; this economic planning i s the r e s p o n s i b i l i t y of the State. In implementing this r e s p o n s i b i l i t y of economic planning, the State p a r t i c i p a t e s d i r e c t l y i n i n d u s t r i a l 1 3 8 development, either by providing the supporting f a c i l i t i e s f o r the private i n d u s t r i a l operations or, as i n most cases, by providing the supporting f a c i l i t i e s and developing indus-t r i e s through i t s agencies alongside the private entrepreneurs. Whatever method i s taken for i n d u s t r i a l development, the influence of the State i s f e l t i n i n d u s t r i a l i z a t i o n since i t s economic plan embraces a l l aspects of economic development. In the process of i n d u s t r i a l i z a t i o n , the developing countries were found to encounter many problems. Among these i s the problem of i n d u s t r i a l l o c a t i o n , which i s the s p e c i f i c subject for discussion i n t h i s study. The works of two i n d u s t r i a l l o c a t i o n t h e o r i s t s , namely, August Losch and Edgar Hoover, were examined to determine methods f o r analysis .of t h i s problem. These theorists explain the costs and benefits involved i n choosing one geographic area instead of another as a lo c a t i o n f o r industry. In addition to the works of these two t h e o r i s t s , a regional approach to indus-t r i a l s e l e c t i o n offered by Walter Isard and his co-authors was also examined. The importance of the concept of pre-determined i n d u s t r i a l l o c a t i o n within a regional framework demanded a review, i n Chapter I I , of the concept and i t s application i n one developing country, namely, Puerto Rico. A l l of these preliminary considerations provided the basis f o r an appreciation of the problems of i n d u s t r i a l l o c a t i o n i n the developing countries. These problems, namelyj s e l e c t i o n of industries, selection of locations, and the provision of supporting f a c i l i t i e s , were presented i n Chapter 139 IH. I n o r d e r t o examine the problems o f i n d u s t r i a l l o c a t i o n , i t was n e c e s s a r y t o i d e n t i f y s p e c i f i c a l l y the g o a l s w h i c h most d e v e l o p i n g c o u n t r i e s have i n t h e i r i n d u s t r i a l d e v e l o p -ment p o l i c i e s . The g o a l s i d e n t i f i e d were: i n c r e a s e i n income p e r c a p i t a ; e a r n i n g or s a v i n g f o r e i g n exchange; and f u l l employment. The i d e n t i f i c a t i o n o f the g o a l s was found t o be i m p o r t a n t because these g o a l s determine the most r a t i o n a l s e l e c t i o n o f the t y p e s of i n d u s t r i e s and t h e i r l o c a t i o n s . F o r the s e l e c t i o n o f the t y p e s o f i n d u s t r i e s t o be e s t a b l i s h e d i n the d e v e l o p i n g c o u n t r i e s , v a r i o u s c r i t e r i a s u g g e s t e d by s e v e r a l development economists were a n a l y z e d . These c r i t e r i a a r e : f a c t o r i n t e n s i t y ; p l a n t s i z e and com-p l e x i t y ; f o r e i g n exchange b e n e f i t s ; and u t i l i z a t i o n o f raw m a t e r i a l s . I t was found t h a t the f a c t o r i n t e n s i t y c r i t e r i o n p l a c e s emphasis on l a b o u r - i n t e n s i v e o r c a p i t a l - i n t e n s i v e i n d u s t r i e s . One s c h o o l o f t hought advocates t h a t the l a b o u r -i n t e n s i v e i n d u s t r i e s s h o u l d be e s t a b l i s h e d i n the d e v e l o p i n g c o u n t r i e s because l a b o u r i s abundant and cheap, r e l a t i v e t o c a p i t a l i n these c o u n t r i e s . A n o t h e r s c h o o l a d v o c a t e s t h a t the c a p i t a l - i n t e n s i v e i n d u s t r i e s s h o u l d be s e l e c t e d because t h e y are more p r o d u c t i v e and e f f i c i e n t . I t was p o i n t e d out t h a t i n d u s t r i e s s h o u l d not be s e l e c t e d because t h e y are l a b o u r - i n t e n s i v e o r c a p i t a l - i n t e n s i v e but t h a t e v e r y p o t e n t i a l p r o j e c t must be e v a l u a t e d t o determine i t s t o t a l advantage t o the economy. The p l a n t s i z e c r i t e r i o n a t t a c h e s g r e a t importance t o s m a l l - s c a l e i n d u s t r i e s w h i c h do not demand 140 high s k i l l s because such s k i l l s are lacking i n the developing countries. The foreign exchange benefit c r i t e r i o n advocates import substituting industries, e s p e c i a l l y the types of industries which u t i l i z e domestic raw materials. It was concluded that the s e l e c t i o n of any of these c r i t e r i a would depend upon the goals which the developing country concerned wants to achieve. In order to select locations f o r industries, i t was found that the developing countries must consider such factors as transportation, source of raw materials, market, labour, and energy, which have quite s i g n i f i c a n t l y influenced the l o c a t i o n a l decisions of private entrepreneurs i n the more i n d u s t r i a l i z e d countries. These factors have been considered most important by the i n d u s t r i a l l o c a t i o n theorists and have appeared most often i n empirical studies. These factors w i l l also a f f e c t the l o c a t i o n a l decisions of the developing countries and, f o r that reason, they must be given considerable thought. Nevertheless, the developing countries must note that the r e l a t i v e importance of the l o c a t i o n a l factors i s changing. For Instance, the importance of the source of raw materials as a l o c a t i o n a l factor i s declining because of substitutes, a longer chain of pro-cessing between raw materials and the f i n a l products. On the other hand, the importance of market has increased owing to the change i n the character of industry as a whole, and the present necessity of speedy and regular delivery of goods. The source of energy has also declined i n importance 141 as a l o c a t i o n a l f a c t o r , due to technological improvements i n the transmission of e l e c t r i c i t y . Labour i s also declining i n importance because of increasing mechanization. Although most of these factors of lo c a t i o n are changing i n importance, yet they w i l l continue to a f f e c t l o c a t i o n a l decisions and so the developing countries must consider them c a r e f u l l y when selecting i n d u s t r i a l locations. F i n a l l y , since industries require c e r t a i n support-ing f a c i l i t i e s and services for the i r e f f i c i e n t operation, the provision of these f a c i l i t i e s and services was considered as a problem of i n d u s t r i a l l o c a t i o n . These supporting f a c i l i t i e s and services are: transportation and communica-tions, u t i l i t i e s , , i n d u s t r i a l parks, housing, i n d u s t r i a l education and t r a i n i n g , commercial f a c i l i t i e s , and other community services, such as schools and hospitals. Some of these are needed f o r the actual manufacturing process, others for the manufacturing employees, and some for both the process and the employees. It was necessary to consider these supporting f a c i l i t i e s and services i n some d e t a i l , because they are either lacking or less developed i n these countries. It was concluded i n Chapter III that the problems of i n d u s t r i a l l o c a t i o n i n the developing countries are complex and i n t e r - r e l a t e d i n nature and, for that reason, they must be c a r e f u l l y examined i f i n d u s t r i a l l o c a t i o n i s to be predetermined within a regional framework i n order to help these countries to achieve t h e i r i n d u s t r i a l i z a t i o n 1 4 2 g o a l s . The c o n s i d e r a t i o n o f t h e s e p r o b l e m s p r o v i d e d a n o p p o r t u n i t y f o r the d e m o n s t r a t i o n o f the a p p l i c a t i o n o f the r e g i o n a l a p p r o a c h t o i n d u s t r i a l l o c a t i o n p r o p o s e d f o r t h e d e v e l o p i n g c o u n t r i e s . T h i s d e m o n s t r a t i o n was the s u b j e c t o f C h a p t e r I V . The A c c r a P l a i n s i n Ghana were t a k e n as a c a s e s t u d y a r e a . G h a n a ' s i n d u s t r i a l i z a t i o n g o a l s were i d e n t i f i e d a s : f u l l employment o f a l l p e r s o n s i n b o t h t h e u r b a n and the r u r a l a r e a s ; i n c r e a s e i n n a t i o n a l income w h i c h t a k e s a c c o u n t o f incomes o f a l l i n d i v i d u a l s ; and m a i n t e n a n c e o f a s t r o n g b a l a n c e o f p a y m e n t s . These i n d u s t r i a l i z a t i o n g o a l s must d e c i d e t h e s e l e c t i o n o f i n d u s t r i a l p r o j e c t s and t h e i r l o c a t i o n s i n the c o u n t r y . The s e t t l e m e n t p a t t e r n , t h e economy and t h e r e s o u r c e s o f t h e r e g i o n were e x a m i n e d and t h e s e i n d i c a t e d t h a t i n d u s t r i e s c o u l d be e s t a b l i s h e d i n t h e l a r g e r u r b a n c e n t r e s and some o f t h e s m a l l e r towns t o c r e a t e employment and income f o r the p e o p l e , and a l s o t o r e d u c e i m p o r t a t i o n o f m a n u f a c t u r e d g o o d s . T h i s r e g i o n a l a p p r o a c h t o i n d u s t r i a l l o c a t i o n was f o u n d t o be h e l p f u l i n a p p r e c i a t i n g t h e v a r i o u s p o t e n t i a l i t i e s o f b o t h t h e u r b a n and t h e r u r a l a r e a s f o r p a r t i c i p a t i n g i n i n d u s -t r i a l i z a t i o n , e i t h e r i n t e r m s o f s i t e s f o r t h e i n d u s t r i e s as m a r k e t s , o r as s o u r c e s o f raw m a t e r i a l s . The a p p r e c i a t i o n o f the p o t e n t i a l i t i e s o f b o t h the u r b a n a n d the r u r a l a r e a s was n o t p o s s i b l e i n the D o x i a d i s A s s o c i a t e s ' p l a n p r e p a r e d f o r t h i s r e g i o n b e c a u s e t h e c o n -s u l t a n t s p r e d e t e r m i n e d i n d u s t r i a l l o c a t i o n w i t h i n t h e n a t i o n a l 143 f r a m e w o r k . T h e i r s e l e c t i o n o f o n l y f o u r u r b a n c e n t r e s i n G h a n a , n a m e l y A c c r a , Tema, T a k o r a d i , a n d K u m a s i , as p o i n t s o f i n d u s t r i a l c o n c e n t r a t i o n , a n d t h e i r r e c o m m e n d a t i o n t h a t t w o - t h i r d s o f t h e c o u n t r y ' s i n d u s t r i a l d e v e l o p m e n t s h o u l d t a k e p l a c e i n t h e A c c r a - T e m a a r e a , w e re c r i t i c i z e d f o r t e n d -i n g t o w i d e n s t i l l f u r t h e r t h e p r e s e n t gap b e t w e e n t h e l i v i n g c o n d i t i o n s o f t h e p e o p l e i n t h e s e u r b a n a r e a s a n d t h o s e o f t h e p e o p l e i n s m a l l e r towns a n d t h e r u r a l a r e a s , i n w h i c h c a s e t h e c o u n t r y ' s i n d u s t r i a l i z a t i o n g o a l s w o u l d n o t be a c h i e v e d . I t was c o n c l u d e d t h a t Ghana's i n d u s t r i a l i z a t i o n g o a l s w o u l d be a c h i e v e d i f r e g i o n s , s u c h a s t h e A c c r a P l a i n s , w e r e t a k e n a s a f r a m e w o r k w i t h i n w h i c h i n d u s t r i a l l o c a t i o n c o u l d be p r e d e t e r m i n e d . T h i s r e g i o n a l a p p r o a c h t o i n d u s t r i a l l o c a t i o n w i l l a s s i s t t h o s e r e s p o n s i b l e f o r t h e n a t i o n a l i n d u s t r i a l d e v e l o p m e n t p o l i c y t o e x a m i n e t h e r e s o u r c e s o f b o t h t h e u r b a n a n d t h e r u r a l a r e a s , a n d t o u t i l i z e t h e s e r e s o u r c e s t o c r e a t e employment and i ncome f o r a l l t h e p e o p l e and t h u s r a i s e t h e i r l i v i n g s t a n d a r d s . EVALUATION I n l o c a t i n g i n d u s t r i e s t o y i e l d f u l l e m p l o y m e n t , i n c r e a s e i n t h e p e r c a p i t a i n c o m e , and a s t r o n g b a l a n c e o f p a y m e n t s , t h e d e v e l o p i n g c o u n t r i e s have t h r e e a l t e r n a t i v e f r a m e s o f r e f e r e n c e w i t h i n w h i c h t h e y c a n p r e d e t e r m i n e i n d u s t r i a l l o c a t i o n . The f r a m e w o r k s e l e c t e d may be a t t h e n a t i o n a l , r e g i o n a l , o r l o c a l l e v e l . 144 The n a t i o n a l framework f o r p r e d e t e r m i n i n g i n d u s t r i a l l o c a t i o n has been examined and shown i n the case s t u d y t o be u n s a t i s f a c t o r y i n a c h i e v i n g the g o a l s w h i c h the d e v e l o p i n g c o u n t r i e s have i d e n t i f i e d i n t h e i r i n d u s t r i a l development p o l i c i e s , s i n c e the n a t i o n a l approach tends t o o v e r l o o k the s m a l l e r towns and the r u r a l a r e a s . I n t h i s c a s e , any i n c r e a s e i n employment and income t a k e s p l a c e i n the l a r g e r u r b a n c e n t r e s . People i n the s m a l l e r u r b a n c e n t r e s and the r u r a l a r e a s c o u l d move to these l a r g e u r b a n c e n t r e s f o r j o b s but t h i s m i g r a t i o n would be u n d e s i r a b l e f o r the g e n e r a l development o f the c o u n t r i e s because o f the l i k e l y d e p o p u l a -t i o n o f the a r e a s whence the p e o p l e would m i g r a t e , and a l s o because of the l i k e l y o v e r - p o p u l a t i o n o f the few i n d u s t r i a l c e n t r e s . F o r a l l these reasons the n a t i o n a l approach.which tends t o c o n s i d e r o n l y the l a r g e r u r b a n area s w i l l not p e r m i t the d e v e l o p i n g c o u n t r i e s t o a c h i e v e t h e i r i n d u s t r i a l i z a t i o n " g o a l s . A n o t h e r a l t e r n a t i v e i s p r e d e t e r m i n i n g i n d u s t r i a l l o c a t i o n w i t h i n a l o c a l framework. By ' l o c a l framexTOrk' i s meant t h a t each c i t y , town, o r v i l l a g e i s r e g a r d e d as a. s e p a r a t e e n t i t y i n the i n d u s t r i a l i z a t i o n p o l i c i e s o f the d e v e l o p i n g c o u n t r i e s . The use o f t h i s l o c a l approach would be v e r y d i f f i c u l t , c o n s i d e r i n g the a d m i n i s t r a t i v e problems l i k e l y t o a r i s e from the g r e a t numbers o f the c i t i e s , towns, and v i l l a g e s i n any d e v e l o p i n g c o u n t r y . These p o t e n t i a l a d m i n i s t r a t i v e problems c o u l d s t i f l e a l l a t t e m p t s t o d e v e l o p i n d u s t r i e s i n most o f the s e t t l e m e n t s . Moreover, the use o f 145 the l o c a l approach would cause the larger urban centres to attrac t almost a l l the industries established by the private entrepreneurs, because of th e i r large urban markets, large labour supply, and also because of personal preference f o r c i t y l i f e , a l l of which could influence the l o c a t i o n a l decisions of the private entrepreneurs, with t h e i r consequent disregard f o r the smaller towns and v i l l a g e s . The State may consider a l l the settlements while developing i t s i n d u s t r i a l projects, but there i s the tendency f o r the State i t s e l f to be influenced by the competitive p o s i t i o n of the larger urban centres which can provide some supporting f a c i l i t i e s and services at t h e i r own cost i n order to attra c t indus-t r i e s . For a l l these reasons, i t can be said that the smaller towns and v i l l a g e s are u n l i k e l y to gain when indus-t r i a l l o c a t i o n i s predetermined within the l o c a l framework. In t h i s case, the i n d u s t r i a l i z a t i o n goals of these countries w i l l not be achieved. Both the national and the l o c a l approaches to i n d u s t r i a l l o c a t i o n have been found to be unsuitable for the developing countries i n achieving t h e i r i n d u s t r i a l i z a t i o n goals, namely f u l l employment, increase i n incomes of a l l persons, and earning or saving foreign exchange, because these two approaches tend to disregard the smaller towns and the r u r a l areas which also need more employment and income. The t h i r d alternative i s predetermining i n d u s t r i a l l o c a t i o n within a regional framework. 146 A p p l i c a b i l i t y o f the R e g i o n a l Approach A t t h i s s t a g e , i t i s n e c e s s a r y t o r e v i e w some assumptions made d u r i n g the p r e v i o u s d i s c u s s i o n s o f the r e g i o n a l a pproach t o i n d u s t r i a l l o c a t i o n i n the d e v e l o p i n g c o u n t r i e s , and a l s o some f i n d i n g s from the case s t u d y b e f o r e a r r i v i n g a t c o n c l u s i o n s on the a p p l i c a b i l i t y o f the r e g i o n a l a p proach. I n the f i r s t p l a c e , i t must be p o i n t e d out t h a t the e a r l i e r d i s c u s s i o n s on the r e g i o n a l approach were based upon the a s s u m p t i o n t h a t the r e g i o n , w i t h i n w h i c h i n d u s t r i a l l o c a t i o n must be p r e d e t e r m i n e d f o r the d e v e l o p i n g c o u n t r i e s t o a c h i e v e t h e i r i n d u s t r i a l i z a t i o n g o a l s , i s d e f i n e d as a g e o g r a p h i c u n i t c o n t a i n i n g u r b a n and r u r a l a r e a s u n i t e d t o g e t h e r by s o c i a l and economic t i e s . A l l the v a r i o u s p a r t s o f the r e g i o n may not n e c e s s a r i l y p e r f o r m the same f u n c t i o n s , f o r whereas the u r b a n c e n t r e s may p e r f o r m commer-c i a l , i n d u s t r i a l , c u l t u r a l and r e c r e a t i o n a l f u n c t i o n s , the r u r a l a r e a s may be engaged i n a g r i c u l t u r e and o t h e r p r i m a r y a c t i v i t i e s . What i s i m p o r t a n t , however, i s t h a t the v a r i o u s a r e a s are k n i t t o g e t h e r t h r o u g h exchange o f goods and s e r v i c e s , and t h a t t h e r e i s a f o c a l p o i n t , a c i t y W h i c h , by r e a s o n o f i t s a c c e s s i b i l i t y from a l l the p a r t s o f the r e g i o n , t i e s the whole r e g i o n t o g e t h e r , and a l s o s e r v e s as a market f o r b o t h raw m a t e r i a l s and manufactured p r o d u c t s . Such a r e g i o n t a k e n as a framework f o r p r e d e t e r m i n i n g i n d u s t r i a l l o c a t i o n w i l l h e l p the d e v e l o p i n g c o u n t r i e s t o examine c l o s e l y the 147 resources of the region, the suitable types of industries and t h e i r locations i n order to create employment and income fo r a l l the people. The fact that the region contains both urban and r u r a l areas i s very important since f u l l employment and higher incomes, i d e n t i f i e d by the developing countries as i n d u s t r i a l i z a t i o n goals, are meant f o r people i n both the urban and the r u r a l areas. In this sense, a metropolitan region taken as a framework fo r predetermining i n d u s t r i a l l o c a t i o n w i l l not permit the developing countries to achieve t h e i r i n d u s t r i a l i z a t i o n goals, since a metropolitan region, by d e f i n i t i o n , i s an urban system which does not take into account the r u r a l areas. Thus, a metropolitan region taken as a framework fo r predetermining i n d u s t r i a l l o c a t i o n w i l l l i m i t the v a l i d i t y of the hypothesis. It was found i n the course of the study that, whereas the achievement of f u l l employment and increase i n the per capita income would demand a regional framework f o r predetermining i n d u s t r i a l l o c a t i o n i n the developing countries, the achievement of the t h i r d national i n d u s t r i a l i z a t i o n goal, namely Tearning or saving foreign exchange, does not necessarily demand a regional framework. Foreign exchange i s an aspect of international trade and, f o r that reason, i t i s nations rather than regions which are basic units f o r consideration. In this sense, i t does not matter whether the framework i s national, regional, or l o c a l , provided industries are selected and economically developed to reduce imports or to increase exports of manufactured goods. This fact also l i m i t s the 1 4 8 v a l i d i t y of the hypothesis that ONLY predetermined i n d u s t r i a l l o c a t i o n within a regional framework w i l l help the develop-ing countries to achieve th e i r i n d u s t r i a l i z a t i o n goals f o r one of the goals may be achieved within the national or l o c a l framework. The case study area was found to possess such i n d u s t r i a l l o c a t i o n factors as market, labour, raw materials, po t e n t i a l energy, and e f f i c i e n t transportation network. In this case, the region must be used as a framework for predetermining i n d u s t r i a l l o c a t i o n to y i e l d f u l l employment and higher incomes. On the other hand, where the region lacks most of these factors of l o c a t i o n , i t would be uneconomic to take such a region as a separate e n t i t y f o r predetermining i n d u s t r i a l l o c a t i o n . Lack of these factors may also tend to l i m i t the general a p p l i c a b i l i t y of the regional approach. CONCLUSION In conclusion, i t may be said that the regional approach to i n d u s t r i a l l o c a t i o n w i l l a s s i s t the developing countries to achieve th e i r i n d u s t r i a l i z a t i o n goals by enabling them to examine closely the resources of both the urban and the r u r a l areas and to u t i l i z e these resources to create employment and income for the people. However, the general a p p l i c a b i l i t y of the approach i s l i m i t e d by the fact that not a l l kinds of regions can be he l p f u l as frameworks for i n d u s t r i a l l o c a t i o n , and also by the fact that not a l l the 149 goals necessarily demand a regional framework fo r t h e i r achievement. Also, i t must be emphasized that the three l e v e l s are not mutually exclusive, and that although the regional approach i s v a l i d , the approach must be integrated with national i n d u s t r i a l i z a t i o n goals and l o c a l conditions of labour and resources supply. RECOMMENDATIONS For the regional approach to i n d u s t r i a l l o c a t i o n to be effected i n the developing countries, there w i l l be a need f o r administrative p o l i c i e s , f o r special devices necessary to influence the lo c a t i o n of industries, and for studies i n regionalism. Administrative P o l i c i e s The present administrative regions i n the develop-ing countries may not be suitable as regions within which i n d u s t r i a l l o c a t i o n can be predetermined properly i n order to achieve the national i n d u s t r i a l i z a t i o n goals. For this reason, there w i l l be a need fo r i d e n t i f i c a t i o n of regions f o r i n d u s t r i a l development. It i s recommended that each region should contain both urban and r u r a l areas united together by socio-economic c r i t e r i a . ' In addition to the delimitation of i n d u s t r i a l regions, an autonomous body, that i s , a statutory agency, i n the form of either a board or a commission, must be established i n each region. The agency must be an autonomous 150 body rather than a branch of the Central Government so that i t may be removed from the C i v i l Service 'red tape' and thus ensure an authority, independence, and e f f i c i e n c y . The agency must be given s u f f i c i e n t finance and powers which i t can use to obtain compliance with i t s p o l i c i e s and pro-grammes. Special Devices to Influence In d u s t r i a l Location It i s recommended that special devices be used to influence the l o c a t i o n of industries i n each region. Six devices have been suggested by Charles Abrams. Any one or a combination of these devices should be examined and used by the developing countries: 1. Persuasion - i . e . influencing enterprises to s e t t l e In a p a r t i c u l a r l o c a l i t y through reasoning, a l t r u -ism, or by an appeal to public s p i r i t and i t s g r a t i f i c a t i o n s . 2. Inducement - i . e . o f f e r i n g loans, subsidies, housing, land, and other public aid or indulgences. 3. Compulsion - i . e . prescribing through zoning or d i r e c t i v e orders the places where settlement Is permitted and where forbidden. Ij.. Direct operations - i . e . purchase of s i t e s with public funds, building of f a c t o r i e s or other i n s t a l l a t i o n s by government agencies for public or private operation. 5- Public - private j o i n t ventures i n which govern-ment investment i s made i n private operations, i n return for which the public partner i n s i s t s upon prescribing the conditions for i n d u s t r i a l settlement as part of the bargain. 151 6. 'Planned i n e v i t a b i l i t y * - i . e . the placement of p u b l i c , t r a n s p o r t a t i o n a l o r other f a c i l i t i e s and investments i n so tempting a manner t h a t i t i n e v i t a b l y s t e e r s the i n d u s t r i a l move toward the d e s i r e d l o c a l i t y . 1 S t u d i e s i n Regionalism V a r i o u s kinds o f s t u d i e s w i l l be needed i n order to make the r e g i o n a l approach a r e a l i t y . In the f i r s t p l a c e , s t u d i e s must be undertaken to determine r e g i o n s f o r the purpose of i n d u s t r i a l development. Secondly, there must be a d e t a i l e d study of the r e s o u r c e s , t r a n s p o r t a t i o n system, settlement p a t t e r n , economic base, employment c h a r a c t e r -i s t i c s , economic trends and r a t e s of growth, and the develop-ment programmes of a l l the re g i o n s i n the de v e l o p i n g c o u n t r i e s . F i n a l l y , there must be a systematic process of mapping and of the a n a l y s i s of p o t e n t i a l i n d u s t r i a l l o c a t i o n s of each r e g i o n . Continuous study and up- d a t i n g of the r e -search i n f o r m a t i o n would a l s o be necessary. The r e s u l t of these s t u d i e s would be a b e t t e r a p p r e c i a t i o n of the r e g i o n a l approach to i n d u s t r i a l l o c a t i o n , which w i l l a s s i s t the dev e l o p i n g c o u n t r i e s to achieve t h e i r i n d u s t r i a l i z a t i o n g o a l s . Abrams, C. "Regional P l a n n i n g L e g i s l a t i o n i n Under-Developed Areas'i. R e g i o n a l P l a n n i n g - Housing, B u i l d i n g and  P l a n n i n g , Nos. 12 and 13. New York. U n i t e d N a t i o n s . 1959, p. 99. APPENDIX I The f o l l o w i n g l i s t r e p r e s e n t s Conway's 700 P l a n t L o c a t i o n F a c t o r s , w h i c h are d i v i d e d i n t o t e n major h e a d i n g s . Each o f these major headings has many su b - h e a d i n g s , as shown. Under each o f t h e s e sub-headings t h e r e i s a l i s t o f sub-subheads, w h i c h are not i n c l u d e d i n t h i s a p p e n d i x . PLANT LOCATION FACTORS 1. Markets Market Trends R e t a i l S a l e s Income C o m p e t i t i o n I n d u s t r i a l Markets R e g i o n a l Comparisons A r e a s Consumer C h a r a c t e r i s t i c s P o p u l a t i o n 2. Labour Commuting F a c t o r s Employee Performance i n A r e a R e l o c a t i o n T e s t i n g Techniques Labour L e g i s l a t i o n U n i o n A c t i v i t y P e r s o n n e l P o l i c i e s Unemployment Labour P o t e n t i a l S c i e n t i f i c Manpower V o c a t i o n a l T r a i n i n g Labour F o r c e I n v e n t o r y Labour Surveys o r R e g i s t r a t i o n I n t e r v i e w Other Employees Sources o f Data U n a v a i l a b l e P e r s o n n e l 3. M a t e r i a l s and S e r v i c e s M a jor Raw M a t e r i a l s R o u t i n e S u p p l i e s G e n e r a l S e r v i c e s T e c h n i c a l S e r v i c e s Transportation Location Economies R a i l Transportation—General R a i l Service at Each Site Motor Transportation Water Transportation Commercial A i r Service Private A i r c r a f t F a c i l i t i e s Mail, Parcel Post, and Express Communications Special Services Government and L e g i s l a t i o n Government Administration i n Area State L e g i s l a t i o n State Taxes Local Taxes Total T'ax B i l l Future Taxes Indu s t r i a l Dispersal Financing Analyze Requirements Sources of Funds Credit Standing Terms of Loans Special Inducements Water and Waste Disposal Basic Water Sources Municipal Water Systems Ground Water--Wells Surface Water—Streams and Lakes Chemical Analysis Drainage Stream Pollution—Waste Disposal Sewage Disposal Systems Garbage and Trash Disposal Power and Fuel Select Basic Energy Source Check each U t i l i t y or Supplier E l e c t r i c Power Coal, O i l , F o s s i l Fuels Gas 154 9. Community. Characteristics Overall Community Planning Planning and Zoning Ind u s t r i a l Zoning A i r P o l l u t i o n Weather--General Weat'her--Specific Check-points Housing C i v i c Organizations P o l i t i c a l Atmosphere Law Enforcement So c i a l Attitudes Business Meeting F a c i l i t i e s Health and Medical Programmes Schools Churches Cultural and Recreational F a c i l i t i e s Spectator Sports News Media Representation i n Congress Streets F i r e Protection Amenities and Intangibles E x i s t i n g Industries 10. Individual Sites General Requirements Types of Sites Intangible Considerations Survey Methods Legal Check-Points Maps S o i l C h a r a c t e r i s t i c s f o r Foundation Cost of Land SELECT BIBLIOGRAPHY A. BOOKS Balakrishna, R., Regional Planning i n India, Bangalore. The Cit y P r i n t i n g and Publishing Co., 191+8, 136 p. Bogue, D.J., The Structure of the Metropolitan Community, Michigan University. Horace H. 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" I n t e r s t a t e Highway P l a n n e r s Urged t o Leave S i t e s Next t o R a i l r o a d s " , I n d u s t r i a l Develop-ment , V o l . I l l , No. 7j November-December, T9F6", pp. 37-1+3. 163 Roterus, V., Schultz, T.W, Shaffer, B.H. Syke s, J . , Trewartha, G, Ullman, E.L., Van, G.E., Ward, D.G., Wehrly, M.S. , Weston, J.K. , Wood, R., Woods, S.K., Wrigley, R., Yadava, V.S. , " S u i t a b i l i t y of Economic A c t i v i t i e s i n Relation to the Local Economy", Journal of  the American Institute of Planners, Vol. XIII, No. 1, 191+7, PP. 29-31 . , "Latin-American Economic Pol i c y Lessons", American Economic Review, Vol. XLVI, No. 2, May, 1956, pp. 1+25-1+32. and Lormer, J.W., "Preplanning for Plant Location", Factory Management, Vo l . 106, October, 191+8, pp. 95-102. "Industrial Location and Land Use", Town and  Country Planning, Vol. 2 3 , 1955, pp. 521-523. ]. and Verber, J.L., "Regionalism i n Factory Industry i n India and Pakestan", Economic  Geography, Vol. 27, October, 1951, pp. 283-286. "Amenities as a Factor i n Regional Growth", Geographical Review, Vol. I+i+, January, 1951+, pp. 119-132. "Locating the Right Industry i n the Right Place", Appraisal Journal, Vol. 26 , A p r i l , 1958, pp. 223-226. "Transportation Growing i n Importance as a Site Factor", I n d u s t r i a l Development, January-February, 1956, pp. 51+-58. "What Industry i s Looking For", Urban Land, Vol. XVI, No. 10, November, 1957, pp. 6 -5 . "Space Needs of Industry", Town and Country  Planning, Vol. 18, August, 1950, pp. 317-322. "Where to Put Your Plant", Fortune, Vol. 51+, July, 1956, pp. 100-101+. "Problems of Country Town Industries", American S o c i o l o g i c a l Review, Vol. 1+0, 191+8, pp. 113-121. "Planned In d u s t r i a l D i s t r i c t s " , Urban Land  I n s t i t u t e : Technical B u l l e t i n , No. 19, 1952, 28 p. ~~ "Industrial Location i n India", Modern  Review, Vol. 99, May 9, 1956, pp. 3 6 3 r 3 6 9 . 164 D. ENCYCLOPEDIA ARTICLE Schumaker, H., "Location of Industry", Encyclopedia of the  Social Sciences, Vol. IX, New York. The MacMillan Company, 1933, pp. 585-593. E. UNPUBLISHED MATERIAL Turner, O.D., Indu s t r i a l Location Factors i n Wyoming: A Functional Analysis, Unpublished Doctoral Dissertation, The University of Texas, January, 1958. F. REFERENCES ON GHANA Acquah, I., Boateng, E.A., Accra Survey, London. The University Press, 1958, 178 p. A Geography of Ghana, Cambridge University Press, 1959, 192 p. The Central Bureau of S t a t i s t i c s , Economic Survey, I960, Accra. The Government Prin t e r , 1961, 91+ p. Central Bureau of S t a t i s t i c s , "Highlights of Census", Ghana Today, Vol. 6, No. 22, January 2, 1963, PP. 7-8. 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Ministry of Information, "Ghana's Economic Poli c y " , New Ghana, August 1, 1962, pp. 9-12. Ministry of Information, "Imoru Egala T e l l s Parliament of Ghana's I n d u s t r i a l i z a t i o n Programme", Ghana Today, Vol. 6, No. 22, January 2, 1963, PP. 1+-5. Prasad, V.N., "Indu s t r i a l Development i n Ghana and Need fo r Regional Balance", A Paper submitted for Consideration of Industries Committee of the National Planning Commission, Government of Ghana, Accra, June, 1§62, 5 p. 

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