Abstract
“Agglomeration economies” are the advantage which comes when different firms and people locate or accommodate near one another together in the nearby areas, industrial clusters and specified zone. The main benefit from neighboring company than company at a distance place is the saving in the cost of transportation and easy connectivity. The transportation costs must be calculated in the all required aspects in details, it includes the challenges in exchanging goods, people and ideas. The connection between agglomeration economies and transportation costs would seem to suggest that agglomeration should become less important, as transportation and communication costs becomes less (Glaeser, 2010) . There will be decrease in the cost transportation and communication by application of the agglomeration economy. Yet, a central paradox of our time is that in cities, industrial agglomerations remain remarkably vital, despite ever easier movement of goods and knowledge across space (METRANS, 2019). It can be clarified into localization and urbanization economies. More benefits can come by clustering of industries in a particular area.
Introduction
Small initial challenges and differences lead to industrial setting up in specific locations, which means other industrial related to the company will also tend to develop nearby. Due to agglomeration economies, groups of same type of industry are developed in nearby area. If industry is concentrated in a particular region, then services can be provided more efficiently.
If a particular same area is specialized in production of some specific type of products, all the firms related to it can get benefits from various factors such as:
- Easy logistic links
- Availability of skilled workers
- Good Supply and Demand chain
- Good infrastructure and civil amenities
- Urbanization Economies: The term urbanization economies refer about the advantages that firms in number of different industries receive from population and industrial clusters. Example: Shopping Mall, although there are different stores of different products in same location to use the same infrastructure like buildings, parking and other common areas. Another benefits in this example is that stores can attract the customers who have come to other nearby shops also.
- Localization economies: The term Localization economies refer in which firms in same industry locates near each other and gets benefits of locating close together. The labor pooling is major benefit as same skilled group of workers are drawn to same location and ideas spread quickly among firms within same industry, termed as knowledge spillovers. It helps in growth and development of that particular area which benefits the overall growth of country. Example: Detroit. Accesses to skilled labor specific to the auto industry, common suppliers and potential for knowledge spillovers were powerful factors in turning the city into an auto manufacturing hub.
Mandal Becharji Special Investment Region
“Mandal Bechraji Special Investment Regoin” (MBSIR) is a new industrial hub being planned about 90km from Ahmedabad and 85kms from Gandhinagar near Becharaji town which has spread area of more than 102 Sq.km.[1] It is green field development project. A new smart industrial city with concepts of reduce, recycle and reuse is aimed to efficiently develop with good transportation availability. Envisaged by the government of Gujarat, MBSIR is one of its kind industrial hubs and will consist of world class automobile and manufacturing hub with excellent infrastructure and advanced civil amenities (Gujarat, 2019). The SIR is strategically well connected and located with trade gateways and falls into the influence zone of proposed Delhi-Mumbai Industrial Corridor (DMIC), a joint initiative by the government of Japan and India. A huge investment of about Rs.117057crore has been proposed with employment generation of more than 7lakhs.
There are already two major automobile industry in this area: Maruti SUZUKI with annual production of 1.5 million vehicles, in a phased manner, Honda Motorcycles and Scooters India (HMSI) has set up its facility in the area for two-wheeler production and JSW group has signed agreement with Gujarat government for producing 2lakh electric vehicles annually for an investment of about Rs 4000 crore.
These companies will attract more automobile related companies and auxiliary company in the area and surrounding clusters. As the area is in the influence zone, the transportation can be made more viable. This project will help in the development of the Localization economies.
Direct and Tangible Benefits to MBSIRDA:
- Direct Employment generation. (1.7 lakhs)
- Increased investments in the region
- Indirect jobs creation. (2.5 lakhs)
- Increase Revenue for government through various taxes
Conclusion
There will be huge benefits from agglomeration economy in forms of physical capital, consumers, companies and laborer. Less transportation cost and easy avaibiliaty of goods in local market, larger supply of trained and skilled labors at lower search costs. The agglomeration economy increases the exchange of new innovative ideas and improvements in the current production units, increasing opportunities and productivity and helps in growing the capital accumulation of the city. The rate of development of the physical and economic growth of the cities increases at higher rates. If this phenomenon occurs in the rural areas it will help in decrease in migration to metro cities and increase in the employment opportunities and development in the rural areas.
The relation between the economic growth and agglomeration is interdependent on each other though; there is a difficulty in explaining agglomeration economies in theoretical definition with the identification of its causality as affected in applied studies.
References
- DholeraSIR. (2019, 10 15). MBSIRDA. Retrieved from DholeraSIR: http://dholerasir.com/mbsirda/
- Glaeser, E. L. (2010). Introduction. In E. L. Glaeser, Agglomeration Economics (pp. 1 – 14). Chicago: The University of Chicago Press.
- Gujarat, G. o. (2019). Mandal Becharaji Special Investment Region Development Authority (MBSIRDA) . Ahmedabad: Gujarat Pollution Control Board.
- METRANS. (2019, 08 10). METRANS CITIES GROWTH. Retrieved from METRANS: https://www.metrans.org/outreach/documents/METRANS_CITIES_GROWTH_SEP_17_08_SEP_15_update.ppt
Author Details
Ishita Vyas | PGDM (IM) | 2019-21
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She has completed B.E. (Civil). She is currently pursuing PGDM in Infrastructure Management (2019-21) at AIIM. She has an experience of over 2 years in Urban Infrastructure Consultancy for Smart City development.
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If you think your projects ,I will subjected facilies there or nor.first of all good roads,lights(electric),water supply & drainage are there?
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