Sargant’s Theory of Industrial Location (With Criticism) | Economics

Sargant Florence has given his theory about industrial location, which has become popular. He started with the idea that some of Weber’s assumptions are not realistic. According to him geographical location of an industry is not as important, as the distribution of occupied population. His main consideration is that occupational distribution of population should be the main and primary factor for taking into consideration the location of an industry.

His theory is mainly based on inductive analysis and while explaining location factor of an industry he has taken into consideration location factor and co-efficient of localisation. Now a question arises as to what is location factor. According to him, it is an index of the degree of concentration of an industry in a particular region. Now this raises another problem namely how to arrive at the index, to which Sargant has made a reference.

According to Saviyya and Dass, This index is calculated by taking into consideration two ratios, namely, the percentage of workers of the industry in question found in the region under consideration and the percentage of all industrial workers in the country.

In calculating index to find out the location factor the first one is divided by the second and if the quotient is one, the location factor is said to unity and it can be said that the industry is evenly tribute over the whole country. If quotient is above unity, then the conclusion can be that the region under reference has higher share of industry.

Co-Efficient of Localisation:

By this he meant prosperity of an industry for concentration. It indicates an industry’s tendency for localisation anywhere in the country. It is primarily concerned with a particular industry and not a particular region. It will thus be a single figure for the industry and also for the country as a whole.

Co-efficient of localisation can be found with the help of following formula:

(a) % age of all workers found in each region;

(b) % age of the workers of industry in question in each region;

(c) Positive deviations of (b) from (a) are to be added;

(d) Sum thus derived is to be divided by 100.

On the basis of coefficients it becomes possible to divide the industries into three categories namely high, medium and low. Thus coefficient helps in classifying industries according to their dispersion or concentration.

While discussing the advantages of method Prof. Kuchhal says, “Thus the location significance of industries is shown and the problem of investigation becomes easier. Industries with low- coefficient of localisation can thrive in different regions and are thus dispersed. Industries which show a high coefficient of localisation…. are centralised in particular regions.”

Critical Assessment of the Theory:

1. The theory is not in a position to explain the causes responsible for the choice of location of an industry. It can only help in finding out the existing state of industrial distribution in a country. It is said that the theory is only the investigation of status quo and nothing beyond that.

2. While finding out coefficient of localisation, the unit is political region, which it is said cannot be much justified in discussing an economic theory. Therefore, the unit should be economic region.

3. According to this theory number of workers is the only one factor as the indicator of concentration of an industry, but there is no logic in choosing this one factor alone for finding out concentration of an industry.

4. According to Florescence co-efficient of location for all the countries is the same. But it cannot be the same because distribution of workers in each country varies according to local conditions.

5. While formulating his theory, he has not given due place and consideration to various forces of concentration which have direct bearing on the location of industrial units namely the role of external economies or tax incentives etc.

Value of the Theory:

Like Weber’s theory, this theory also suffers from some defects, about which a mention has already been made. But the theory has its advantages too. The theory is of considerable use for studying location dynamics in any country. These indices help in guiding the trends of industrial development in a country.

Then another advantage is that coefficient of localisation helps in deciding the types of industries that may be dispersed under a scheme of regionalism. It then becomes possible to diversify industries with a medium coefficient of localisation over a wide area, according to factor equipment in each area.