Government Policy and Location of industries

Hon. Patrick Chinamasa presenting the budget.

• This factor affects both industrial growth and location in a national economy in a number of ways.
• In terms of industrial growth, government can affect this through:
• Fiscal policy – Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. Under these policies industrialists will seek answers to questions like, what is the nature of the tax regime prevailing in a country? Does the Government allow repatriation of profits by foreign companies? Is foreign currency readily available or are there stringent controls over is flow?
• Domestic and foreign policy – if government promotes free enterprise and privatization, industrialists feel happy and will expand their operations.
• On the other hand, where government nationalizes private businesses or control prices or deliberately encourages trade unionization and fixes minimum wages, entrepreneurs are threatened and move to greener pastures.
• It is the responsibility of government to supply basic infrastructure to industries in the form of transport, power, health and education so that industrialists simply tap these services.

As for industrial location, government can influence this in the following ways:

• Direct ownership of industrial firms – under such circumstances, government will decide where to locate its factories.
• Industrial location policy – in advanced countries such as France, Italy and UK there occur what are called depressed regions.
• Under such conditions, government deliberately promotes industrial location in the depressed regions through offering multiple incentives while through local authorities, it makes location in prosperous regions very difficult.
• In Zimbabwe, areas of prosperity are the larger established urban centres such as Harare and Bulawayo.
• Industrialists want to continue locating here but the government, worried by the disparities in levels of total national economic development, is in favour of decentralization to smaller towns and growth points which are looked upon as depressed regions.
• In this regard, government is trying to decentralize by offering incentives such as free or cheap land, a low tax regime, cheap water and electricity supplies, among others.
• The aim is to have equal economic growth, raising living standards in rural areas, especially communal lands, stem rural-urban migration by bringing jobs to the people and provide basic modern infrastructure.
• Growth points such as Gokwe and Mupandawana have sprung up as a result.
• Strategic industries – government decides on what it terms strategic industries. These are industries of national importance such as ZISCO which it feels should be determined where to locate by the state.
• In this case government directly decides the location of the industry for security reasons and other considerations.

To access more topics go to the O Level Geography Notes page