Question

How does growth of Agglomeration economies promote urbanization and what can be the consequences of rapid urbanization

Answer 1

agglomeration is a marketing structure where several firms,industries execute there production process and enjoy the external economies of scale arising due to better business environment and convenience.

agglomeration and urbanization-due to agglomeration there is a huge supply of

• skilled,innovative and efficient labor,
• inflow of funds,
• infrastructural development

which accelerate the growth of economy as well as urbanization process.it impact the economic environment as follow

CONSEQUENCES OF URBANIZATION- there is two sides of a coin similarly the consequences of urbanization is also of two types.

POSITIVE IMPACT -

1. BETTER TRANSPORTATION-better roadways,seaways and even airways would be available and develop due to increasing trade.this is important concept of urbanization.
2. BETTER EDUCATIONAL FACILITIES-firms would like to employ the skilled,educated and efficient personnel in their firms,therefore the educational institutions concerned with engineering,technology,finance and medical studies would also increase.
3. BETTER CREDIT FACILITIES-various financial institutes like banks,NBFC(non-banking financial institutions) would like to operate in the market due to large scope and large scale of business dealings.
4. HIGHER STANDARD OF LIVING-people would be provided with better quality of goods and services which would lead to raise the standard of people and improve the lifestyle.
5. BENEFIT OF GLOBALIZATION-Foreign companies would like to operate and invest in the economy which have better business environment.

NEGATIVE IMPACT-

1. UNBALANCED GROWTH-the rural area may remain neglected and no special effort is made in respect for the development of rural and under developed areas.
2. INFLATION-increased urbanization leads to increase inflation in the economy and therefore it becomes difficult for the survival of poor people in the economy.
3. HIGHER IMPORTS-due to increased income people would demand for the non-essential items in the economy,and therefore it would lead to increase the imports and would subsequently make an adverse impact on BOP(balance of payment)
4. THREAT TO AGRICULTURAL AND CULTIVATION SECTOR-over-urbanization leads to acquire the agricultural land for construction work therefore the level of production concerned with agriculture sector would be under threat.
5. DESTRUCTION OF NATURAL RESOURCES-deforesting,depleting natural resources are destructing the environment.which will make and adverse impact to the present as well as to the future generations.