Question

Briefly explain what the term "agglomeration economies" refers to and briefly describe what the fundamental reason for the development of this particular type of economy relates to. From Oman economy please provide two examples of factors associated with agglomeration economies and identify what these factors help to explain. Identify two factors that would lead to diseconomies and briefly explain how the future of many of the world's cities will be likely be determined.

Could you please write on your own words

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Answer 1

Agglomeration of economies shows an external economies of scale which refers to the benefits concentrate from output and housing in particular areas. For example, if a firm specialise in the production of certain good all other firms get benefit in terms of the supply network, supply of trained workers, infrastructure efficiency and good transportation link. One of the most important example for the agglomeration of economies is the migration of people from rural areas to urban. West Midland car industry, Chinese clothing manufacturers are the significant explanation about the agglomeration of industries. Most important reasons for this type of developments are high level adoption of the technology and other innovations, efficient industrial policies, increasing educational development etc.
Oman economy was based on the production of the oil and gases. The development of the manufacturing sector in Oman economy also attracts several migrant workers to Oman and this will increase the production of oil and gases and also increase the migration level. This high level migration helps the travel industry and also increases the level of GDP. One of the reason for diseconomies of the agglomeration economies is the increasing level of the crowding and traffic congestion by concentration of automobiles. This will affect the sustainable development of the future generation. The high level pollution affects the environment and the non renewable resources. The increasing urban population will increase the formation of slums.