Advantages of Localization of Industry:

(i) When firms locate at one area, very often there is the tendency for the development of pool of labour around the area. People around the area learn skills needed by the industry. Institutions may spring up to train people around in the skills needed by the industry.

(ii) Specialist-service industries such as banks, telecommunication organizations, postal organizations, security services organizations may extend their services to the area.

(iii) Subsidiary industries such as suppliers of raw materials, packaging industries, marketing industries, etc. may develop around the area.

(iv) Firms when concentrated at an area may create keen competition among them. Competition leads to efficiency which can pass on to the consumers in the form of lower prices and increased quality.