What is the difference between raw material orientation and market orientation?

Raw material oriented industries locate near the raw material because it is heavy, bulky, or perishable (e.g., steel mills near iron ore). Market oriented industries locate near the consumer because the finished product is fragile, perishable, or gains weight (e.g., bakeries, bottling plants).

What is an Export Processing Zone (EPZ)?

An EPZ is a designated geographic area where foreign companies can import raw materials, manufacture goods, and re-export them with reduced taxes, fewer customs duties, and relaxed labour regulations. The host country benefits from jobs and technology transfer; the foreign company benefits from lower costs.

O-Level Geography: Industrial Location Factors and EPZs

Q: What are the key factors affecting industrial location?

1) Raw materials (heavy industries locate near the source to minimize transport costs). 2) Labour supply (skilled workers or cheap labour). 3) Transport links (roads, ports, railways). 4) Market proximity (perishable or bulky finished goods need to be near consumers). 5) Government incentives (tax breaks, subsidies, EPZs). 6) Energy supply (aluminum smelting needs vast electricity).

Q: What are the disadvantages of EPZs?

Workers often face poor conditions (long hours, low wages, limited union rights). Profits are repatriated to the foreign country rather than staying locally. Environmental regulations are often relaxed, leading to pollution. Companies may leave once tax holidays expire, causing sudden unemployment.

An aerial view of an industrial zone with factories, port infrastructure, and cargo ships.

Why do steel mills always locate near iron ore mines rather than near cities?

Steel production is raw material oriented. The iron ore is incredibly heavy and bulky, but the finished steel is much lighter. Transporting raw ore long distances is prohibitively expensive. A steel mill consumes roughly 3 tonnes of iron ore and coal to produce 1 tonne of steel — meaning 2/3 of the material weight is lost during processing. It is far cheaper to process at the source and transport only the lighter finished product.

1. The 6 Key Location Factors
2. Raw Material vs Market Orientation
3. Export Processing Zones (EPZs)
4. Evaluating Industrialization in LEDCs

Industrial location is not random. Every factory, refinery, and processing plant exists where it does because of specific geographic and economic logic. CAIE frequently asks you to explain why an industry chose a particular location, or to evaluate whether a government industrial policy was successful. This guide from our Ultimate Geography Guide teaches you the analytical framework.

1. The 6 Key Location Factors

Raw Materials: Cement factories locate near limestone quarries. Sugar mills locate near sugarcane plantations. Heavy, bulky raw materials pull industries towards the source.
Labour: Tech companies flock to areas with skilled graduates. Textile factories locate where cheap, unskilled labour is abundant (e.g., Bangladesh, Vietnam).
Transport: Port cities (Karachi, Shanghai) attract export industries. Motorway junctions attract distribution centers.
Market: Bakeries, ice cream factories, and bottling plants must be near consumers because their products are perishable or gain weight.
Government Policy: Tax holidays, subsidies, and EPZ designations can override all natural location factors.
Energy: Aluminum smelting requires enormous electricity. Smelters locate near hydroelectric dams (cheap, abundant power).

💡 Tutor's Tip

Named Examples Win Marks: Never write "many factories are near ports." Write "The Karachi Export Processing Zone is located adjacent to Port Qasim, providing direct access to international shipping lanes." Specific place names and geographic locations are worth extra marks.

2. Raw Material vs Market Orientation

Raw Material Oriented (Weight-Losing)

The raw material is heavier than the finished product. Processing removes waste material. Examples: Steel mills (iron ore), sawmills (timber), sugar refineries (sugarcane).

Market Oriented (Weight-Gaining / Perishable)

The finished product is heavier, bulkier, or more fragile than the input. Examples: Bottling plants (water is heavy), bakeries (bread is perishable), furniture factories (assembled furniture is bulky).

3. Export Processing Zones (EPZs)

EPZs are designated industrial areas where governments offer special incentives to attract foreign investment: tax holidays (often 10-25 years), duty-free import of raw materials, relaxed labour laws, and subsidized infrastructure.

Advantages

Creates thousands of jobs in areas with high unemployment
Technology transfer — local workers learn modern manufacturing skills
Foreign currency earnings from exports
Infrastructure development (roads, power) benefits surrounding areas

Disadvantages

Low wages and poor working conditions (minimal union protection)
Profits repatriated to the foreign parent company, not reinvested locally
Environmental damage due to relaxed pollution regulations
Dependency — if the MNC leaves, mass unemployment follows

📋 From the Desk of David Chen

The "Race to the Bottom":LEDCs compete against each other by offering increasingly generous incentives — lower taxes, cheaper labour, fewer environmental controls. This is called the "race to the bottom". CAIE frequently asks whether EPZs truly benefit LEDCs or simply allow MNCs to exploit them. Your evaluation should acknowledge BOTH the employment benefits AND the exploitation risks.

4. Evaluating Industrialization in LEDCs

The key evaluation question is: "Does foreign industrial investment genuinely develop an LEDC, or does it create a dependency trap?" The balanced answer acknowledges short-term job creation while questioning long-term sustainability if profits leave the country and skills remain low-level (assembly, not design).

💡 Tutor's Tip

The China Counter-Example: When evaluating EPZs, mention that China used EPZs (Shenzhen) as a springboard — initially attracting foreign assembly plants, but then developing indigenous technology companies (Huawei, Xiaomi) that now compete globally. This shows EPZs CAN lead to genuine development when combined with education investment.

Frequently Asked Questions

What are the key factors affecting industrial location?▼

Raw materials, labour, transport links, market proximity, government incentives, and energy supply.

What is raw material vs market orientation?▼

Raw material oriented: locate near the heavy/bulky source (e.g., steel mills). Market oriented: locate near consumers for perishable/weight-gaining products (e.g., bakeries).

What is an EPZ?▼

A designated zone with tax breaks, duty-free imports, and relaxed regulations to attract foreign manufacturers for export production.

What are the disadvantages of EPZs?▼

Low wages, profit repatriation, environmental damage, and dependency on foreign companies.

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Factory Footprints: Why Industries Locate Where They Do