From the statement “most of Mr Alex Pang’s friends appear to have ignored the effect of agglomeration of industry”

From the statement “most of Mr Alex Pang’s friends appear to have ignored the effect of agglomeration of industry”, we understand that Alex Pang’s friends ignored the effect of agglomeration because his friends discouraged him to obtain the land for retail development that is out-of-town. This is because there is highly competitive environment which the land is currently surrounded by two retail centres across the road. Mr Alex Pang’s friends are lack of knowledge on the benefits and effect of agglomeration of industry.
An agglomeration of industry refers to the concentration of several industries in an area or place. Such a concentration of several industries occurs since the area in question has the greatest location advantage compared other areas, including the benefits of accessibility to related industries. As a result of agglomeration, firms frequently centralize in an area or place which firms be inclined to close to each others. Agglomerative activity can apply many forms and is frequently considered to result in either “Localization or “Urbanization” economies dependent over the industrial composition of the cluster or complex. For Localization Economies, it basically involved economies which includes similar firms, whereas economies which includes different firms are known as Urbanization Economies. The latter form of agglomeration has received greater attention in the literature, frequently offering a mechanism for analyze of dissimilar urban growth and optimal city size. (Morgenroth, Edgar, 2018)
An consultation should be given to Mr Alex Pang to develop the 5-acre retail center development as there is much affirmative effects of the agglomeration of industry. There will be more people being attracted by this retail centers development, as there are already 2 existing retail centers along Jalan Kuala Langgat by referring to the site plan, by the affirmative effects of the agglomeration of industry. Mr Alex Pang will have a good revenue on his investment if he was to acquire and develop the 5-acre land for retail development. In fact that there is existing residential housing across the road and Mr Alex Pang also propose to develop the 200-acre residential housing in the same area, with this the 5-acre land for retail center development will have good revenue in return as the residents increased.
There are a few reasons for Agglomeration take places. There are many industrial strategies have obviously been attracted to the identical location and the system tends to be cumulative. The preliminary enchantment to industry, for example it might also have been the availability of strength resources or the existence of a material or a place, as a essential port or junction of routes to form agglomeration. (Jasson, 2009)
Town are financial engines in every places as they focus the social and economic activities that enables existence of financial of scale plus economies of agglomeration. Town preference productivity and facilitate the provision and trade of goods, lowering transaction costs. In addition, agglomeration economies have an influence on town development. The agglomeration economies represent benefits to corporations as result of clustering. There are two major consequences of the agglomeration economies on towns. It result in an accumulation of capital, reflected in economic growth and town size. Besides, it also affect the level of monetary specialisation, or monetary profile of each place or area. (Jasson, 2009)
There are many benefits for agglomeration of industry. The concentration allows personal corporations contract out certain essential components which they buy from some other corporations which specialized in the manufacturing of those part. The specialized corporations with its larger scale of manufacturing can use specialized equipment and limit its overhead costs. In a massive and developing industrial centre, there is also development and enlargement of many necessary or beneficial offerings e.g. trade journals, unique banking and insurance facilities, and so on. Small-scale and specialised industries on occasion also acquire excellent economies through concentrating their activities in a unique ‘quarter’ of a massive industrial centre e.g. they can buy and sell through local middleman who specialize in their requirement. (Gilles Duranton ; William R.Kerr, 2015)
Agglomeration economies enhance the trade of thoughts producing innovation and enhancements in the manufacturing structures of corporations, growing productivity and consequently the capital accumulation of a town. The agglomeration economies enhance the productivity which lets in a quicker increase of corporations and physical and financial increase of the cities. (Jasson, 2009)
Agglomeration of retail center developments will fascinate more people to visit the 5-acre retail centers specifically the 200-acre residential housings’ residents and residents across the street. For example, if a resident can have anything he/she wants in agglomeration of retail center, he/she will choose to shop in the retail center rather than going far away to get what he/she wants. Therefore, Mr Alex Pang can proceed with the 5-acre land development on retail center beside his 200-acre land of residential housing development.
As a conclusion, as a registered valuer who worked in the Klang Valley for the past 10 years, I shall persuade Mr Alex Pang to acquire and invest this 5-acre land for retail development. This is because the effect of agglomeration will not only attract nearby residents but also to attract residents which are out-of-town.