Explain how Government Policy functions as a factor deciding location of industries.
Government policies encourage or discourage manufacturing activity in certain locations or regions and the control is very strong in planned economies. While the government may encourage establishment of industries in some regions in order to achieve a regional balance or otherwise, it may discourage such development in some other areas. The pattern of industrialization may be influenced by the government through either selective taxing or tax rebates or by clear-cut direction to the manufacturers. The government policy has become a very significant factor affecting the distribution of manufacturing activity as the governments in most countries stress balanced growth of all parts and a general dispersal of industry.
Topics: GS-I: Factors Responsible for the Location of Industries in Various Parts of World