Which of the following correctly describes the concept of a Marshallian Industrial District?

Explanation

A Marshallian Industrial District is not a single mega-factory or a state-planned estate; it is an organic regional concentration of many small and medium enterprises working in the same or related industries. The OECD's discussion of regional clusters traces this idea to Alfred Marshall: firms located near one another can become more productive through labour market pooling, knowledge spillovers and supplier specialisation. Its cluster typology also distinguishes "Marshallian" clusters, made mainly of locally owned SMEs, from hub-and-spoke or industrial-complex clusters dominated by one or several large firms. That is why option C captures the concept: the district's strength comes from external economies created by proximity, not from ownership integration, tax incentives or government planning.

Why the other options are wrong

• (A) A describes vertical integration by one firm, whereas a Marshallian district rests on many specialised SMEs gaining external economies from proximity.
• (B) B describes an export processing or special economic zone created through policy incentives, not an organically formed cluster of related local firms.
• (D) D is a state-planned industrial township for heavy industry, while Marshall's idea concerns spontaneous agglomeration and shared external economies among firms.

Concept

This tests industrial location, regional specialisation and agglomeration economies in World Geography. RAS asks such ideas because they connect theory with real industrial clusters and regional development patterns.

Source

• OECD, Globalisation and Regional Economies: Can OECD Regions Compete in Global Industries?

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