The Impact of Factory Size on Urban Growth and Development

Abstract

Medium size manufacturing plants, achieving increasing scale economies by a disintegrated production process within the urban economy, are more favorable for urban growth than larger plants. These plants (as indicated by a survey of 150 plants in nine, southern Israeli towns) are large enough to maintain diversified production activities, but they are not big enough to take advantage of internal economies of self supply or to depend on out-of-town supply agents. The medium size plants, therefore, create a substantial demand for local input and service resources, and initiate intensive linkages within the local economy. The beneficial effects of the medium size plants are best accomplished in the medium and larger urban centers. The policy implications of these findings are that regional development and industrialization policies, which strive for regional equality, should concentrate on the establishment of medium size plants in medium size urban centers.