concentration and centralization

The tendency of economic activity to congregate in a restricted number of central places. This convergence of economic activity is encouraged by functional linkages, and external and agglomeration economies. The centralized core tends to develop at the expense of the periphery, attracting cheap raw materials and the best brains.

Concentration and centralization occur on a number of scales; within a nation they result in regional inequality, within a continent or trading block they result in variations in national prosperity, and globally they help to bring about the contrasts we see between North and South.

The driving force behind concentration and centralization is said to be the tendency for economic activity to be organized into larger and larger hierarchical structures; a pattern which began in the nineteenth century but which has extended into the twentieth century. Industry is in the control of fewer and fewer capitalists and the growth of transnational corporations has seen economic activity all over the world increasingly directed from a few head offices in Europe, North America, and South-East Asia.