Material index

Material index

Material Index is a concept developed by Alfred Weber in his theory of least cost location.

The point of optimal transportation based on the costs of distance to the "material index" – the ratio of weight to intermediate products (raw materials) to finished product.

In one scenario, the weight of the final product is less than the weight of the raw material (Material Index more than 1) going into making the product – the weight-losing industry. For example, in the copper industry, it would be very expensive to haul raw materials to the market for processing, so manufacturing occurs near the raw materials. (Besides mining, other primary activities (or extractive industries) are considered material oriented: timber mills, furniture manufacture, most agricultural activities, etc. Often located in rural areas, these businesses may employ most of the local population. As they leave, the local area loses its economic base.)

In the other, the final product is equally as heavy (Material Index is equal to 1) as the raw materials that require transport. Usually this is a case of some ubiquitous raw material, such as water, being incorporated into the product. This is called the weight-gaining industry. This type of industry tends to build up near market or raw material source, and are called foot-loose industry. Cotton industry is a prominent example of weight-losing raw material.

Some industry, like heavy chemical industry, the weight of raw material is less than the weight of finished product. These industries always grow up near market.

Weber's concept successfully describes the location of industry in most cases. But because of the costs other than transport some industries violate this rule. Today the development of transport and technological development has largely reduced the success of Weberian model. For example although the iron and steel industry is a highly weight-losing industry it tends to grow in places where iron ore is absent, Japan for example.