Cities provide market and other facilities like banking, insurance, transport, labour, and financial advice etc to the industry. Many industries tend to come together to make use of the advantage offered by the urban institutions.

Industrial locations are influenced by availability of raw material, labour, capital, power and market, etc.Manufacturing activity tends to locate at the most appropriate place where all the factors of industrial location are either available or can be arranged at lower cost.After an industrial activity starts it triggers urbanisation. Industrialisation and urbanisation go hand in hand.Cities which provide markets and also provide services such as banking, insurance, transport, labour, consultants and financial advice, become urban centers called as agglomeration economies.