The benefits that are external to the firms in proximity are called the economies of localization .now these typically are not the only firms in the immediate region .there are usually other factories ,producting other goods,distributed through other channels ,sometimes for different markets.there other firms,and their employees ,and the service workers who provide food,education.and health care for all these employees and their families,comprise,typically an urban area .all the firms that benefit from being in the urban area ,regardless of whether or not there are other similar firms in the area,derive economies of urbanization from their location choice .in other words,there are productivity gains from industrial clustering.