Industrial location theory is broadly based on the economic arguments of opti- mum location, according to which firms locate where profits are maximised. It is now noticed that when infrastructure develops along with economic development, economic factors such as transport, raw materials and market become less critical; simultaneously, non-economic factors such as pleasant environment gain in importance. This shift in the relative importance of location factors according to changes in the level of economic development is called 'Location Dynamics'. This concept is developed in this paper, and the influence of industrial structure on it briefly discussed. Evidence collected from literature and a survey of small scale enterprises in the United Kingdom, Japan and India support the validity of the concept. Some of the implications of location dynamics on regional development policies are also discussed in this paper.