Growth Pole Theory

Pratik Danish Ritwick Sugandha Shweta 081110236 081110202 081110253 091110231 091110245

GROWTH POLE HYPOTHESIS

A French regional economist Francis Perroux introduced the concept of Growth Pole. According to this concept public investment programs will have maximum effects on a regional growth if concentrated in a small number of favorable locations in regional development policy.

Growth does not appear everywhere at the same time, it becomes manifest at points or poles of growth, with variable intensity; it spreads through different channels, with various terminal effects on the whole of the economy.
Francois Perroux 1903-1987

Assumptions:

The concept of growth poles and growth centers is based on certain assumption about the real world. 1.Human activities must cluster together to generate internal and external economics of scale.
2. If clustering is allowed, it may entail heavy social costs in terms of congestion, diseconomies of scale and spatial imbalances in social and economic development. 3.The autonomous process, which generate clustering of human activities and there by create spatial imbalances in economic development, can be directed through policy interventions to generate growth foci in areas where they do not exist.

The close relationship between scale of operations, dominance and impulses to innovate became the most important features of Perrouxs theory and lead to the concepts of dynamicpropulsive firm and leading propulsive industry. Characteristics Dynamic & leading propulsive firm

The characteristics of a dynamic propulsive firm are: it is relatively large has a high ability to innovate belongs to a relatively fast growing sector and the quantity and intensity of its interrelations with other sectors of the economy are important enough for the induced effects to be transmitted to them.

The characteristics of a leading propulsiv industry are also similar. Suchan industry has highly advanced level of technology and managerial expertise high income elasticity of demand for its products marked local multiplier effects and strong inter-industry linkages with othersectors

The linkages created by these industries are of two types.

Backward linkage : An industry encourages investments in the earlier stages of production by expanding its demand for inputs (which are the outputs of industries in the earlier stages of production (e.g. Sugar Industry) Forward linkage : An industry encourages subsequent stages of production either by transmitting innovations or effects of innovations forward.

Basis of Perroux Hypothesis

Thus Perroux based his theory on two cornerstones

1. Schumpeterian theory of development

2. Theory of inter-industry linkages and industrial interdependence.

The Growth Point and the Region

The growth point is surrounded by a swarm of affected industries, thinning out as you move away from the growth point. At a later stage, the growth point has spawned a secondary growth point.

Differential Growth
Which Cities Will Grow?

Time 1

Differential Growth
Growth Cities =

Time 2
Industrial Mix = the mix of industry that grew during this time period.

Differential Growth
Which of the growth cities will grow the most?

Competitive Shift = those that are best able to exploit and augment the growth industries

Growth Pole Theory

More elegant and applicable than economic base Growth is not spatially uniform Its concentrated at points (poles) Growth begets more growth Growth pole effect operates on cities themselves Also within cities as some area grow while other lag behind Most theories of urban development have growth pole theory at their core Build it and they will come!

Uneven Impacts of Regional Growth

Concentrating investment in one area usually leads to polarization of development. As growth accelerates in the urban area, the hinterland experiences a parallel decline. Also called backwash, this involves the out-migration of rural residents from the hinterlands to take advantage of urban job opportunities. The end result is that the hinterland can become more impacted and less able to meet local needs.

Polarization & Trickle Down

Growth at poles = decline in peripheral areas Backwash effect = loss of jobs and migration of young to growth poles Counteracted over time by trickle down effect which makes periphery more attractive spurring urban and rural migration

The Trickle-Down Process or the Spread Effect

A trickle-down process (Albert Hirschmans term) or spread effect (Gunnar Myrdals term) counteracts the initial depletion of human and financial resources in the hinterland caused by polarization (or backwash). Growing markets, new technology and friction of distance combine with congestion, pollution and diseconomies of scale in the heartland (urban center) and the amenities of the hinterland, making outlying areas more attractive to development over time. The push and pull process of regional development.

In context of Bhopal

Applicability of Growth Pole theory in Regional Planning

Growth Pole concept has become popular because of its orientation towards dynamic industry (i.e. dynamic propulsive firm & leading propulsive industry) polarization and agglomeration (inter-industry linkages of external economies) and the promise of ensuring spread effects.

Thus the growth pole theory postulates that if we carefully plan the public investment programs to be concentrated or located in a small number of favorable locations then it will have maximum spread effects on a regional growth. Because of this, the underdeveloped countries today regard it as the most promising hope for regenerating the economy of backward areas. To develop backward regions, one has to implant potential propulsive industries there and concentrate investments in the selected poles rather than spread them thinly over the whole region. Even though it promotes structural imbalance over the whole region, it is justified that concentration of expansionary momentum at the poles will result in higher per capita income level in the region as a whole . Concentration of investments and public expenditure in a few selected points will enable more effective use of resources and there would be better chance of generating enough external economies

Inadequacies of the Growth Pole hypothesis

1. 2. 3. 4.

Inapplicability Urban and Industrial Bias Functional Rigidity Lock of Spill Over Mechanism

INTRODUCTION TO THE CONCEPT OF BACKWASH CIRCUITS AND GROWTH POLE

I. GOVERNMENT INVESTS FIRST IN THE CAPITAL CITY IN : -- THE INDUSTRIES, -- THE INFRASTRUCTURE. II. URBANIZATION PROCESS STARTS. III. BACKWASH PROCESS BECOMES VISIBLE : THOUGH LARGE CITIES HAVE LOWER LEVELS OF POVERTY, THE BACKWASH EFFECT OF NEW DEVELOPMENT MAY BECOME EVEN HARSHER ON THE URBAN POOR. CAUSES: DUE TO WRONG GOVT. POLICIES OF INVESTMENT IN THE CAPITAL CITY AND LACK OF SPATIAL AND REGIONAL PLANNING APPROACH.

CONCLUSION
I. THE ECONOMIC DEVELOPMENT PROSPECTS OF RURAL AREAS GENERALLY CANNOT BE ANALYZED OR UNDERSTOOD IN ISOLATION FROM THE SURROUNDING REGIONAL ECONOMY II. THE DEVELOPMENT STRATEGIES FOR ECONOMIC PLANNING AND GROWTH IN OUR COUNTRY SHOULD ADOPT INTEGRATION OF DEMOGRAPHIC, ECONOMIC, SOCIAL, SPATIAL, AND PHYSICAL ENDOWMENTS WITH INFRASTRUCTURE INVESTMENTS III. THIS POWERFUL CORRELATION BETWEEN ECONOMIC GROWTH AND HUMAN SETTLEMENTS CALLS FOR EFFECTIVE INTEGRATION STRATEGIES FOR URBAN AND RURAL DEVELOPMENT IN A SPATIAL AND REGIONAL PERSPECTIVE FRAMEWORK.

IV.

V.

REGIONAL PLANNING IN TERMS OF DEVELOPMENT AND CREATION OF GROWTH POLE AND GROWTH MAGNETS WOULD EVENTUALLY INDUCE DEVELOPMENT IN THE REMAINING PERIPHERAL AREAS NO DOUBT THIS SCIENTIFIC APPROACH WILL LEAD TO THE SUSTAINABLE DEVELOPMENT OF OUR CITIES AND REGIONS WHICH WILL FURTHER HELP US TO ACHIEVE THE MILLENNIUM DEVELOPMENT GOALS.

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