Growth Pole and Growth Centres

The theory of Growth Pole & Growth Centre has been proposed by French economists Francois Perroux and Boudeville respectively, with a view to resurrecting the French economy with propulsive growth in a short span of time. This concept acknowledges the preeminence of industrialization as the only and sole basis of economic development. The main idea was to initiate economic development in the backward regions by making investments at focused points or in certain areas, from which the development was supposed to diffuse to the whole region.

Historical Background

The Growth Pole Theory was originally proposed by Francois Perroux in 1955, as a part of economic development planning in France. Later, Boudeville (1966) introduced further modifications to the growth pole theory and published it as the growth centre theory, which gave a regional character and a specific geographic content to Perroux’s conception.

Growth Pole Theory

Perroux tried to explain how the modern process of economic development varies from the stationary concept of equilibrium growth. A "growth pole" (GP) is a dynamic and highly integrated set of industries organized around a propulsive leading industry. A highly advanced level of technology, managerial expertise, high income elasticity of demand for its products, and strong inter-industry linkages are the characteristics of a propulsive firm.

Rather than being uniform across an entire region, economic development or growth occurs around a specific pole or cluster. This is the central idea of the Growth Pole Theory as attempted by Francois Perroux. Perroux's model is based on three cornerstones.

• Schumpeterian theory of development is an economic concept, where development occurs because of discontinuous spurts in a dynamic world. Discontinuous spurts are a sudden, brief period of intense activity, effort, or emotion caused by an innovative entrepreneur. This takes place in large-scale firms.

• Theory of inter-industry linkages − there are two types of inter-industry linkages.

• Backward linkage − an industry encourages investment in the earlier stages of production by expanding its demand for inputs.

• Forward linkage − an industry encourages investment in the subsequent stages of production either by transmitting innovation or by carrying the effects of innovations forward.

• Theory of industrial interdependence − As a result of more investments, industries experience a decline in the cost of production, leading to a fall in the price of their output. As a result, the demand for that output product will increase among the industries that use this finished product to make their output. Similarly, there are many other ways in which investments in innovations can be transmitted forward.

Over a period, the region will have secondary and tertiary growth centres because of clustering economic activities that result in uniform regional development.

Growth Centre Theory

As a part of his studies in Minas Gerais (Iron Ore Mines, the largest in Brazil), Boudeville proposed the concept of a growth centre. In addition to Perroux’s conception, Boudeville added the concept of regional character and specific geographic content, which resulted in the growth pole theory receiving specific geographic and regional importance. According to Boudeville, the growth pole is a region with a set of expanding industries in an urban area, which induces the process of development of economic activities throughout its zone of influence.

He states that the place where the expanding, or propulsive or dominant industries are located in the region becomes the pole, and agglomeration (the accumulation of several basic and heavy industries with their respective sets of ancillary industries and their linkages) tendencies are promoted. This results in the polarization of economic activities around that pole. There are three types of external economies that are available in the area constituting the growth pole of a region.

• Economies internal to the firm: It lowers the average cost of production resulting from an increased rate of operational efficiency, like organizational and administrative efficiencies. This increases the output margin of a firm.

• Economies external to firms but internal to industries: It is associated with the localization of industry on account of the close geographic proximity of the linked form. Here, the firm's cost per unit of output decreases.

• Economies external to the industries but internal to the urban areas − This is called urbanization economics. The strategies include the development of the urban labour market, the provision of a wide range of facilities, and access to large market areas.

Global and Regional examples

• Peru is considered an example of a growth pole that has generated huge economic growth in a semi-arid environment. Though it started with industry, it expanded to all other sectors and resulted in the creation of two growth centers: Lima and Trujillo.

• In France, Paris was formed as a centre of growth. Later, through policy incursion, places like Bordeaux, Lyon, etc. were promoted as an alternate growth pole and helped reduce regional disparity in France.

• Bhilai was promoted as a growth pole based on iron and steel industries, which have linkages with coal mining areas and manganese mining in Palghat region.

• Jamshedpur was deliberately created as a growth pole based on the iron and steel industries. Later, it attracted a population from the hinterland. So, heavy industries have become the propulsive industry to promote growth in this region.

Criticism

• There is a lot of controversy regarding the generation and diffusion of innovation because identifying innovativeness and establishing linkages with the hinterland are very difficult.

• This concept, being closely related to the notion of hierarchy, provides a link to Christaller’s Central Place Theory. As the "central place" theory failed to explain growth, it became contradictory.

• Due to the gap that existed between the traditional notions of growth poles and the empirical reality, Growth pole theory was largely abandoned in the 1980’s.

• The explanation for why some growth poles tend to grow faster than others remained unanswered.

• Failed to identify the people’s preferences and social acceptability of the people. E.g., Posco in Orissa, and Tata nano in west Bengal.

• Selection of growth pole based on political consideration is not sustainable in the long run.

• In India, this theory is particularly successful in resource-rich regions like Vizag which attracted both industries and population, but it failed to develop interior hinterland like Bhilai.

Conclusion

Economic space has been criticized by many scholars, and Boudeville replaced it with geographi cal space. Economic space remains a mere fanciful idea, while geographical space is a larger reality.

Frequently Asked Questions

What does Growth Pole and Growth Centre Theory exactly define?

The concept of growth centres and growth poles was developed to explain the imbalance in the growth of regions and the need for regional planning to disperse growth to underdeveloped regions. According to this concept, for an economy or a nation, economic development is the most coveted goal.

What is a growth pole?

A "growth pole" (GP) is a dynamic and highly integrated set of industries organized around a propulsive leading industry.

What is the meaning of agglomeration?

Agglomeration means the accumulation of several basic and heavy industries with their respective sets of ancillary industries and their linkages. It involves the growth of infrastructure, research, and development.