PERROUXS GROWTH POLE THEORY

DEBADITYA GOSWAMI ROLL NO. - 05

Francois Perroux introduced the idea of economic Growth Poles in 1949. The intuitive notion of growth poles would identify a growth pole as an industry or perhaps a group of firms with an industry. At an extreme a growth pole might be a single firm or it might be a group of industries. Perroux, however, defined growth poles in terms of what he called abstract economic space. Perroux conceived of abstract economic space to be of three types: an economic plan a field of force or influences a homogeneous aggregate

He specifically denied that abstract economic space could correspond to a geographic area such as a city or region. For Perroux the aspect of dominance was important for growth poles. A firm or industry A is said to be dominant over B if the flow of goods and services from A to B is a greater proportion of A's output than the flow from B to A is of B's output. A large firm or industry that has a high degree of interaction with others and is dominant in that interaction is said to be propulsive. The process of development of a propulsive firm or industry is called polarization. Perroux and other writers on growth poles try to base the concept on the notions of external economies, agglomeration and linkages. An external economy exits if a change in the output of one firm or one industry affects costs in other firms. External economies of scale may be negative, as in the case of pollutions costs, or they may be positive, as in the case of the development of integrated circuit technology in the electronics industry. Linkage is a concept developed in regional economics. Linkages may be forward or backward. If a growth in production in one industry stimulates production in the industries supplying it then that industry has backward linkages. For example, the steel industry has backward linkages to the iron ore mining industry, the coke and coal industries and the transportation industry involved in transporting those inputs to the steel industry. A forward linkage when the availability of the output of an industry make possible the production of industries using that output. For example, the plastic producing industry makes it feasable for businesses requiring plastic to begin operation. The French economist, J-R. Bourdeville made a study of the steel industry of the Brazilian state of Minas Gerais as a growth pole. Despite Perroux's denial that growth poles are geographic many of the applications of the concept are for geographic regions.

These applications often are enlightening. For example, the regional economy of Paris can be considered to be a growth pole. The case of Paris shows that effect of polarization on the surrounding geographic area is not always positive. The attraction of Paris has been so great that it has been extremely difficult to promote any economic development in the area outside of the Paris region. French planning literature refers to this as the phenomenon of Paris and the French Desert. In the U.S. the concept of growth poles has usually taken the form emphasizing geographic location which are called Growth Centers. Growth centers are related to the concept of agglomeration. In many ways the American work on growth centers is virtually independent of Perroux and the French literature on growth poles. Albert Hirschman uses the term polarization to refer to the negative impact of a growth pole on surrounding regions. Trickling down is the term he uses for the positive impact of a growth pole or growth center on adjacent regions. Gunnar Myrdal, the Swedish economist, use the terms backwash and spread for the same concepts as Hirschman's polarization and trickling down. The American economist, John R. Friedman, has developed a concept that is related but distinct from the ideas of growth poles and growth centers. It is called the matter of the center versus the periphery. Friedman developed this idea in analyzing the relationship of the interior regions of Venezuela to the coastal regions. Others have extended the concept to the relationship of the North Atlantic center of Westerm Europe and North America to Latin America, Africa and Southeast Asia. Altogether the concept of growth poles has been of only marginal importance in analyzing regional economic problems. Nevertheless the idea of growth poles has had a major role in formulating regional policy.

Development involves polarization Growth poles are accordingly a good thing a source of dynamism in the economy, which generate spread effects somewhere, but not necessarily in their own peripheral geographic region. The principal role of growth poles is as a source and a diffuser of innovations. Therefore growth poles should be encouraged to form and to play this role even if it involves some degree of domination/ dependence relationship. A policy of selected decentralisation creation of poles equilibrium is not in conflict with this perroux style growth pole policy.

 There may be cases when small and middle sized cities serve as growth poles. What is excluded in perroux style growth pole strategy is pushing and pulling enterprises at random and disadvantaged regions when the conditions for generation of spread effects are not present in other words, the kind of growth pole strategy that was in fact pursued in many countries during the 1960 s and 1970s.

Growth pole theory, as originally formulated, assumes that growth does not appear everywhere at the same time, but it manifests itself in points or poles of growth (Perroux, 1950; 1955). With variable intensities, the growth spreads by different channels and eventually affects the economy as a whole (Vanneste, 1971). It is widely argued that Perrouxs initial concept of growth pole denoted an individual plant; one that occupied an abstract economic space, rather than a specific geographical space such as a city or region (Vanneste, 1971; Monsted, 1974; Mitchell-Weaver, 1991). In his latter

writings, as Vanneste (1971) points out, Perroux refined his concept of growth pole as a dynamic unity in a defined environment.