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Theories of Regional Development

Walter Christallers Central Place Theory

Settlements by-products of social & economic interaction processes and can be manipulated for desired changes in spatial structure Human activities must cluster together for internal and external economies of scale Clustering social costs, diseconomies of scale, spatial imbalances Autonomous processes that generate clustering directed through policy interventions to generate growth foci

Walter Christaller 1893- 1969 German Philosopher & Geographer Published Central Places in South Germany in 1933 Foundation for a large body of research on cities as a system of cities , rather than as simple entities

Central Place Theory

This is theory concerned with the functional importance of places Functional Interdependence between a town and surrounding area

Boundless and homogeneous plain Plain Uniformly settled Farmers having same demand for goods and services Business persons in urban areas & Farmers as consumers rational individuals Free entry to market All equally well served by Central Places

Central Place
-is a settlement that provides goods & services. It can be small (a village) or large (primate city) all settlements form a link in a hierarchy

Nature of Central places

Centralisation as a principle of order The Centralisation ( Crystallisation) of mass around a nucleus is an elementary form of order. Centralistic principles are found in human settlements Centrality Measure of importance of a settlement The best term for settlements are Central Places as the word Central is neutral Importance & Centrality not synonymous - but there is a strong correlation

Why are there very few large settlements?

Settlement hierarchy
Why are there very few large settlements? Large settlements need a very large population (threshold) to support all of their functions (services) Large settlements provide very high order functions .Because these functions are so highly specialised there is not enough demand to support more than a few of them


Sphere of influence
Is the area around each settlement that comes under its economic, social & political control.


Sphere of influence
The extent of the sphere of influence will depend upon the spacing, size & functions of the surrounding central places


Central place functions

Function= a service

These are the goods & services it provides for local customers & for clients drawn from its wider sphere of influence

Population size does not necessarily determine the importance of the central place

Spatial Demand Cone

Q Demanded



Market location

Q Demanded


Increasing real price

RANGE: The spatial extent of demand before demand drops to zero



Demand = zero


Market Threshold Range



Important definitions
minimum DEMAND (volume of sales) needed for a business to stay in operation (and make a normal profit).

maximum distance over which a good can be sold from point P (i.e. where real price is low enough that people will travel to market to buy it)

Profit = R T really an excess profit Threshold and range is the spatial basis for profit

Range & Threshold

The range of a good or services is the maximum distance that people are prepared to travel in order to obtain it. (short distances for a low order item e.g. newspaper) The threshold of a good or services is the minimum number of people required to support it i.e. 2500- doctors surgery 500-primary school/ 25,000-shoe shop /60,000 for a large supermarket/ 100,000- large department store/ 1million University The more specialised the service the greater the number of people needed to make it profitable.

Range & Threshold

Low order items (basic items)= newspaper High order items (specialised items)= furniture Low order functions (basic services)= corner shop/ Primary school High order functions (specialised services)= university/ hospital Settlements providing low order services = low order settlements (rural) Settlements providing high order services= high order settlements (urban)

Implications of the RANGE

Area of Extra Profit Min area required to stay in business (normal profits)

Isotropic surface

Unmet demand for same good or service


Implication of RANGE:
room for more than one producer of same good / service
where would producer locate? > 2*R avoiding overlap


Implications of the RANGE



Homogeneous plain

2R distance

Unmet demand for same good or service


Unmet demand for same good or service


How can problem of interstitial areas of unmet demand be solved?



Interstitial areas of unmet demand disappear if R markets are moved closer together




How will market area boundaries form given the R ellipses formed by overlapping market areas?



Overlapping Trade M Areas Unfilled demand T now served R Competition


A system of hexagonal market areas fills the plain so that every consumer is served and no market areas overlap
Homogeneous plain

No Overlapping Trade Areas Unfilled demand now served No competition Every producer making normal profit


Further economic / spatial complications:

T and R are good- or service-specific Separate demand curves / cones for each good or service Why?
Different levels of demand Different sensitivity to distance etc.


Q Demanded Good / service A

Good / service B

Good / service C




Q Demanded Good / service A

Good / service B

Good / service C



Range A

Range B

Range C

Q Demanded Good / service A Good / service B Good / service C



Range A

Range B

Range C



Central Place Hierarchy: Cities,Towns, Villages and Hamlets:

Why cluster in Central Places?
Agglomeration economies Urbanization economies Localization economies

Clustering in Central Places

Vertical arrangement of central Places (relative importance) Horizontal Arrangement of Central Places (situation of central places)

Organization of central place hierarchy

Ordering principles: k=3, 4 and 7 Relationship between centres and market areas

Changes in population size & number of functions

Settlement sizes change over time (via births, deaths, migration) 1998
Number of functions 1940

Settlement size- increases

Settlement functions (services) change over time Over the past 50yrs in the India= decrease in the no. of services available in small settlements and an increase in the no. of services provided by larger settlements

Factors that affect a settlements number of functions

Settlement depopulation or increased population Greater wealth & mobility means some rural populations no longer visit their own local services but go further afield seeking services from higher order settlements Domestic changes means rural households no longer make use of daily low order services (village shop)
Population size does not necessarily determine the importance of the central place but there is a strong correlation


The rules of functional hierarchies


1. The larger the settlements are in size, the fewer in number they will be 2. The larger the settlements grow in size the greater the distance between them 3. As a settlement increases in size the range and number of its functions will increase 4. As a settlement increases in size, the number of higher-order services will also increase (the services become more specialised)

Walter Christallers model of central places

The theory states that threshold and range act as laws that govern the number, size and distribution of settlements When these 2 factors act together they create a hierarchical landscape Christaller noticed in the flat land of South Germany that towns of a certain size were roughly equidistant (uniformly spread) He stated that the ideal shape for each towns sphere of influence should be a hexagon because circles either leave gaps (which are unserved by any central place) or they overlap (meaning one area is served by too many central places)

Christaller's central place theory

Christaller stated that the best shape for a sphere of influence is a hexagon. This shape means that consumers still have accessibility to the highest order central place and its trading area from all parts of the hexagon. Christaller's key idea was that customers would go to the nearest higher order central place to buy goods and services High order central places act like a magnet for consumers. He called this phenomenon K=3 (or the marketing principle) In order to make his theory work Christaller had to make a few assumptions He assumed that each trading area had an isotropic surface (that the whole area was the same all over) i.e. the whole area was flat there was only 1 form of transport (and transport costs were proportional to distance) the population was distributed evenly across the plain


What's wrong with circles?

Whats wrong with circles


The areas within the black dots shows the sphere of influence (trading area) of the largest settlements

Like London


K=3 The marketing principle

The high order (3rd order) settlement (A) in the middle is surrounded by medium order settlements (black dots) and lower order settlements (small red dots). These consumers are attracted in equal amounts to whichever large central place is nearby.
Why is K=3 called K=3? Hint look at the numbers of consumers who visit the highest order settlement

Example -the highlighted lower order settlement (village X) will have 1/3 of is consumers go to the city (settlement A) and 1/3 will go to town Y and 1/3 will go to town Z (middle order settlements) All the other lower order settlements (red dots) will follow the same pattern.

Settlement X

K4= The Traffic Principle

In the K=4 model the lower order settlements (red dots) only have a choice of 2 higher order settlements to visit, in order to buy goods and services. -Half of them go to settlement A and the other half go to a medium order settlement (black dot)
Why is K=4 called the Traffic Principle (model)

How did K=4 get its name?

How the K=4 Traffic principle got its name

The Crossways train-line

The K=4 model is called the traffic principle because the model shows how consumers are influenced in where they go to shop for goods and services by transport routes

In this example the low order settlements (red dots) are located along a transport route. This means that these low order villages can only visit other settlements that are also on their transport route. So they are limited to visiting the settlement behind them on the transport route or the settlement in front of them.


K=7 The Administrative Principle

A high order central place is shown.

This model shows a hierarchy of control -Lower level settlements are arranged within the sphere of influence of the highest order settlement. This is done so that the lower order settlements can be completely controlled by higher levels.

-All the low order settlements lie within the hexagonal trade area (U,V,W,X,Y)

Why is K7 called K7?


The marketing principle (k=3). The territory is served by a minimum number of urban centers. Each centre has the largest choice (3) to purchase goods and services of an higher order. The transport principle (k=4). In this distribution, as many centers as possible are along main transport lines. The system tends to be linear in orientation. With the transportation principle, towns not on major transportation routes are smaller than expected because on the market principle. Transportation routes attract business and allow more and large towns to develop along the railroad. The administrative principle (k=7). The central place system is organized in such a way that there is a clear separation or all market areas. In the k=3 and k=4 principles the border between market areas of a centre of higher order is composed of lines between centers of lower order. Administratively, it does not make sense, so according to this principle, the boundary is located halfway between two centers of the same order. Political boundaries also "distort" the even pattern of cities.


Causes of Dynamism
Competition among forces of marketing, transportation and administration Arrangement of general factors of production including density, distribution and structure of population, type, price and production cost of central goods, transportation technology Influence of internal and external forces such as long distance trade, industrial development and local events

Uses of Christallers Central Place Model

Breakthrough in predicting & understanding hierarchical development of settlements Applied in regional and urban economies in describing location of trade and service activity and consumer market- oriented manufacturing Distinctive social network as economic activities and movement of people are modified Foundation for a large body of work on Systems of Cities


Uses of Christallers Central Place Model

The model is often used by governments to plan the location of new towns (i.e. Milton Keynes) and high order services i.e. hospitals It is used by transport authorities to plan transport routes( so that all areas have equal access i.e. K4 model) Businesses can use the model to decide where to locate a new shop

Limitations of Christaller's model

Few real-life regions fit Christaller's model (except the flat lands of the Dutch Polders and East Anglia in the UK)
The problem lies in the basic assumptions of the model: People do not always go to the nearest central place (they may chose a new edge of city superstore further away) So the K3 theory wouldnt work. Large areas of flat land rarely exist. Mountains & hills etc distort transport routes (so the K4 theory wouldnt work) People and wealth are not evenly distributed (if poorer people live in a certain area & their nearest high order settlement is expensive then they wont visit it) Governments often control where new towns are located, not market forces (i.e. not necessarily where the demand for goods and services is highest)

49 Train-line

Laundharts Theory Laundhart in 1882- Individual manufacturing firms locational decisions based on transportation costs Relative to location of raw materials and consumer markets Optimum location of firms Foreshadow of Industrial Location Theory of Weber

Alfred Weber & Industrial Location Theory

Minimum transport theory 1909 Locational preference of individual firm Expanded Laundharts approach by introducing variables such as labour cost, agglomerating factors and deglomerating factors Assumed static location of raw materials, output consumption, immobility and unlimited supply of labour at fixed wages and transportability of raw materials

Isotropic plain assumption- model is operative in a single country with a uniform topography, climate, technology, economic system. Only one finished product is considered at a time, and the product is shipped to a single market. Raw materials are fixed at certain locations, and the market is also a known fixed location. Labour is fixed geographically but is available in unlimited quantities at any production site selected. Transport costs are a direct function of weight of the item and the distance shipped.

Tries to explain & predict the locational pattern of the industry at a macro-scale. It emphasizes that firms seek a site of minimum transport and labour cost Deals with weight of goods and distance postulated only one form of transportation Locational figure area bounded by places of consumption and sources of raw materials


The reasons for location of certain types of industry Function of transport cost where it does not use weight losing materials Drawn to sources of raw materials where it does not use weight losing raw materials Concentration of industries which have a high labour cost per weight Supply side model assumes static demand in a single market or to a single distribution point to multiple markets

Locational patterns of industrial firms based on three principles: Minimum transport cost Labour Isodapanes Effects of Agglomeration

Material Index
The point of optimal transportation based on the costs of distance to the "material index" - the ratio of weight of intermediate products (raw materials) to finished product. If the weight of the final product is less than the weight of the raw material going into making the product -- the weight losing industry. Example - Copper industry, it would be very expensive to haul raw materials to the market for processing, so manufacturing occurs near the raw materials. If the final product is heavier than the raw materials that require transport. -weight-gaining industry.

Weight losing raw materials lose weight during production process and increase the locational pull of source of raw material in determining minimum transport cost Pure raw materials closest to place of consumption tend to be used since total transport cost would be lowest for users


As pure raw materials would tend to be exhausted over time, Weber suggested that over the long term for industries for which raw materials have weight losing characteristics, location near the source of raw material becomes an even stronger pull Reinforced by process and technological improvements

Labour distortion: Sources of lower cost labour may justify greater transport distances and become the primary determinant in production. Unskilled Labour industries such as the garment industry require cheap unskilled laborers to complete activities that are not mechanized. They are often termed "ubiquitous" meaning they can be found everywhere. Skilled Labour - High tech firms- require exceptionally skilled professionals. Skilled labour is often difficult to find.

Isodapanes- Circles around points of minimum transport costs - within which additional transport costs are equal Isotim-a line of equal transport cost for any product or material Critical Isodapanes Savings in labour cost is at least equal to increased transport cost at the new location outside of the point of minimum transport cost Locational figure was derived

Low population density increases average distance between locational figures and labour Rate of transportation cost increase with distance determines size of isodapanes When transport costs are uniformly low and rate of increase of transport cost is low with distance , labour exerts stronger pull on optimum firm location


Agglomeration and Deglomeration

Agglomeration - phenomenon of spatial clustering, or a concentration of firms in a relatively small area. The clustering and linkages allow individual firms to enjoy both internal and external economies. Auxiliary industries, specialized machines or services used only occasionally by larger firms tend to be located in agglomeration areas, not just to lower costs but to serve the bigger populations.

Deglomeration occurs when companies and services leave because of the diseconomies of industries excessive concentration. Firms who can achieve economies by increasing their scale of industrial activities benefit from agglomeration. However, after reaching an optimal size, local facilities may become over-taxed, lead to an offset of initial advantages and increase in Production Cost Then the force of agglomeration may eventually be replaced by other forces which promote deglomeration.

Locational triangle. - one market and two sources of material. This illustrated such that manufacturing which utilizes pure materials will never tie the processing location to the material site. Also industries utilizing high weight loss materials will tend to be pulled toward the material source as opposed to the market.

Furthermore many industries will select an intermediate location between market and material. The last generalization is considered to be wrong because he never takes into account terminal costs and therefore is considered biased toward intermediate locations.


Increase in land rent caused by concentration of firms (agglomeration) causes an opposite effect as land rent rises (deglomeration) Cost savings in concentration can counterbalance increased land rent Critical Isodapanes regarding concentration exists where rise in transportation cost is balanced by lower cost due to concentration

Least cost location then implies marketing the product at the least cost to the consumer, much like retailers attempt to obtain large market shares today.
Economically, it is explained as one way to make a profit; creating the cheapest product for the consumer market leads to greater volume of sales and hence, greater profits. Therefore, companies that do not take the time to locate the cheapest inputs or the largest markets would not succeed, since their product costs more and costs the consumer more.

Didnt explain Central Places Critical assumptions

Unlimited availability of labour Site Rent Varying prices and demand Varying factor proportions in production


Geographic variation in market demand, which is considered a locational factor of paramount influence not considered Treatment of transport did not recognize that these costs are not proportional to distance and weight, and that intermediate locations necessitate added terminal charges. Labor is not always available in unlimited quantity at any location and is usually quite mobile through migration.

Most manufacturing plants obtain a large number of material inputs and produce a wide range of products for many diverse markets, so his theory doesnt easily apply. Underestimated the effect of agglomeration


Lschian Theory
The German economist August Lsch expanded on Christallers work in his book The Spatial Organization of the Economy (1940) Used a concept similar to Range and Threshold Contended that K=3 was a simple case of a general arrangement

Considered other values for K More flexible system in which different goods and service have different thresholds and different market areas
Centres of differential functional mixes Superimposition of different market areas

Individual market area networks superimposed in such a way that there is at least one common central location Rotation of networks location pattern in which certain sectors are with many urban places and others with few




Growth Pole Hypothesis

Formulated by Perroux 1955
Urban Centres foci of change
Developing countries Over grown villages Developed countries Generators of social and economic change


Human activities must cluster together to generate internal and external economies of scale Clustering also entails social costs, diseconomies of scale & spatial imbalances in social and economic development Autonomous processes that generate clustering can be directed through policy interventions to generate growth foci in areas where they do not exist

Concept of a Growth Pole

Growth pole concentration of highly innovative and technically advanced industries that simulate economic development in businesses and industries


Concept of a Growth Pole

Centre in abstract economic space from which centrifugal forces emanate and to which centripetal forces are attracted to. Forces economic in nature Generators firms & industries Process of economic growth unbalanced involving a succession of dynamic poles through time

Large economic units that are innovative dynamic propulsive firms Dynamic firms new, technologically advanced, operating in high income elastic markets market for its products Exert influence on economy through interindustry linkages Linkages forward or backward Backward linkage growth in production in one industry stimulates the production in the industries supplying it

Forward linkage when the availability of the output of an industry make possible the production of industries using that output

Clusters become growth poles if leading & propulsive industries come together to form a complex, large enough to exert a determining influence over industrial environment


Dominant Propulsive Firms

Relatively large Generate growth impulses to its environment High ability to innovate Belongs to fast growing sector Technologically advanced


Relied on Leontief Model Once inter- industry linkages are well established, developmental activities will spread automatically


Static character of inter-industry model while developmental processes are dynamic in nature Less concerned with spatial dimensions Failure of newly established industrial complexes with inter- industry linkages to generate development in surrounding environment


Expansion in quantitative terms and structural changes in society and economy Elements of change institutional, social and economic ( sectoral and spatial) Development change in desired direction at a desired speed Presupposes policy interventions to attain goals and objectives Involves socio- psychological transformation Involves temporal, sectoral and spatial phasing & integration of planning