A

L
GROWTH POLE
THEORY
E
C
T
U by
R
Dr. IJAZ AHMAD
E Associate Professor
Department of City and Regional Planning
University of Engineering and Technology, Lahore

O Dated: 28 February 2015

N
The concept was given by:

 
F. Perroux
Perroux used term pole de croissance and it means

DYNAMIC SECTOR OF AN ECONOMY

SCHUMPETERIAN

Theory of

Development
Growth does not appear everywhere and all at once; it
appears in points
or
development poles
with variable intensities;
it spread along diverse channels and with varying
terminal effects

to the whole of the economy. 

Perroux developed his idea of economic space as a

FIELD OF FORCES
consisting of

centers (or poles or foci) from which centrifugal forces EMANATE

and to

which centripetal forces are ATTRACTED.  

 ‘GROWTH POLE’
as a set of expanding industries located in an urban
area and it includes further development of economic
activity throughout its zone of influence.

The place where

these ‘expanding’ or ‘propulsive’ or ‘dominant

industries’ areLOCATED in the region becomes
the poles of the region and agglomeration tendencies
are promoted.
 BASES
OF
CONCEPT
 
 Industries / Firms (Propulsive Industry)
 Multiplier Effects
 Input-Output Matrix
 Agglomeration Economies
 Economies of Scale
 Polarization Effects
 Linkages
 Backwash Effects
 Forward & Backward Linkages
PROPULSIVE
INDUSTRY
o It means Master Industry / Key
Industry / Lead Industry / Dominant
Industry

o Propulsive Industries are LARGE-SCALE and

FAST GROWING, enjoying a high income
elasticity of demand for their products which are
sold to national markets.

o They are HIGHLY INNOVATIVE with an

advanced level of technology and managerial
expertise and have tendency to dominate because
of input-output relationships with other industries.
oThey play a role in formulating
poles around which economy
clusters.

oThe concept is also applied at level

of individual firm.

oExamples: Master Sanitary, Fauji

Fertilizer, Toyota, Suzuki, Nike,
Adidas, Polo, Sitara Textile, Oxford,
etc.
 MULTIPLIER EFFECT
o A multiplier is a NUMERICAL COEFFICIENT
applied originally in macro economics to relate a
change in a component of aggregate demand, such
as investment, to a consequent change in national
income

o A multiplier is the ratio

of the
direct, indirect and induced changes
of an action on a regional or national
economy.
o Itsmeasurement may be either in terms of jobs
created/lost (Employment Multiplier) or in terms of
increased / decreased money value of the changes in
economic activity (Income Multiplier)

o Multiplier SUMMARIZE AND PREDICT short-run

effects, and value of multiplier change over time for a
given area.

o The VALUE of multiplier also depends on size of

area under study
 INPUT / OUTPUT ANALYSIS

Input / output analysis

demonstrates THE WAYS
in which the inputs of one
sector are the outputs of
another sector and vice
versa.
Example:

MANUFACTURING sector require

inputs from the mining (metal ores),
agriculture (raw materials),
Commercial (finance), and various
other sectors including itself
(machine tools) in order to produce
manufactured goods.
These products in turn
forms INPUTS of other
sectors such as tractors
for agricultural sector,
office machinery for the
commercial sector
AGGLOMERATION
ECONOMIES
It is used to describe all
EXTERNAL ECONOMIES
experienced by a productive unit
and derived from its particular
locational association with a
large scale spatial cluster of
economic activities
EXTERNAL ECONOMIES
means cost advantages
obtained by a firm through
no direct effort on its own
part, i.e. scale economies
from sources external to the
individual firm. These lower
cost arise from:.
oLabor supply advantages
such as local availability of
skilled labor

oInfrastructure benefits
including provision of
services such as banking,
transportation
ECONOMIES
OF
SCALE
The GAINS by ways of
reduced costs of production
per unit of output, arising
from large-scale production.
As firm or plant size increases average
cost of productions falls, i.e. total costs of
production increase less than
proportionately with output up to the
point where diseconomies of scale set in.

Economies of scale derive from a firm or

plant as a result of its own efforts; they
are internal to the plant or firm
concerned. Such internal economies are
realizable by the individual firm
 POLARIZATION

A term used by A. O.
Hirsehmann to denote the
tendency for uneven
regional development to
be intensified as a result
of economic energy
flowing to a growth pole
Boudeville;
is one of the most eminent economists who
applied the GROWTH POLE CONCEPT in regional
planning. According to his definition,
the growth pole is:

"a SET of expanding industries

located in an urban area and
inducing further development
of economic activity
throughout its zone of
influence“
Boudeville; reached this concept from his typology of regions:

HOMOGENEOUS
REGIONS, POLARIZED
REGIONS, AND PLANNED
REGIONS.
He developed the growth pole concept into an

'operational planning model"

which explained a condition in
which growth would be
created in 'polarized regions‘.
He defined three types of polarization : national,
regional and local
 POLARIZED
DEVELOPMENT
 A model proposed by J. Friedmann, which says

economic growth in a
development context as a
process of CUMULATIVE
INNOVATION, whereby
innovation becomes organized
into clusters and then into
complex systems.
o Innovation is mostly in cities.

o The leading city and its region will

constitute the CORE or CENTER of a
national urban system, the rest of the
system being a PERIPHERY
dependent upon the core.

o Innovation is DIFFUSED from the core

to the periphery through exchanges of
people, goods and services
 LINKAGES
OPERATIONAL
CONNECTIONS between firms,
in the form of flows of materials,
goods and information, within a
relatively restricted geographical
area.
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.
 BACKWASH EFFECTS
The idea was originally
introduced by G. Myrdal

One of the Sets of

interdependences (Spread effects)
recognized as DYNAMIC ASPECTS of
Core Periphery.
Back wash Effects represent the NEGATIVE
EFFECTS of economic growth in the core
region on its periphery; therefore increase
the disparity between core and periphery.

The effects take the form of the spontaneous

development of spatial flows of labor, capital
and commodities from the periphery to the
core and so supports the further
concentration of activity in the expanding
core called POLARIZATION EFFECTS
 SPREAD EFFECTS
The Idea was introduced by G. Myrdal

These work to DECREASE the discrepancy

between core and the periphery,
representing an expansionary momentum
transmitted from the CENTER of economic
growth to the SURROUNDING REGIONS via
trading opportunities (especially the demand
for natural resources) and more generally
through the diffusion of innovations.
Such effects are subject
to distance decay and
generally come later and
are weaker than
backwash effects called
TRICKLE DOWN EFFECTS
 GROWTH POLE THEORY
Growth Pole comprise industries or
firms, i.e. an propulsive industry that
exerts dominance through its inter
industry (linkages) over other
manufacturing sectors.

These interrelationships between the

propulsive industry and other sectors are
considered exclusively in abstract,
functional economic space.
A growth pole is capable of rapid
growth and of transmitting that
growth through multiplier effects
to other sectors of the economy.

Growth poles may therefore be

represented as sectors in an
input-output matrix, in which
growth effects are transmitted
through the rows and columns
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.
 LIMITATIONS OF
GROWTH POLE
 There are difficulties in identifying
propulsive industries in practice.

 There is lack of understanding of the

relationship between the infrastructural base
to be provided and the needs of propulsive
industries.

 The period of time over which the growth

effects might be expected to spread out from
the growth center.