The growth pole theory was postulated by Francois Perroux in 1955. He considered growth pole as key driver of economic activities and development in a region. Basic idea behind his theory is that the growth in a large city propels the growth in the all the areas surrounding the large city due to exchange of goods and services.
NOTE: Periphery, hinterland and surrounding areas are synonyms to each other. They all imply the villages, small towns and small industrial units present in the periphery of growth pole.
In this article, we will study the concept of growth pole, postulates or assumptions of growth pole theory and the working of growth pole.
What is a Growth Pole?
Growth pole is an abstract economic area which acts as a field of force from which centrifugal forces emanate to the periphery and to which primary products are attracted for addition of value. Altogether, growth pole has three primary characteristics.
- Homogeneous space: The growth pole is an homogeneous area i.e. the all economic activities in the growth pole enjoy similar socio-economic, political and environment benefits and constraints.
- Economic Plan: The growth pole is delimited by an economic plan. This means that the the economic activities in the growth pole are planned and organized to achieve certain economic and developmental goals.
- Field of Force: The growth pole emanates centrifugal and centripetal forces. Centrifugal forces mean that the benefits of the economic activities and services in the growth pole spreads to hinterland (periphery) of the growth pole. Centripetal forces means that growth pole attracts the supply of raw material and primary products from the rural areas.
In simple words, growth pole is a large city where economic activities (industries and services) operate at a large scale due to economic externalities and people from periphery come to city for sale and purchase of products.
Postulates of Growth Pole Theory
- Unbalanced Growth: Economic growth does not take place everywhere but only at certain favorable locations.
- Externalities: Growth pole has positive economic externalities, therefore, any firm located within the growth pole will experience certain advantages which it would not have experienced outside the growth pole. For example, locating at a large city will help a firm to hire skilled labor with relative ease to rural areas.
- Agglomerations: Agglomeration is a process of accumulation of lots of firm, industries and residential areas in one city. Due to the positive externalities and cumulative causation, the growth pole becomes a large agglomeration comprising of industries, services, research centers, skill institutions, entertainment etc.
- Forward and Backward Linkages: The growth pole has forward and backward linkages with its hinterland. The backward linkages imply the supply of raw materials and primary goods by the producers in the hinterland to the growth pole. The forward linkages refer to the sale of finished products by the growth pole either to hinterland or other regions.
Working of Growth Pole Theory
He based his theory on the ideas of Schumpeter’s theory on the role of innovation and large scale firms in economic growth.
Dynamic Propulsive Firm
- Schumpeter opined that the entrepreneurial innovations are prime causal factor of economic growth. Please note that these innovations take place only in large firms.
- These firms dominate other firms in scale of operation and have impulse to innovate. These firms are called dynamic propulsive firm. Dynamic propulsive firms form leading propulsive industries.
- The firms and industries are fast growing, highly innovative and linked to other sectors of importance.
- Any innovation in the large firm transmit to other firms and sectors. Leading to overall growth of economy.
- Similarly, Perroux incorporated the above ideas into his model and came up with growth pole theory.
- The growth pole has agglomeration of industries which demand and supply goods from each other.
- This agglomeration provide many externalities/advantages to new firms. Therefore, every upcoming entrepreneur established his/her firm in the large agglomeration.
- Agglomeration due to cumulative causation is the process of increase in the size of growth pole.
- This large center of economic activities dominate other centers due to their location and scale of operation.
- The growth pole transmits any innovation which takes place in the growth pole to its hinterland and the hinterland also grows.
Forward and Backward Linkages
- The exchange of goods and services between growth pole and its hinterland takes place through forwards and backward linkages. The exchange of goods and services takes place through many channels as shown in Fig.1.
- Backward linkage: As seen in Fig. 1, the hinterland exports goods through trade channel raw materials, agricultural goods and food etc. The labor is supplied through migration channel. The goods and laborers are necessary for operation of economic activities in growth pole.
- Forward linkage: The growth pole transmits new technology and knowledge through migration, trade and financial channels (Fig. 1). The growth pole supplies finished products such as food, clothing, sanitary products etc. to the hinterland through trade channel. In return for labor, the industries pays wages to the laborers in hinterland. Smaller industries in the hinterland receive investment, new technology, institutional innovation and factor technology.
Consequently in this exchange of goods and services, the growth pole grows very fast and the benefits of the fast growth in the growth pole spread towards periphery of growth pole. Generally, these benefits are in form of employment, income, new technology etc. The trickle down effect is the process of spatial expansion of growth from growth pole to periphery.
To summarize, the growth pole theory explain the process of economic growth of a region. The growth starts in one center and then trickles down to periphery of the growth center through forward and backward linkages.
Kulwinder Singh is an alumni of Jawaharlal Nehru University, New Delhi and working as Assistant Professor of Geography at Pt. C.L.S. Government College, Kurukshetra University. He is a passionate teacher and avid learner.