growth pole theory by perroux, Assignments of Economic geography

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GROWTH POLE THOERY

BY

FRANCOIS PERROUX

(CONTRIBUTION)

POONAM 18513006

• He based his argument heavily on Schumpeters theories of the role of innovations and large –scale firms. In **Schumpeters analyses** , development occurs as a result of discontinuous spurts in a dynamic world. Such ‘discontinuous spurts’ are caused by the innovative entrepreneur whose activities generally take place in large-scale firms. GROWTH POLE THEORY
• The concept of a growth pole was developed by the French regional economists, particularly François Perroux, in 1955.
• He was concerned with the phenomenon of economic development and with the process of structural change.
• Attempted to explain how modern process of economic growth deviate from stationary conception of equilibrium growth.

Basic Assumptions The concept of growth poles and growth centers is based on certain assumption about the real world:

1. Human activities must cluster together to generate internal and external economics of scale.
2. Clustering create social problem like congestion, diseconomies of scale and spatial imbalance in social and economic development.
3. Policy interventions generate growth foci in areas.

Objective of Theory Perroux in his attempt to understand the modern process of economic development, discovered that –

1. Growth does not appear everywhere at the same time.
2. It manifests itself in points or poles of growth with variable intensities.
3. It spreads by different channels and with varying terminal effects on the economy as a whole. According to Perroux, “The process of economic development is essentially unbalanced and the centers of growth may give birth to other centers or it may become a center of stagnation.”

Dynamic Propulsive Firm The characteristics of a dynamic propulsive firm are that it is- (i) relatively large, (ii) has a high ability to innovate, (iii) and belongs to a relatively fast growing sector, (iv) and the quantity and intensity of its interrelations with others sectors of the economic are important enough for the induced effects to be transmitted to them.

Leading Propulsive Firm The characteristics of a leading propulsive industry are also similar. Such an industry has – (1) highly advanced level of technology and managerial expertise, (2) high income elasticity of demand for its products, (3) marked local multiplier effects, and (4) strong inter-industry linkages with other sectors.

Basic types of polarization Growth poles theory thus documents the contribution of polarization to the development of poles as well as peripheries. This theory identifies four basis types of polarization: A. Technological and technical – based on the concentration of new technology in the growth pole. B. Income – the growth pole contributes to the concentration and the growth of income due to expansion of services and dependence on demand and profit. C. Psychological based on the optimistic anticipation of future demand in the propelled region. D. Geographical based on the concentration of economic activity in a geographically determined space.

Contributions of the theory The theory of growth poles makes several contribution:

1. It uncovers inequalities in the economy of a country (region) and focuses our attention to the propulsive and propelled units. 2. It offers a dynamic image of the economy in the country (region) which is based on a general tendency to spatial focus of manufacturing facilities on an interregional level. 3. It presents a basis for careful decentralization by supporting the creation of new development poles (focused decentralization).

CASE STUDY

1. Madagascar The Madagascar Integrated Growth Poles Project aimed at stimulating the growth of three geographical regions of Madagascar centered around the growth poles of Nosy Be Fort Dauphin Antananarivo- Antsirabe.

OBJECTIVE OF THE POLES  (^) Was to address key constraints to investment, including infrastructure, business environment, institutional capacity, skills and access to finance. The poles are multi-sector projects with particular focus on tourism-led growth in Nosy Be, mining- and tourism-led growth in Fort Dauphin, and export-led growth in Antananarivo- Antsirabe.

In Nosy Be , the pole focuses on

• (^) building support infrastructure (rehabilitating roads and improving water supply)
• (^) strengthening municipal capacity for administration,
• (^) fiscal management, and service delivery
• (^) supporting business environment reforms. The project supports a new hotel training school in partnership with other donors and the private sector, and the establishment of a marine reserve to protect rare ecological resources vital to the sustainability of the tourism industry.