LU9 Growth Pole Theory PDF

SSR3094 THEORIES & TECHNIQUES OF REGIONAL PLANNING LU9 GROWTH POLE THEORY  DEFINITION & ORIGIN Growth Pole Theory is an economic and regional planning concept that suggests economic development does not occur uniformly across a region but rather around specific "poles" or hubs of activ...

SSR3094 THEORIES & TECHNIQUES OF REGIONAL PLANNING LU9 GROWTH POLE THEORY  DEFINITION & ORIGIN Growth Pole Theory is an economic and regional planning concept that suggests economic development does not occur uniformly across a region but rather around specific "poles" or hubs of activity. These poles, typically characterized by dynamic industries or sectors, act as catalysts for economic growth, influencing the development of surrounding areas. The theory originated in the 1950s - French economist François Perroux, who conceptualized growth poles in terms of economic space rather than geographic space. Perroux argued that growth is driven by industries with a high capacity for innovation and expansion, which generate ripple effects across the economy – Oil & Gas Industry in Bintulu. The O&G industry in Bintulu exemplifies a growth pole because it drives regional economic growth, fosters industrial linkages, and creates multiplier effects on the local and national economy. Its development is a real-world application of Perroux's theory in the Malaysian context.  KEY PROPONENTS François Perroux Introduced the idea of growth poles as economic "forces" driven by leading industries. Jacques Boudeville Extended the concept to a spatial context, linking it to regional planning and development. Albert Hirschman Emphasized the role of linkages (backward and forward) in driving regional development. François Perroux He emphasized that economic growth is not uniform or evenly distributed across space or industries. Instead, certain industries or firms act as propulsive forces that drive growth in surrounding sectors and regions. Example: A leading automobile manufacturer in a region might stimulate the growth of suppliers (backward linkage) and service industries like dealerships or transportation networks (forward linkage). Jacques Boudeville Boudeville extended Perroux’s theory to the field of regional and spatial planning, integrating the geographic dimension. He shifted the focus from abstract economic space to the physical and spatial organization of regions. Example: A city with a thriving tech hub (e.g., Silicon Valley) attracts skilled labor and investment, driving development in adjacent areas. Albert Hirschman Hirschman’s contribution lies in emphasizing the role of linkages in economic development and integrating growth pole theory into broader development strategies. He viewed uneven development as a natural and necessary process for economic growth. Example: Developing a port city leads to infrastructure investments (backward linkages) and boosts trade-related services (forward linkages).  Key Distinctions Among the Thinkers Thinker Focus Contribution Growth poles as dynamic industries driving François Perroux Economic Forces economic growth in an abstract space. Interpreted growth poles as physical growth Jacques Boudeville Spatial Organization centers influencing regional development. Highlighted strategic investments and Albert Hirschman Development Strategy linkages to accelerate uneven but efficient growth.  GROWTH POLE & GROWTH CENTRE A growth pole refers to a dynamic economic force, typically an industry or set of industries, that drives regional or national economic growth. It emphasizes the role of innovation, investment, and inter- industry linkages, which create ripple effects across the economy. Growth poles are embedded in economic theory and are often existing in "economic space" rather than a specific location. A growth center is the geographical display of a growth pole, representing a physical location such as a city, industrial park, or region where economic activity is concentrated. Growth centers are tangible and play a vital role in regional planning, serving as hubs for infrastructure, services, and development initiatives.  Key Differences Aspect Growth Pole Growth Center Economic dynamics and inter-industry Focus Physical location and spatial organization linkages Nature Abstract (economic concept) Concrete (geographic concept) Origin François Perroux’s economic theory Jacques Boudeville’s spatial interpretation Purpose To explain drivers of economic growth To manage and direct regional development Cities like Detroit (automobile hub), Examples Leading industries like IT, automobiles Shenzhen (tech hub) The growth pole is the economic engine behind growth, while the growth center is the geographic location where this economic activity is concentrated and can be managed for regional development.  CONCEPT & IDEA OF GROWTH POLE THEORY Economic development and growth is not uniform over an entire region, but instead takes places around specific pole – growth pole. The growth pole is characterized by key industry (like O&G Industry – liquefied natural gas) around which linked industries develop mainly through direct and indirect effects. Expansion of this industry implies expansion of output, employment, related investments and new technologies and industrial sectors. Following the scale & agglomeration of economies near the growth pole – regional development is unbalanced. Transport terminals (movement of goods & people) play important role. According to Perroux, growth does not appear everywhere at the same time but appears at points or pole of growth with varying intensity, thus spreads along various channels and with different overall effects on the whole economy. Perroux considered two basic aspects in his Growth Pole Theory: Theory of development – which states that growth is not seen everywhere, but it is in a form of aggregate or poles. Growth is seen in a form of cluster and agglomerate. Inter-industrial linkages – the area which is developing all the industries that are setup they will be having some linkages with one another – one industry depends on another. An output of the industry will be the input for another one. ELEMENTS OF GROWTH POLE THEORY The Role of Industries and Innovation as Growth Poles At the heart of growth pole theory is the idea that certain industries or firms act as propulsive forces in the economy, driving growth through their capacity for innovation, investment, and expansion – propulsive firm/ industry. A propulsive firm or industry is a dynamic economic entity with high growth potential and the ability to stimulate economic development in its surrounding areas. These firms or industries are often technology- intensive or resource-based, investment capacity, and strong inter- industry linkages, making them central to the concept of growth poles. Example - the oil and gas sector in Bintulu. The Role of Industries and Innovation as Growth Poles Schumpeter’s Theory of Innovation - Joseph Schumpeter emphasized that economic development is not a gradual or linear process but rather occurs through discontinuous sprawl of growth. These sprawl are driven by innovative entrepreneurs who introduce new products, processes, or business models – creating new market & opportunities. These ideas define the concepts of dynamic propulsive firms and leading propulsive industries, which are central to growth pole theory: Dynamic Propulsive Firms: Large, innovative firms that dominate their sectors, drive market trends, and create significant economic ripples - Tesla in the electric vehicle industry, which influences suppliers (batteries), competitors, and related industries (charging infrastructure). Leading Propulsive Industries: Entire industries that act as growth poles due to their innovation and economic influence - the semiconductor industry, which drives technological advancements in multiple sectors like electronics, automotive, and communication. Economic Agglomeration and Regional Development Growth poles often lead to economic agglomeration, where businesses and industries cluster together to benefit from shared resources, infrastructure, and markets. This clustering creates efficiencies and fosters collaboration, making the region more competitive. Positive Effects: Increased productivity, innovation, and job creation. Negative Effects: Over-concentration, regional imbalances, and environmental pressures. At a later stage, the emergence of secondary growth poles is possible, mainly if a secondary industrial sector emerges with its own linked industries, contributing the regional economic diversity. Polarization Effects and Trickle-Down Effects Growth poles initially lead to polarization effects, where economic activities and wealth concentrate around the pole, henceforth often creating disparities with surrounding regions. Over time, however, the benefits may trickle down to peripheral (surrounding) areas through investments, job opportunities, and infrastructure development. Polarization Example: Urban areas attracting most resources and talent. Trickle-Down Example: Suburban and rural areas benefiting from improved transportation networks and market access due to the growth pole. Backward and Forward Linkages A key elements of growth poles is their ability to create backward and forward linkages with other industries: Backward Linkages: When industry encourages investment in earlier stages of production through increased demand for input (industries supplying raw materials). Industries supplying raw materials or intermediate goods benefiting from increased demand. Forward Linkages: Industries using the outputs of the growth pole as inputs for their production also experience growth. Industries encourages investments in subsequent stages of production – through (1) innovation; (2) effects of innovation forward (lower cost of productions) Example: In an automobile manufacturing hub, backward linkages include steel and component suppliers, while forward linkages include dealerships and logistics services. Strategic Investment for Regional Development The concept emphasizes strategic investments in industries or locations with the highest potential to generate growth. These investments aim to maximize returns and foster regional development. Planned Growth Centers: Governments often designate specific cities or regions as growth centers to operationalize the growth pole concept and address regional disparities. CHARACTERISTICS OF A GROWTH POLE A growth pole is characterized by: Economic dynamism and innovation within leading industries. A growth pole is typically driven by highly innovative industries or firms that introduce new technologies, products, or services, leading to economic dynamism. These industries are the "engines" of growth, and their innovation enhance productivity and competitiveness in the surrounding region. High investment capacity to drive industrial growth. Growth poles often revolve around industries or firms with significant investment capacity. These industries are typically capital-intensive, requiring large amounts of capital for research and development, infrastructure, and operations. Geographic concentration leading to agglomeration benefits. Growth poles are often geographically concentrated in specific regions or cities, where the economic activity is concentrated. These concentrations lead to agglomeration effects, where businesses cluster together to benefit from shared infrastructure, labor pools, and market access.  Creation of strong backward and forward linkages with other sectors. A defining feature of a growth pole is its ability to create economic linkages to other sectors. These linkages can be: Backward Linkages: The growth pole stimulates demand for raw materials, services, and intermediate goods. Forward Linkages: The industry also creates demand for services and products that use its output, stimulating growth in other sectors. Attraction of capital, labor, and technology to the region. A growth pole attracts both capital (investment), labor (skilled workers), and technology (through innovation or knowledge transfer). The concentration of these resources enhances the development of the industry and surrounding sectors.  Disproportionate growth leading to polarization effects. Growth poles often lead to disproportionate growth, where the economic benefits are concentrated in the area around the pole, creating polarization effects. This can lead to wealth and development disparities between the growth pole and surrounding areas. Over time, however, these benefits can spread through spillover effects as infrastructure, jobs, and markets expand. The ability to catalyze regional development and create long-term economic impacts. A growth pole has the potential to catalyze the development of the region it is located in. Its success can stimulate broader regional economic growth by encouraging the development of additional infrastructure, services, and industries. Over time, it can create a multiplying effect, where the region evolves into a more diversified and industrialized area. Long-Term Economic Impact Growth poles tend to have a long-term economic impact, not just through immediate economic gains but also in shaping the economic structure of the region. As they grow, they contribute to structural changes in the local economy, improving productivity, diversifying industries, and enhancing regional competitiveness. MYRDAL’S SPREAD & BACKWASH THEORY Gunnar Myrdal studied the effect of the Perroux’s Growth Pole Theory and: believes that growth in progressive (or advancing) regions affect the growth in lagging (or depressed) regions through (1) Spread Effects and (2) Backwash Effects. Discovers that regional development by concentrating on a few poles will only increase regional disparities. An initial advantage and subsequent agglomeration economics at a center enhances its growth at the expense of other areas. Increase marketing Movement of labour and outlet for the capital from the hinterlands Technology innovations hinterland’s produce Growth pole Hinterlands Spread Effect Backwash Effect HIRSCHMAN’S TRICKLE-DOWN & POLARIZATION EFFECTS Studies carried out by Albert Hirschman to view the effect of growth poles on the surrounding areas. He believed that the economic gap between the poles and the hinterland will gradually lessen, with public investment from the government. Resulted in concepts of Trickling Effects & Polarization Effects. Trickling down effect – when there is increasing activities at the surrounding areas, there will be more job opportunities for the rural folks – increase per capita income. Polarization – the poles will press the relatively inefficient industries surrounding them – eventually may fast-growing due to incompetence. Government support is crucial to counter the polarization effect from the fast-growing centers. Hirschman agreed this may not be the best alternative to overcome the problem, but it is crucial to ensure that the hinterland will be able to stand on their own economically – may it be in the agriculture, services or the rural industry sectors.  APPLICATION OF GROWTH POLE THEORY IN REGIONAL PLANNING Strategic Industrial Development Growth pole theory is used to identify and promote industries with the potential to act as economic drivers for a region. By investing in these industries, planners aim to create centers of economic activity that stimulate broader regional development. Example: In Malaysia, the development of the oil and gas sector in Bintulu has stimulated growth in logistics, petrochemical industries, and infrastructure development. Urban and Regional Development Growth pole theory guides urban and regional development strategies to create balanced growth by concentrating resources in selected locations to spur development. Planned Growth Centers: Designating certain cities or areas as growth centers to attract industries, infrastructure, and talent – agglomeration effects. Example: The Iskandar Malaysia Corridor in Johor is a planned growth center aimed at creating a dynamic economic region near Singapore. Infrastructure Planning Infrastructure plays a critical role in supporting growth poles by ensuring connectivity and access to resources and markets. Planners prioritize investment in transportation networks - highways, railways, and ports to link growth poles with peripheral areas. Example: Malaysia’s East Coast Rail Link (ECRL) connects the East Coast Economic Region (ECER) to the Klang Valley. Addressing Regional Disparities Growth pole theory helps address regional inequalities by promoting spillover effects from developed cores to underdeveloped peripheries. Policies to ensure that benefits from the growth pole extend to surrounding areas such as developing industrial parks or satellite towns around major urban hubs - to stimulate local economies. Economic Diversification Planners use growth poles to encourage economic diversification in regions dependent on a single industry or resource – to reduce vulnerability to economic shocks by creating multiple economic drivers. Example: In Penang, the growth of the electronics industry complements tourism and agriculture, reducing reliance on any single sector. International Cooperation and Trade Growth pole theory can guide cross-border regional planning, particularly in areas with shared economic interests. Example: The Greater Mekong Subregion Economic Cooperation Program promotes growth poles in Southeast Asia to enhance trade and connectivity among member countries. CRITICISM AND LIMITATIONS OF GROWTH POLE THEORY Uneven Regional Development Growth pole theory can intensify regional inequalities. Although the theory suggests that growth poles generate spillover effects to surrounding areas/ regions, in practice, the benefits often remain concentrated in the core area, leaving peripheral regions underdeveloped. Over-Reliance on the Core Growth poles often lead to an over-reliance on the core industries or firms, making the regional economy vulnerable to shocks. If the leading industry in the growth pole faces a downturn, it can have a spilling negative impact on the entire region, including peripheral areas. Weak Spillover Effects The theory assumes strong backward and forward linkages between the core and peripheral regions. However, these linkages are often weak, particularly in developing countries where infrastructure, institutional capacity, and market access are limited. Thus, the expected spread effects may not materialize. Environmental Degradation The concentration of industries and economic activities in growth poles can lead to environmental degradation - pollution, resource depletion, and habitat destruction. Urban areas designated as growth poles may experience overcrowding, strain on natural resources, and deteriorating living conditions. Neglect of Peripheral Areas The focus on developing a single or few growth poles often leads to the neglect of peripheral and rural areas, which may continue to lack basic infrastructure, services, and investment - resources and attention are concentrated on the core. Assumptions About Innovation and Leadership The theory relies heavily on the presence of dynamic propulsive industries or firms to drive growth. However, not all regions have such industries, and creating them artificially through policy interventions may not always succeed. Dependency on External Factors The success of growth poles often depends on external factors - global market demand, foreign investment, and political stability. Unfavorable changes in these factors can undermine the effectiveness of growth pole strategies, making them less reliable in volatile economic or political conditions. BINTULU AS A GROWTH POLE The O&G industry in Bintulu, particularly driven by Petronas, has introduced advanced technologies and expertise in liquefied natural gas (LNG) production - positioned Malaysia as a key global player in LNG export markets. Ripple Effects Across the Economy Backward Linkages: The LNG industry stimulates upstream activities such as natural gas exploration, drilling, and servicing. Local engineering, logistics, and equipment suppliers benefit from increased demand for their services. Forward Linkages: Natural gas is used as a feedstock for downstream industries, including petrochemical production and manufacturing. It supports energy-intensive industries and power generation in the region. Infrastructure Development The growth of the LNG industry in Bintulu has required the development of supporting infrastructure: Transportation: The development of ports and shipping facilities for exporting LNG. Utilities: Expansion of energy and water resources to support industrial activities. Urban Development: Growth in housing, schools, and healthcare facilities to accommodate the workforce and their families. Regional and National Impact The economic activities centered in Bintulu have had a polarization effect, concentrating wealth and development in the area. Over time, these benefits have spread to neighboring regions in Sarawak. Bintulu's growth as an LNG hub has contributed significantly to Malaysia's GDP, tax revenues, and foreign exchange earnings. THANK YOU Khalid Zanudin Faculty of Social Sciences and Humanities, Universiti Malaysia Sarawak [email protected]