Lesson 6 Theories of Industrial Location-II 6.1 Introduction
6.2
Hirschman’s theory
6.2.1 Trickling-down
6.2.2. Polarization effects
6.3 R P Misra’s Modified Growth Foci Approach
6.3.1 Service Centres at Local Level
6.3.2 Growth Points at the Sub-Region Level
6.3.3 Growth Centres at the Regional Level
6.3.4 Growth Poles at the National Leve l 6.4
Factors effecting Industrial Location
6.5
Summary
6.6
Check your Progress
6.7
Key Concepts
6.8
Self-Assessment Questions
6.9
Answers to check your progress
6.10 Suggested Readings
Objective: After studying this lesson, you will be able to understand
•
Meaning of Un-balanced growth theory
•
Role of Trickle-Down effects
•
Role of Polarization effects
•
Meaning of Growth Poles and Central Places
•
Definition of Growth foci
•
Role of Growth Poles, Central Places and Growth foci
6.1 Introduction: Introduction: Dear student already you studied some of the important industrial location theories in an earlier earlier lesson. They are; Alfred Alfred Weber, Sargent Florence Florence and August Losch Losch industrial industrial location theories. And as already mentioned in the lesson five, the theory of industrial location attempts to explain why the industries are located where they are, why the locations are shifted, and what can be the best location for a particular p articular industry keeping in view the resource endowments of different regions, transport network, existing demand, potential demand, etc.,
It is a field of study that interests both economists and geographers, because the location of industries is of particular importance in studying the internal structure of regions and, in many cases, guides the pattern of spatial development. The different approaches to the industrial location theory can be classified in either of the three following categories:
a) those those whic which h emphas emphasize ize cost cost facto factors rs
b) those which emphasize demand
c) Those which are concern concerned ed with with vocational vocational interdependen interdependence. ce.
The first attempt in developing a theory of location emphasizing cost factors was made by a German scholar, Von Thunen, in regard to agricultural location. He was considered the problem of location of various forms of agricultural production in relation to markets.
Here in this lesson, we will study remaining two Industrial location theories developed by A O Hirschman and R P Misra.
6.2 Hirschman theory:
Perroux developed the concept of a growth pole in 1955. The close relationship between scale of operations, dominance, and impulses to innovate become the most important featur features es of Perrou Perroux’s x’s theory theory.. Furthe Furtherr he stated stated that that agglom agglomera erati tion on tenden tendencie ciess are promoted around the pole, and such tendencies arise because be cause of external economies and result in polarization of economic activities around the pole.
Albe Albert rt O Hirs Hirschm chman an,, in his his theo theory ry he empha emphasi size zess that that,, beca becaus usee of thes thesee exter external nal economi economies es there there is a tendenc tendency y among among invest investors ors to concent concentrat ratee in the growth growth poles. poles. According to him “what appears to happen is that the external economies due to the poles, though real, are consistently overestimated by the economic operators”. Thus, a sort of ‘dualism’ in the economic progress of nations develops- a country is split up into developed and backward areas.
6.2.1 Trickling-down and Polarization Effects:
Despite the exaggerated space preferences of economic operations, notes Hirschman, development in geographical growth points will set in motion certain forces that act on the other regions of the country. Some of these forces will be favorable and others adverse. The favorable forces are referred to by Hirschman as the trickling-down forces while the adverse forces are named polarization effects. Through the trickling-down forces progress is ‘trickled down’ to the backward areas from the growth pole. Such forces work basically through;
i)
inter-regional trade and
ii)
tran transf sfer er of capi capita tall to to bac backw kwar ard d reg regio ions ns
In addition, the growth pole might also attract labor from the backward areas and thus help in reducing the pressure of population there.
6.2.2 Polarization effects: Polarization effects can discourage growth in the hinterland on account of the following factors:
i)
The The indus industr tria iall in in suc such h regi regions ons may may fin find d it diff diffic icul ultt to comp compet etee with with indus industr try y in in the growth pole particularly as transportation facilities are improved.
ii) ii)
Owin Owing g to bet bette terr inve invest stme ment nt oppo opport rtun unit itie iess in the the grow growth th pol pole, e, the the inve invest stor orss in the hinterland may invest their savings in the growth pole rather than in the hinterland.
iii) iii)
Perhap Perhapss the wor worst st pola polari rizat zatio ion n effec effectt from from the poin pointt of view view of the the hint hinter erla land nd is that it might be drained of the best part of its labor force. Instead of absorbing the disguised unemployed, the progress of the growth pole may
denude the hinterland “of its key technicians and managers as well as of the more enterprising young men.”
6.3 R P Misra’s Modified Growth Foci Approach:
The growth pole theory contributes to explaining the impact of propulsive industries and leading firms on regional economic development, it is not in itself a theory of location which explains where the functional poles are or where the most likely locations of the new poles may be. To explain this it has to relay on the central place theory. On the other hand, the central place theory does not explain the growth phenomenon. It is a static theory which only explains the existence of certain patterns of centres. It does not say how these patterns come into being and how they may undergo changes in future.
To explain these dynamic phenomena, it needs the help of the modified growth fold theory. Therefore, let us now study the modified growth foci approach, contributed by R P Misra.
R P Misra notes the following three important weaknesses in the conventional growth pole theory when it is applied to conditions prevailing in under developed countries:
i)
The The Hypo Hypoth thes esis is has has its its roo roots ts in in west wester ern n econ econom omic ic tho thoug ught ht whe where re its its rol rolee has has been defined in terms of accelerating development through industrialization. Undue emphasis on industrialization programs introduces functional rigidity in the growth pole theory.
ii)
In under developed count untries like India, the growt owth foci oci shou hould not not be concerned with industrial development alone. They have to perform two other basic functions: a) they must function as service centres, and meet the day-t-
day needs of the area they served (i.e., they must function as central places in the form of postulated by Chris taller) and b) they must act as Innovative and growth promoting promoting centres. centres. They must have processing processing and manufactur manufacturing ing activities of both basic and non-basic types and should be able to provide employment to the drop-outs of the agricultural system. Thus the role of growth foci is not limited to manufacturi manufacturing ng of goods; it includes includes the creation creation of conditions under which industrial development can occur.
iii) iii)
In UDC’ UDC’s, s, the the grow growth th foci foci have have to funct functio ion n as socia sociall inter interac acti tion on point pointss also. also. They have to act as the centres of diffusion of information. Provision of extension services, educational services and meeting places is necessary to accomplish this task.
Recognizing the importance of the growth pole theory in the process of regional planning and taking account of the considerations, Misra extends the concept of Growth pole to the concept of Growth Foci. This new concept of Growth foci seeks to integrate the main elements of the central place theory, the growth pole theory, and the spatial diffusion theory. The earlier version of the theory advocated the following four – tier hierarchy of growth foci.
i)
Service Centres at the Local Level
ii)
Grow Growtth poi point ntss at at the the subub-regi region onal al level evel
iii) ii)
Grow Growtth cen centtres res at at the the regi region onal al level evel
iv)
Grow Growtth pole poless at the the nati nation onal al leve levell
The later formulation envisages a five-tier hierarchy with the central village at the local level, the service centres at the micro regional level, the growth points at the sub-regional level, the growth centres at the regional levels, and the Growth poles at the national level.
The central village, which will be the lowest level central place in the system, is designed to form the service and marketing nuclease for about six thousand people living in about six villages. villages. It will planned rural settlement settlement offering marketing, recreational, recreational, social services services for the community. community. Each central village will have a standard standard primary school, a sub-post office, a co-operative, etc.,
6.3.1 Service Service Centr Centres es at at th thee Local Local Level: Level: The service centres will serve a population of about thirty thousand living in rural areas, apart from its own population of about five thousand. They will have grocery stores, general merchant shops, minor repair facilities, tailor shops, barber shops, restaurants, primary and junior high schools, a sub-post office, co-operatives, a community centre, and other other basic basic faci facili liti ties es.. The The serv servic icee cent centre re will will also also with with the the head headqua quart rter er of an exten extensi sion on offi office cerr such such as the the vill village age leve levell work worker er,, and other other mino minorr gover governm nmen entt functionaries.
The service centres are aim to serve as focal point for social intercourse from where development information will spread to the village and hamlets. For any program of integrated national development such service centres centres are vital, for in country where there is a serious lack of resources it is better to provide certain facilities such as co-operative, schools, schools, etc., at some determined determined centre centre rather rather than dissipate dissipate the resources in providing providing them in each and every village.
6.3.2 Growth Growth points points at the the sub-regi sub-regional onal level: level: Each growth point will serve about five service centres, serving about one lakh fifty thousand people living in rural areas. The size of growth point interms of population will range from ten thousand to twenty five thousand. The concept of a growth point here is similar to market towns. The growth points are so en visaged as to be the ‘the sub-regional innovative and propulsive urban centres’.
They will be linked with sister growth points by state high ways and with the service centres by district / local road networks. In terms of service specialization, the growth points will be predominantly agro-industrial. The economic activities at the growth points will be production, handling, and processing of agriculture and dairy products.
6.3.3 Growth Growth Centr Centres es at the Region Regional al Level: Level: Growth centres which should be about 500 in number in the country as a whole. The population of each centre will vary from 50,000 to 5 lakhs depending upon the stage at which the regional economy is. The growth centres will serve at population of about 12 lakhs spread over a meso region level. In contrast with the growth points, the growth centres will have a preponderance of secondary activities and manufacturing as their chief function.
6.3.4 Growth Growth Poles Poles at the the Nation National al Level: Level: The population of the growth pole will range from 5 lakhs to 25 lakhs. Each growth pole will serve a rural population of about 20 million and is designed to function as the ‘heart’ of one macro region of the country performing highly specialized secondary, tertiary and quarternary activities, which other centres are not in a position to perform. The growth poles will also send out ‘financial, technological, research and industrial impulses to all centres and points within the area of their command’.
6.4 Facto Factors rs effe effecti cting ng Indu Industr strial ial Locati Location: on: A large number of technical, economic and institutional factors which exert pull and pressure on location of the factory in varying magnitudes, are to be considered simultaneously. A general list of such factors is given below:
1. Technical thesee are are the the phys physic ical al fact factor orss which which are are more more or less less Technical Factors: Factors: thes geographical in nature related to soil, raw material etc., the important facturs in this category are :
(a) Availa Availabil bility ity of land land (b) Nature Nature and quality quality of raw materials materials from land, e.g. forest products, products, agricultural agricultural inputs, minerals. (c) Geographic Geographic situation situation of the factory factory site in relation to the transport transport facilities facilities by rail, road, water and air. (d) Quantity Quantity and quality quality of human resources resources (e) Enegy Enegy reso resourc urces es (f) Availabili Availability ty of water for for drinking drinking and industrial industrial use (g) Wages to to disposal disposal faciliti facilities es (h) (h) Clim Climat atee
2. Economic and infrastructural factors:
(a) Local markets (b) Situation in relation to export markets (c) Costs of land and buildings d) Costs of transport, power, water rates etc., (e) Salaries and wages in relation to skills (f) Local cost of living (g) Taxes and subsidies (h) Cost and availability of finance (i) Industrial relations and Trade Union activities (j) Local medical facilities (k) Housing facilities (l) Cultural facilities (m) Communication facilities
3. Other Factors:
a) Government policies towards location of new p lants
b) Personal factors
Most of the factors mentioned above are self explanatory. All factors together provide a spatial configuration which is to be analised very carefully for the optimum location of factory.
6.5 Summary: Hirschman’s trickling-down and polarization effects are very much like Myrdal’s spread effects and backwash effects, though Hirschman is more optimistic. Hirschman feels that in the long run external diseconomies will appear in the growth centre and the existence of complementaries complementaries will ensure an extensive extensive spread of development development.. On the other hand, Myrdal believes that this may not be the end result, for the existence of cumulative and circular causation may prevent this from happening.
R P Misra’s growth pole theory opens up immense possibilities for the application of this theory in promoting the processes of regional and national economic growth. By ensuring a linked pattern of hierarchy of human settlements it also successfully avoids the danger of over over urbani urbanizat zation ion and of depres depressed sed areas areas co-exi co-existi sting ng with with develop developed ed areas. areas. The problem of providing an adequate institutional infrastructure in the rural areas is also properly looked after. Adoption Adop tion of this strategy leads to what Misra calls ‘Decentralized Concentration’.
6.6
Key Concepts
Un-balanced growth : This development model developed by Hirschman. According to
him priority while investing should be given for few selected sectors but not for all sectors at a time.
Growth Pole theory: The growth pole theory contributes to explaining the impact of
propulsive industries and leading firms on regional economic development.
Centr Central al Plac Placee Th Theor eory: y: The The cent centra rall plac placee theo theory ry does does not not expl explai ain n the the grow growth th
phenomenon. It is a static theory which only explains the existence of certain patterns of centres.
Growth Foci: Extended version of Growth pole theory which was propounded by RP
Misra
Trickle –down effects : According to Hirschman, through the trickling-down forces
progress is ‘trickled down’ to the backward areas from the growth pole.
Polarization effects: Polarization effects can discourage growth in the hinterland.
6.7
Check your Progress
State whether the following statements are True or False
1. Growth Pole theory developed by Perroux 2. Growth Pole and Central Place theories are not supplement each other 3. Trickle-down effects introduced by Hirschman 4. Growth Foci concept coined by RP Misra
6.7 6.7
Self Self-A -Ass sses essm smen entt Qu Ques esti tion onss
Short answer type questions:
1. Explain the concept of Growth pole. 2. Elaborate the Trickling-down and Polarization effects. 3. What is meant by Growth Foci? F oci?
Long Answer type questions:
1. Critically examine Hirschman’s Theory 2. Distinguish between Trickling-down and Polarization effects 3. Examine the contribution of Misra to Growth Foci approach. 4. Explain the important determinant factors of industrial location.
6.9
Answers to check your progress
1. True
2. False
3. True
4. True
6.10 Suggested Readings
1. Misra, Misra, Puri Puri
Indian Indian Indust Industria riall Econom Economy. y.
2. Mahesh Chand & Puri.V.K. Puri.V.K.
Regional Regional Planning Planning In India. India.
3. Kuscha Kuschal.S l.S
Indust Industria riall Econom Economics ics..
4. Sivaia Sivaiah h & Das
Indust Industria riall Econom Economics ics..
5. Bole Bole Rao & Desai Desai
Indust Industria riall Econom Economics ics..
6. Bhagwati.J. Bhagwati.J.N N & Desei.P Desei.P
India: India: Planning Planning for Industriali Industrializatio zation. n.
7. Misra. Misra.R.P R.P..
Region Regional al Planni Planning ng
8. Balakr Balakrish ishna. na.R. R.
Region Regional al Planni Planning ng in India. India.
9. Cherun Cherunil iliam iam
Indust Industria riall Econom Economics ics (ed), India’s Economic Policies.