Growth pole theory

Rooted in the work of English economist and academic Sir William Petty (1623-1687), and associated with French economist François Perroux (1903-1987), growth pole theory refers to the grouping of industries around a central core of other industries whose actions act as a catalyst to growth in the area.

Although growth pole theory does not include geographical concentration of industries as part of its criteria, it has been applied to regional policy in Britain since the 1960s.

The central idea of the growth poles theory is that economic development, or growth, is not uniform over an entire region, but instead takes place around a specific pole (or cluster). This pole is often characterized by core (key) industries around which linked industries develop, mainly through direct and indirect effects. Core industries can involve a wide variety of sectors such as automotive, aeronautical, agribusiness, electronics, steel, petrochemical, etc. Direct effects imply the core industry is purchasing goods and services from its suppliers (upstream linked industries) or providing goods and services to its customers (downstream linked industries). Indirect effects can involve the demand for goods and services by people employed by the core and linked industries supporting the development and expansion of economic activities such as retail.

The expansion of the core industry implies the expansion of output, employment, related investments, as well as new technologies and new industrial sectors. Because of scale and agglomeration economies near the growth pole, regional development is unbalanced. Transportation, especially transport terminals, can play a significant role in such a process. The more dependent or related activity is to transportation, the more likely and strong this relationship. 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. Global supply chains have challenged several dimensions of the growth poles theory since growth and linkages generated by a core industry could concern activities located elsewhere.

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