Lesson 6 Theories of Industrial Location-II

6.1 Introduction 6.2 Hirschmans theory

6.2.1 Trickling-down 6.2.2. Polarization effects 6.3 R P Misras 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 6.5 6.6 6.7 6.8 6.9 Factors effecting Industrial Location Summary Check your Progress Key Concepts Self-Assessment Questions 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:
Dear student already you studied some of the important industrial location theories in an earlier lesson. They are; Alfred Weber, Sargent Florence and August Losch 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 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 which emphasize cost factors b) those which emphasize demand c) Those which are concerned with vocational interdependence. 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 features of Perrouxs theory. Further he stated that agglomeration tendencies are promoted around the pole, and such tendencies arise because of external economies and result in polarization of economic activities around the pole. Albert O Hirschman, in his theory he emphasizes that, because of these external economies there is a tendency among investors to concentrate in the growth 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) ii) inter-regional trade and transfer of capital to backward regions

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 industrial in such regions may find it difficult to compete with industry in the growth pole particularly as transportation facilities are improved. ii) Owing to better investment opportunities in the growth pole, the investors in the hinterland may invest their savings in the growth pole rather than in the hinterland. iii) Perhaps the worst polarization effect from the point of view of the hinterland 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 Misras 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 Hypothesis has its roots in western economic thought where its role 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 countries like India, the growth foci should 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 centres. They must have processing and manufacturing 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 manufacturing of goods; it includes the creation of conditions under which industrial development can occur. iii) In UDCs, the growth foci have to function as social interaction points 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) ii) iii) iv) Service Centres at the Local Level Growth points at the sub-regional level Growth centres at the regional level Growth poles at the national level

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. It will planned rural settlement offering marketing, recreational, social services for the community. Each central village will have a standard primary school, a sub-post office, a co-operative, etc.,

6.3.1 Service Centres at the Local 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 basic facilities. The service centre will also with the headquarter of an extension officer such as the village level worker, and other minor government 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 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, etc., at some determined centre rather than dissipate the resources in providing them in each and every village.

6.3.2 Growth points at the sub-regional 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 envisaged 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 Centres at the Regional 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 Poles at the National 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 Factors effecting Industrial Location:

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 Factors: these are the physical factors which are more or less geographical in nature related to soil, raw material etc., the important facturs in this category are :

(a) Availability of land (b) Nature and quality of raw materials from land, e.g. forest products, agricultural inputs, minerals. (c) Geographic situation of the factory site in relation to the transport facilities by rail, road, water and air. (d) Quantity and quality of human resources (e) Enegy resources (f) Availability of water for drinking and industrial use (g) Wages to disposal facilities (h) Climate 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 plants

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:
Hirschmans trickling-down and polarization effects are very much like Myrdals 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 will ensure an extensive spread of 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 Misras 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 urbanization and of depressed areas co-existing with developed areas. The problem of providing an adequate institutional infrastructure in the rural areas is also properly looked after. Adoption 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.

Central Place Theory: 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. 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

Self-Assessment Questions

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?

Long Answer type questions: 1. Critically examine Hirschmans 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 2. False 3. True 4. True

1. True

6.10 Suggested Readings

1. Misra, Puri 2. Mahesh Chand & Puri.V.K. 3. Kuschal.S 4. Sivaiah & Das 5. Bole Rao & Desai 6. Bhagwati.J.N & Desei.P 7. Misra.R.P. 8. Balakrishna.R. 9. Cheruniliam

Indian Industrial Economy. Regional Planning In India. Industrial Economics. Industrial Economics. Industrial Economics. India: Planning for Industrialization. Regional Planning Regional Planning in India. Industrial Economics (ed), Indias Economic Policies.