REGIONAL PLANNING AND DEVELOPMENT

Paper on
THEORIES AND MODELS FOR REGIONAL PLANNING

DEPARTMENT OF GEOGRAPHY
 KIRORI MAL COLLEGE
University of Delhi

Initially, approaches to development had been based on the assumption that

"modernization" was characterized by the Western world (wealthier, more powerful
countries at the time), which were able to advance from the initial stages of
underdevelopment. Accordingly, other countries should model themselves after the
West, aspiring to a "modern" state of capitalism and a liberal democracy. Following are
some of the notable works:
Theorist Year Concept
Francois Perroux 1955 Growth Pole Theory
Gunnar Myrdal 1956 Circular Cumulative Causation
Walt Whitman Rostow 1960 Stages of economic growth
Albert O. Hirschman 1950s Strategy of unbalanced growth
John Friedman 1966 Matter of centre versus periphery (Core periphery)

GROWTH POLE THEORY

Francois Perroux
Growth generally does not take place simultaneously at all places but is concentrated in
few places. Such places are called growth poles and growth centres. which are dominant,
propulsive and have multiplier effect to impact the economy as a whole. According to
Francis Perroux, “growth does not appear everywhere at the same time, it occurs in poles,
centres and points with variable intensity. It spreads with different channel with variable
terminal effects on the economy as a whole.”

According to this theory, all sectors and all dimensions of economy can’t be planned for
at the same time and consequence of growth may not spread and impact with same
intensity. Perroux was concerned with the phenomenon of economic development and
with the process of structural change. He attempted to explain how modern process of
economic growth deviated from the stationary conception of equilibrium growth. His
arguments were based on Schumpeter’s theories of the role of innovations and large-
scale firms and the theory of inter-industry functional linkages. In Schumpeter’s analysis,
development occurs as a result of discontinuous spurts in a dynamic world which occurs
due to the innovative entrepreneur whose activities take place in large- scale firms. These
firms are able to dominate their environment in the sense of exercising reversible and
partially reversible influences on other economic units by reason of their dimension and
negotiating strength, and by the nature of their operations. Scale of operations,
dominance and impulses have close relationship to innovate. A leading propulsive
industry has highly advanced level of technology and managerial expertise, high income
elasticity of demand for its products, marked local multiplier effects and strong inter-
industry linkages with other sectors, without functional interaction spread of growth along
different channels is not possible and nor will result in multiplier and propulsive effect.
This implies growth centres, is economy specific in nature. Linkage is a concept
 developed in regional economics. If a growth in production in one industry stimulates
production in the industries supplying it then that industry has backward linkages. For
example, the steel industry has backward linkages to the iron ore mining industry, the
coke and coal industries and the transportation industry involved in transporting those
inputs to the steel industry. A forward linkage when the availability of the output of an
industry make possible the production of industries using that output. For example, the
plastic producing industry makes it feasible for businesses requiring plastic to begin
operation.

Perroux’s idea of an economic space as a field of forces consisting of centres, “from which
centrifugal forces emanate and to which centripetal forces are attracted. Each centre,
being a centre of attraction and repulsion, has its proper field which is set in the field of
other centres.” According to growth poles theory the propulsive pole is a business
unit (a company, industry) or a set of these units. The economic development of a regions
depends on the intensity of the propulsive industries on the propelled. All other industries,
which lack the strong character, are called propelled. This classification then creates
polarization of space. Perroux also identified the terms dominant region which is the
region where poles of development are concentrated, and dominated region which is
a region where side poles are concentrated. The difference between a growth pole and a
growth centre is purely that of scales with former being at larger scales and later on a
smaller scale. Growth poles theory identifies 4 basic types of polarization:
 Technological and technical: based on the concentration of new technology in the
growth pole.
 Income: The growth pole contributes to the concentration and the growth of income due
to expansion of services and dependence on demand and profit.
 Psychological: Based on the optimistic anticipation of future demand in the propelled
region.
 Geographical: Based on the concentration of economic activity in a geographically
determined space.

As according to this concept over a period of time, deglomeration economies start

functioning on a pole when it grows excessively due to factors like
i. Congestion, traffic problems
ii. High population density
iii. High prices of land and inputs
iv. Limitation of the expansion of the market

Hence, the industries start moving towards hinterland. This aspect has led to most of the
developing, underdeveloped as well as developed countries of the world to adopt this
model for regional planning. To attain a balanced regional development the theory of
growth pole suggests that some places in the backward regions must be selected and
developed as poles. This actually means creating structural economic disparities
deliberately but this will be of worth as the development of growth poles in the backward
region will have two effects:

o It will result in higher average income of the region.

 o It will send impulses of economic and industrial pulses throughout region
by trickledown effect.
Regional and geographical implications of the growth poles theory was proposed by
a French economist Jacques Boudeville in his modified theory the theory of growth
centers and growth axis. Boudeville defined a regional growth pole as a “set of expanding
industries located in an urban area and including further development of economic activity
throughout its zone of influence.” The place where these ‘expanding’ or ‘propulsive’ or
‘dominant’ industries are located in the region becomes the pole of the region and
agglomeration tendencies are promoted.

There have been proposals which pointed out that the presence of growth poles is not
essential for economic growth ie. Switzerland (where tourism is not concentrated in poles
but spread all over the country) and Denmark (the prosperity of which was not initiated
and maintained due to a large propulsive company). Though the theory of growth pole
and growth centres may be successfully applied to attain a balanced regional
development.

Pros:

o It uncovers inequalities in the economy of a country (region) and focuses our

attention to the propulsive and propelled units.
o 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.
o It presents a basis for careful decentralization by supporting the creation of new
development poles (focused decentralization or decentralized focus).

Cons:

o Failing to differentiate between natural and artificial growth pole or between

a spontaneously created center and an attempt to affect the center from the
outside.
o Implementation of the concept in very different contexts - these being neglected
regions, cities to moderate the process of suburbanization as well as achieving
the modification of urban structure.
o Underestimation of the critical amount of initial investment to create new growth
center.
o An insufficient analysis of the newly founded facility of the propulsive industry.
 CIRCULAR CIRCULATION CAUSATION
Gunnar Myrdal
Circular circulation causation (CCC) is a multi-causal approach where the core
variables and their linkages are delineated where the form of an institution will lead to
successive changes in other institutions which are circular in that they continue in a cycle,
many times in a negative way. The process of CCC starts accidentally due to momentum
of an early start or just by chance. The cumulative causation action has been built upon
spread effect and backwash effects. The theory emphasizes that “poverty is further
perpetuated by poverty” and “affluence is further promoted by affluence”. In backward
regions problem creates more problems. In developed regions auto solutions solve all
problems.
The theory maintains that economic development results in a circular causation
process leading to rapid development countries while the weaker countries tend to remain
behind and poor. It rejects the assumption of automatic tendency of socio-economic
system towards stabilization and holds that a change does not create opposite reaction
but other changes which emphasize it. According to Myrdal market forces lead to deepening
of inter-regional differences. The effects of individual cumulative mechanisms (selective
migration) are related and lead to growth spiral i.e. to the outflow of growth sources (capital and
labor) from the underdeveloped to more developed regions.

Premise:
 there is a small group of wealthy countries and many more extremely poor countries,
 wealthy countries continue to grow while poor states stagnate (developing countries).
 from a global point of view the differences between the rich and the poor are growing
larger.

BACKWASH AND SPREAD EFFECT

Negative or Backwash or polarization: It basically means that if one particular area in a

country starts growing or developing, it causes people, human capital as well as physical
capital (infrastructure, finance, machines etc.) from other parts of the country to gravitate
towards this growing centre. It encourages growth of poles at the expense of other
surrounding regions (Negative impact). For instance, in India, let’s say
o Delhi is the developing centre with all the companies being set up there.
o Then people from all over Haryana, Punjab, UP, Bihar etc. have a tendency to move to
Delhi because all companies are located there and better employment opportunities exist.
o So, Delhi will grow but the remaining areas will be worse off. This is Backwash effect.

Positive or Trickle down or spread effect: It is the dispersal of growth away from poles
towards the hinterland (Positive Impact). The growth of demand in more developed regions
for resources and agricultural products produced in underdeveloped regions or expansion of
technological advancement. This essentially leaves the other areas worse off than before
 because their best brains and capital leave them to go to the growing centre. It means
that growth in one area adversely affects the growth in the other. Counter to the Backwash
Effect is the spread effect.
o Development in one place, spreads to its suburbs and all the adjoining areas.
o For Delhi, we could argue that suburbs like Faridabad, Gurgaon, Ghaziabad etc. have
benefited from Delhi’s growth due to the Spread Effect caused by Delhi’s growth

Myrdal believes that international and inter-regional economic relations in practice involve
unequal exchanges in the sense that the weak is always exploited by the strong. He
describes the backwash effects of migration, capital movement and trade in the backward
regions. The main cause of backwardness and regional disparities has been the strong
backwash effect and weak spread effects. Developed region is developing at a faster rate
at the cost of backward region. Income earned by developed region is not reinvested in
backward regions but is repatriated to the developed sectors/regions leading to more
development in these areas. Spread effect continues to become stronger in developed
countries while backward effect continued to become even more spread in backward
countries.
 The development of a region in a balanced manner is an interplay of the above two forces.
Relationship between backwash and spread effect:
o When backwash effect dominates divergence will develop; periphery will remain weak,
only centre will develop and dualism in growth is promoted.
o When spread effect dominates convergence will develop; periphery will develop, there
will be economic integration between centre and periphery, propagating a balanced
development.

Cumulative causation theory proves that:

o Market mechanism will not bring equality between regions but will increase inequalities.
o Govt. Intervention will check backwash effect from getting cumulative.

Pros:

o This model combines national and international forces which tend to keep backward
countries in morass of cumulative process where poverty becomes its own cause.
o He proved that the so called competitive markets instead of solving the problem of backward
region it would accentuate them.
o Has made important contributions to the theories of convergence and divergence, agglomeration
and locational economies and the theory of vicious circle.
o Myrdal was a supporter of balanced growth and wanted it to be initiated, directed and sustained
by govt. He was a strong supporter of the theory of sponsored growth.

Cons:
o The theory has been criticized regarding “accidental factors” as the only factors which
start the growth process.
o There are setbacks in developing regions and there can be development in vicious circle
region.
o The agglomerating factors (same factors which Myrdal emphasized on) can also bring
decreasing returns when diseconomies overcome the economies.
o It can also be argued that even market mechanism can reduce inequalities and disparities
between two regions.
 STAGES OF ECONOMIC GROWTH
WALT WHITMAN ROSTOW

Rostow penned his Stages of Economic Growth in 1960, which presented five steps
through which all countries must pass to become developed. Rostow was fiercely anti-
communist and right-wing; he modeled his theory after western capitalist countries, which
had industrialized and urbanized. As a staff member in President John F. Kennedy's
administration, Rostow promoted his development model as part of U.S. foreign policy.
Rostow's model illustrates a desire not only to assist lower income countries in the
development process.

Premise:
o Lack of adequate investment.
o The financial gap exists.

Rostow took an historical approach in suggesting that developed countries have tended
to pass through 5 stages to reach their current degree of economic development.
These are:
 Traditional Society: This stage is characterized by a subsistent, agricultural based
economy, with intensive labor and low levels of trading, and a population that does not
have a scientific perspective on the world and technology. This is an agricultural economy
of mainly subsistence farming, little of which is traded. The size of the capital stock is
limited and of low quality resulting in very low labour productivity and little surplus output
left to sell in domestic and overseas markets This initial stage of traditional society
signifies a primitive society having no access to modern science and technology. In other
words, it is a society based on primitive technology and primitive attitude towards the
physical World. Thus, Rostow defines a traditional society “as one whose structure is
developed within the limited production function based on pre-Newtonian science and
technology and as pre-Newtonian attitudes towards the physical world”.
However, Rostow believes in this stage of a society output could be increasing through
the expansion of land area under cultivation or through the discovery and spread of a new
crop. But the critical fact about this type of society is that there is limit to attainable output
per head. This limit arises due to the absence of access to modern science and
technology. This type of a society is characterised by a hierarchical social structure in
which there is little possibility for vertical mobility.
The value system that prevails in such a society is called a long-run fatalism. People of
these societies think that not much economic progress is possible for them and for their
future generations.

 Pre-conditions to take-off: Here, a society begins to develop manufacturing. Agriculture

becomes more mechanised and more output is traded. Savings and investment grow
although they are still a small percentage of national income (GDP). The people start
 using modern science and technology for increasing productivity in both agriculture and
industry, people start viewing the world where there are possibilities of future growth. A
new class of entrepreneurs emerges in the society who mobilise savings and undertake
investment in new enterprises and bear risks and uncertainty. In the sphere of political
organisation, it is during this stage that an effective centralised nation state starts
emerging. This covers a long period of a century or more. These conditions mainly
comprise fundamental changes in the social, political and economic fields; for example:
(a) A change in society’s attitudes towards science, risk-taking and profit-earning;
(b) The adaptability of the labour force;
(c) Political sovereignty;
(d) Development of a centralised tax system and financial institutions; and
(e) The construction of certain economic and social infrastructure like railways, ports,
power generation and educational institutions. India did some of these things in the First
Five Year plan period (1951-56).

 Take-off: Rostow describes this stage as a short period of intensive growth, in which
industrialization begins to occur, and workers and institutions become concentrated
around a new industry. Manufacturing industry assumes greater importance, although the
number of industries remains small. Political and social institutions start to develop -
external finance may still be required. Savings and investment grow. Agriculture assumes
lesser importance in relative terms although the majority of people may remain employed
in the farming sector. This is the crucial stage which covers a relatively brief period of two
 to three decades in which the economy transforms itself in such a way that economic
growth subsequently takes place more or less automatically.

 Drive to Maturity: This stage takes place over a long period of time, as standards of living
rise, use of technology increases, and the national economy grows and diversifies.
Industry becomes more diverse. Growth should spread to different parts of the country as
the state of technology improves, the economy moves from being dependent on factor
inputs for growth towards making better use of innovation to bring about increases in real
per capita incomes. This stage of economic growth occurs when the economy becomes
mature and is capable of generating self-sustained growth. The initial key industries which
sparked the take-off decelerate as diminishing returns set in. But the average rate of
growth is maintained by a succession of new rapidly-growing sectors with a new set of
leading sectors. The proportion of the population engaged in agriculture and other rural
pursuit’s declines, and the structure of the country’s foreign trade undergoes a radical
change.

 Age of high mass consumption: Rostow believed that Western countries, most notably
the United States, occupied this last "developed" stage. Here, a country's economy
flourishes in a capitalist system, characterized by mass production and consumerism.
Output levels grow, enabling increased consumer expenditure. There is a shift towards
tertiary sector activity and the growth is sustained by the expansion of a middle class of
consumers. With progressive Industrialisation and urbanization of the economy values of
people change in favour of more consumption of luxuries and high styles of living. New
types of industries producing durable consumer goods come into existence which
become the new leading sectors of economic growth.

Criticism:
o Gunar Mydral has argued that there cannot an inevitable sequence of events described
as successive stages of growth. According to him, economic growth is the result of certain
economic policies adopted and not the other way around.
o Meier argues that stages in the history of economic growth cannot be generalized from
the development experience of some European Countries as Rostow has done. Although
a particular sequence may correspond broadly to the historical experience of some
economies, no single sequence fits the history of all countries.
o Simon Kuznets argued that many countries which have now reached developed status
did so without seeing a significant increase in their savings rate.
o When the external finance has come in the shape of loans from developed countries,
interest charges have been incurred which have acted as a drag on economic growth.
o Some Sub Saharan African countries have received significant external finance but have
been slow to generate growth - many have remained stuck in Stages 1 or 2.
 MATTER OF THE CENTER VERSUS THE P ERIPHERY
John R. Friedmann

Friedman developed the idea in analyzing the relationship of the interior regions of
Venezuela to the coastal regions. The idea of core and periphery is very simple and is
similar to growth-pole theory by Francois Perroux. It states that some areas develop faster
because of human and physical advantages and turn into the core and other areas that
lack human and physical advantages become the less important periphery.

Assumption: Economic growth does not occur everywhere at once, but in poles of growth.

The conventional core-periphery model of development represents the emergence of a

regional urban system in four major stages which goes on par with the development of
regional transport systems from an initial process of spatial inequalities. According to this
concept, the economic development is then the resultant of acting of driving units
on driven units. The model states that as core regions develop it is necessary for them to
exploit the peripheries. This might be in terms of net migration gain or exploitation of
resources i.e. during the colonial period, Western Europe developed as a core region and
exploited many of its colonies in Africa, Asia and South America. The theory is centre
periphery model because:
o the favourable effects flow from centre to periphery. Periphery supplies raw material and
human power to centre.
o centre supplies finished output for consumption and input.

The growth poles can be developed and operated on the basis of different reason:

i. Technological and technical polarization: based on the concentration of new techniques

and technologies in the poles of growth;
ii. Income polarization: in the pole of development the population has sufficient incomes
(pensions) which leads to the expansion of services (as they are demanded by buying
population).
iii. Psychological polarization: is based on optimistic expectations of future demand driven
in the driving area. Similar to the polarization of income, but income is, only expected, not
real.
iv. Geographic polarization: based on the concentration of economic activity in a certain
geographically delimited territory.

According to the hierarchy, poles can be divided into the following types:
 i. Central cities – small and medium-sized cities, which focus primarily on the development
of the tertiary sector;
ii. Growth poles – industrial cities with a diversified economic structure, their growth is
however generated by exogenous factors;
iii. Development poles – large urban agglomerations with diversified economic structure and
with the presence of propulsion industries, causing the autonomy of their growth;
iv. Integration poles – growth zones, occupied by two or more urban systems and cause
evolution of the spatial structure of the country.

Influence of the core regions on the peripheral ones is different in the short and long-term
period. In the short term, it is negative. The core region due to the concentration of
companies pumps resources from the peripheral region. The peripheral region near the
center therefore has no possibility of excessive development and is still behind. In the
long term, however, the core extends to the periphery, the demand for raw materials and
labor force from the peripheral regions increases (the condition is good transport
connection). Exceeding the absorption capacity of the core region leads to the location of
new economic capacities in the peripheral regions. Periphery can become a part of the
core or it arranges concentrated service activities for companies, directly making benefits
from the development of core.

Stages of development in Core-Periphery theory:

o Pre-industrial Stage: The pre-industrial (agricultural) society, with localized economies
and a small-scale settlement structure. Each settlement is fairly isolated, activities are
dispersed and mobility is low.
o Transitional Stage: The concentration of the economy in the core city begins as a result
of capital accumulation and industrial growth, probably because it has more physical or
human resources . Trade and mobility increase, but within a pattern dominated by the core
even if the overall mobility remained low.
o Industrial Stage: Through a process of economic growth and diffusion, new smaller cores
(semi-periphery) start to develop and there is an increase in flows between the core and the semi-
periphery.
o Post-industrial Stage: The urban system becomes fully integrated and spatial inequalities
are reduced significantly. The dominant poles emerge as large commercial gateways,
usually a world city.

Criticism:

o Over time economic disparities have widened rather than converging as the
exchange-based models predicted
o Some of the nations have become independent from colonial rule but they are still
dependent for their development on modem First World countries like United States,
Britain, etc. For him, development is a myth which obscures the reality of exploitation
the capitalist powers have never seriously intended to give up their economic
domination over their erstwhile colonies. Dependent states are merely satellites
whose surplus is extracted, especially by powerful multinational corporations. In this
metropolis core(satellite)-periphery relationship, the majority overwhelmingly peasant
remains poor and only the elite and a small urban middle class develops in a situation
of ‘uneven’ development.
o Technological advances are likely to occur only in the core because of the superior
infrastructure present, which maintains the core countries’ structural advantage.
Consequently, the core is often described as the exploiter and the periphery as
exploited resulting in underdevelopment.
o The theory is criticized for the use of static categories that do not adequately reflect
complexities and variations on the ground. Although the terms core and periphery
imply that discrete categories exist that are homogeneous within them and
heterogeneous between them, in reality it is better to think of a continuum that flows
between each level in these geographic models.
 THEORY OF UNBALANCED GROWTH
ALBERT O. HIRSCHMAN

The strategy of unbalanced growth is most suitable in breaking the vicious circle of
poverty in underdeveloped countries. According to Hirschman, “Development is a chain
of disequilibria that must be kept alive rather than eliminate the disequilibrium of which
profits and losses are symptoms in a competitive economy. If economy is to keep moving
ahead, the task of development policy is to maintain, tension, disproportions and
disequilibria.” He asserts that industries with maximum linkages ought to be developed
first, investment in these selected industries or sectors would accelerate the pace of
economic development.

Premise:
o The degree of technical complementarity is different among the industries. Therefore, the
programme for economic development should aim at the establishment of those
industries where these complementarities happen to be the greatest.
o Simultaneous investment in a number of complementary industries according to the
programme of balanced growth may achieve a once for all increase in national income.
But after this, the economy will become stabilized at a higher level without any movement
forward.

The poor countries are in a state of equilibrium at a low level of income. Production,
consumption, saving and investment are so adjusted to each other at an extremely low
level that the state of equilibrium itself becomes an obstacle to growth. The only strategy
of economic development in such a country is to break this low-level equilibrium by
deliberately planned unbalanced growth. The objective of development is not only to
achieve a once for all increase in national income, rather this process of income
propagation must continue year after year. In order to see that the development process
moves on continuously, it is necessary to create and maintain deliberate imbalances in
the economy.

To create these imbalances Hirschman suggests investment either in Social Overhead

Capital (SOC) "comprising all those basic services without which primary, secondary and
tertiary productive activities cannot function". This includes investment in education,
public health, transport and communications, irrigation, drainage etc. Large investment in
SOC will encourage investment in Directly Productive Activities (DPA) by providing cheap
inputs to agriculture and industry e.g., cheap electricity and power supply may encourage
the development of industries both large and small and may stimulate activity in other
sectors as well. Expansion in investment in DPA without the corresponding expansion in
SOC will lead to increase in cost of production in view of inadequate availability of
overhead facilities. In such a situation, pressures are likely to be exerted and the
 government may step in and undertake investment in SOC for creating the necessary
infrastructure which would lead to an all-round development of the economy.

Pros:

o Realistic Theory: The theory of unbalanced growth is a realistic theory. The theory
suggests appropriate utilization of the scarce resources in less developed countries. The
theory considers all aspects of growth planning.
o More Importance to Basic Industries: The theory underlines the significance of basic
industries in the process of growth. This will automatically press for the growth of
consumer-goods industries.
o Economies of Large Scale Production: The strategy of unbalanced growth generates
economies of large scale production. Establishing key industries calls for the
establishment of ancillaries, generating all round increase in income and employment.
Encouragement to New Inventions: Unbalanced growth generates pulls and pressures in
the system, calling for new inventions and innovations.
o Self-reliance is the under-current of the theory of unbalanced growth. It starts with the
realistic assumption of chronic scarcity of resources in less developed countries and
contemplates to initiate and accelerate the process of growth in accordance with the
needs and means of the country concerned.
o Economic surplus: The strategy of unbalanced growth is expected to generate greater
surplus in the system. This is because of its emphasis upon the capital-goods industries.
This strategy is also expected to produce a very strong multiplier effect in the system,
stimulating income and employment.

Criticism:
o Inflation- The theory gives undue emphasis to development through industrialization,
notwithstanding the significance of agriculture. Because of long gestation lags in
industries, flow of goods is expected to be constricted during the short period, causing
inflation.
o Wastage of Resources- Being concentrated on a couple of industries, resources may not
be appropriately utilized. Some sectors of the economy will grow at a faster rate while
other sectors will remain neglected.
o No mention of obstacles- The theory only mentions the establishing key industries
presses for the establishment of other industries. But the theory is oblivious to the possible
difficulties in establishing key industries to begin with. It is not an easy task to establish
key industries right at the beginning of a development programme.
o Increase in uncertainty- The theory inherently assumes that the success of the growth
process depends on external trade and foreign aids. This increases uncertainty of the
growth process.
o Unbalance is not necessary- The critics are of the opinion that deliberately introducing
unbalances in the system is not so much needed in the less develop countries. These
imbalances are caused on their own due technical indivisibility and uncertain behaviour
of demand and supply forces.
o Neglect of the degree of unbalance- How much to imbalance and where to imbalance are
not known by the theory of unbalanced growth. It only tells of the need to imbalance.
o Linkages effect are not based on empirical data- Prof. Hirschman has advocated to start
only those industries that have maximum linkages effect. But these effects are not based
on statistical data pertaining the less developed countries.
o Lack of basic facilities- ‘Unbalanced Growth Theory’ assumes the availability of certain
basic facilities in terms of necessary raw materials, technical know-how and developed
means of transport. However, in less developed countries mostly these are insufficient.