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GROWTH POLE THEORY AS A CONCEPT
BASED ON INNOVATION ACTIVITY
DEVELOPMENT AND KNOWLEDGE DIFFUSION
Elżbieta Wojnicka-Sycz 1)
Abstract
Innovation activity and knowledge diffusion are key development factors in terri-
torial growth poles and crucial, but not enough stressed in the original growth pole
theory. In the article thoughts of the authors of the original growth pole theory con-
nected with knowledge and innovation are presented. The original theory is than
adjusted to the modern requirements of the knowledge based economy by presenta-
tion of the model of territorial growth pole as a system of development factors and
analysis of the real impact of theoretical development factors on economic growth
based on literature review.
Key words : growth pole theory, development factors, innovation, knowledge diffusion
1. Introduction
The growth pole theory may be considered as one of the earliest regional
development theories referring to knowledge and innovation. This theory stresses
the role of propulsive branches and their impact on the development of their milieu.
However in the original theory, although it stressed the role of innovations, as pro-
pulsive branches were considered not the most innovative branches but such as steel
or petrochemical industries. Thus in the article the original growth pole theory is
presented with the emphasise on the aspect of innovation mentioned by the authors
of the theory and the new approach to the theory from the today’s perspective that is
the model of territorial growth pole as a system of development factors. This model
shows the key importance of innovative branches for formation of territorial growth
poles but also the meaning of the required presence of other development factors in
a given territory. Moreover analysis of the real impact on economic growth of differ-
ent development factors, based on empirical literature review is presented.
- (^) Uniwersytet Gdański, Wydział Zarządzania/University of Gdańsk, Faculty of Manage-
ment.
18 Elżbieta Wojnicka-Sycz
2. The evolution of the growth pole theory
“The bitter truth is this: growth does not appear everywhere at the same time:
it becomes manifest at points or poles of growth, with variable intensity; it spreads
through different channels, with variable terminal effects on the whole of the econo-
my” (Perroux 1955).
A growth pole is a regional and industrial planning model for a “set of ex-
panding industries located in an urban area and inducing further development of
economic activity throughout its zone of influence.” It is the product of agglomer-
ation economies in a leading, dynamic industry or sector that serves as an “engine”
for development, creating forward and backward linkages and promoting diversified
production and consumption for a growing local urban population and also for other
growth points throughout the pole’s area of influence. In this manner, an emerg-
ing dynamic center diffuses technological innovation and socio-economic growth
throughout the periphery, and urban hierarchy it stimulated (Hite 2004, 54).
The original concept of the growth pole derived from Perroux integrates
Schumpeter’s theories on the role of innovations and big business with a theory
of industrial inter-dependence based on inter-industry linkages. The concentration
of economic activities was characterized by a dominant firm which was growing
rapidly, innovating and exerting substantial effects on other firms through strong
inter-industry linkages. This view of the growth process leads naturally to another
key idea in growth pole literature of an industrial complex in which the expansion
of a dominant industry sets in motion a process of development sustained by a very
high super-multiplier. Firms operating in such a complex grow quickly because of
alleged advantages such as economies in investment expenditure – relative to what
would be required for scattered development – proximity to markets and supplies,
larger and more diversified labour markets, rapid diffusion of technological innova-
tion and the benefits of specialization and the organization of common managerial
and infrastructure facilities (Moore 1974, 1019–1020).
The genesis of the growth pole idea was mainly in economic space, rath-
er than geographic space, although geographical agglomeration was not excluded
(Perroux 1950). A shift in emphasis from economic to geographic space soon came,
however. Hirschman in 1958 noted that “an economy to lift itself to higher income
levels should first develop within itself one or several regional centers of econom-
ic strength.” He referred to growth poles as centers. Boudeville defined a growth
pole as a town or city with a complex of propulsive industries. From the beginning,
growth pole theorists have held that economic growth originated in interindustry,
multiplier and accelerator linkages. In particular cost reductions due to productivity
gains, innovations and other types of knowledge, and scale economies are viewed as
providing the opportunities for propulsive industries to initiate growth and to pass
growth impulses through the linkage chains. A second growth path is the local mul-
20 Elżbieta Wojnicka-Sycz
linkages to universities. Probably stagnation in innovation processes in industries
considered as growth poles in the mid-20th c. might be the main reason for many
unsuccessful experiments in influencing regional growth using growth pole theory.
With favorable conditions an environment can foster interactive learning ca-
pacity by facilitating relations between a firm and the external inputs it requires
in order to innovate (Doloreux and Dionne 2008, 262). Hence a growth pole with
a type of modernizing linkages with other industries and local territory will stimu-
late creation of favorable conditions for innovation in the whole region. In today’s
terms innovative branches – growth poles should be active elements of innovation
systems both regional and other (such as domestic or sectoral). The interaction as-
pect of growth pole theory has been recently developed in systems of innovations
and networks theory as has its impact both on innovativeness and competitiveness
of firms and territories (Andreosso-O’Callaghan, Lenihan 2008, Wojnicka 2004).
As Andreosso-O’Callaghan B., Lenihan H (2008, 561) state “seen as an essential
dynamic of the regional growth process, a network benefits from transaction cost
minimization and knowledge exchange leading to higher performance.” Hence the
growth pole should participate in innovative networks both of regional and domestic
or international levels.
Characteristics that should be possessed by an urban center before it can be
considered a growth pole include the existence of a propulsive firm or propulsive
industry, the possession of an assemblage of linked industries whose growth is in-
duced by the propulsive firm (industry), the potential for technical and administra-
tive innovations, the ability to achieve self-sustaining growth, and the capacity for
growth impulses to be diffused over the pole’s environment or periphery (Parr 1973,
Perroux most certainly calls attention to the crucial role of innovations and in-
novators in the process of economic development. Perroux notes that the expansion
of output by the propulsive industry induces subsequent expansion in the outputs of
affected industries – those which are directly connected to the propulsive industry
by technological interdependence or forward and backward input-output linkages.
Perroux suggests that constellations of tangible and intangible innovations can stim-
ulate and involve all agents capable of creative expectations and thus create an emo-
tive state which is conducive to growth and progress (Parr 1973, 175–176).
Perroux shared Schumpeter’s belief in the role of innovations as “the prime
causal factors behind economic progress”. Presumably these innovations are in-
troduced in “large economic units which are able to dominate the environment”
(McKee 1987, 168). For Perroux, a growth pole is relatively large in comparison to
the whole economy and that is the reason for its strength. Although the source of this
strength is the ability to control conditions for buying and selling, the pole influences
the economy in other ways. The pole induces changes and growth in the economy.
Comparatively, centers are places where changes start and later on are experienced
by people in the wider area.
Growth pole theory as a concept based on innovation activity development … 21
According to Rodell (1975, 524–525) the growth pole is a single enterprise or
industry, while an economic center should consist of different types of firms – it is
a geographic unit aggregated around different producers.
If we observe that some areas develop quicker than others, then we presume
that they are the main points of innovations in production, trade or social and po-
litical practices. Innovative processes are crucial conditions for growth. They are
the basis for polarized growth theories. Information about innovations diffuses from
the place of its origin to peripheral areas. Changes in the peripherals depend on the
strength of linkages between the center and peripherals. Growth centers are hence
untypical places in comparison to surrounding areas (Kuehn, Bender 1969, 435).
Investments in propulsive industries are based on innovations and perspec-
tives for future profits, that shift the growth to the surroundings. Perroux perceived
growth and structural change as happening in an economy, geographical space or so-
ciety. A growth center reacting to the situation in the growth pole causes investment
in the center such as the creation of suitable infrastructure or educational facilities.
This center may be a center of attraction – investment in the center lowered the den-
sity of population in the region; or a center of diffusion – investment in the center
increases the density of population in the region.
According to Higgins (1983, 3–5) many modern propulsive branches are
based not on natural resources but on human capital. In such case growth poles
consist of science based manufacturing and related services with weak linkages with
regional peripherals, apart from treating them as sources of labor. Such branches
operate on wider territory. They react to the growth in other cities more than on
changes in regional peripheries. Such growth poles are constellations of innovative,
propulsive branches as engines of diffusion. Modern growth poles are electronics,
scientific instruments, the computer industry and IT.
Currently growth poles, perceived mainly as metropolitan areas, are consid-
ered as an instrument simulating development of the whole country f.ex. in Poland,
but also in other European countries like Germany, Romania, Greece but also in
Cambodia, Thailand and Africa (countries like f.ex. Egypt, Madagascar, Mozambic,
South Africa) (see Christofakis et. al, Knapp i Schmitt 2008, EIB 2010, MRR 2010,
ERIA 2009, Ganstho 2008). In fact all around the world initiatives to stimulate de-
velopment with the usage of growth poles are still undertaken, despite of mixed
results of growth poles strategies that have been carried out since the 60s.
3. The model of territorial growth pole as a system
of development factors
Presented here model of territorial growth pole is the result of the analysis of
development factors present in the Polish sub-regions. Development factors indicat-
ed in varied theories of economic growth and development relating to the level of
countries and regions were grouped in the following types of capital: natural, finan-
Growth pole theory as a concept based on innovation activity development … 23
Many of the development factors included in the above groups of capital will
also support the development in the area of innovative industries (Scheme 1).
Scheme 1. The model of territorial growth pole as the system of developmental factors
Source : Author
For the purpose of checking the impact of the above types of capital, such
as natural, physical, financial, intellectual, socio-economic and administrative cap-
ital on growth tendencies appropriate variables for each development factor were
assigned and synthetic indices were calculated referring to different types of capi-
tal. The linear and in some cases (if needed) spatial lag models showed significant
positive impact on growth tendencies in the years 2000–2009 and 1995–2010 of
all the above kinds of capital. Moreover spatial lag models showed that significant
positive impact on growth tendencies in the sub-region (direct effect) and five near-
est sub-regions (indirect impact) had changes in intellectual, socio-economic and
administrative forms of capital. Also spatial lag and error models showed that one of
the key determinants of the average annual GDP growth per capita in Poland was the
dynamics of employment in innovative industries. This dynamics translated into an
increase in real GDP per capita, not only in the sub-region (direct impact), but also
in the five closest sub-regions (indirect impact). The significance of the spatial error
model showed that also the error term and values other than the variables included
in the model within the 5 neighbouring regions had significant impact on the average
annual real GDP growth per capita in Poland (Wojnicka-Sycz 2013).
24 Elżbieta Wojnicka-Sycz
4. Innovation activity and knowledge diffusion
as crucial development factors
Overview of about 200 articles in national and international literature on the
actual impact of the theoretical factors of economic development on countries and
regions showed that not all of these factors always have a positive impact on eco-
nomic growth. (Wojnicka-Sycz 2013) Often effects of respective factors are con-
troversial – studies give different results depending on the country, the time and
the analysed variables. This shows that context in which the factors are analysed
is important. Studies also show that there is interdependence of different factors –
individual not sufficiently explain economic growth and empirical models usually
involve several factors simultaneously. Very often there is a nonlinear relationship
between development factors and their positive impact. In many cases, the increase
in the intensity of a factor such as social networks or institutional thickness, and for-
eign investment, and the level of education of the society, as well as concentration
and agglomeration will have a positive impact on the development to a certain level,
but then the excess of a factor will make the returns from it diminish, and eventually
it may begin to affect growth adversely, such as congestion due to the concentration
of economic activity and population in one place. For some factors, on some level,
especially if the area – a region or country is a pioneer in the field, such as ICT in-
frastructure, it will be the winning factor, that is determining the competitiveness,
but as it spreads it will become a prerequisite without which it will be impossible
to achieve further development, but it will not assure progress faster than of others.
Some developmental factors such as migration and human capital, indicated both in
the theories of economic growth of countries and regional development theories, will
have a different impact, in the light of empirical research on the country level and
other at the regional level. This is due to different types of entities which we refer
to – the states are still more separate and distinct, even in integration groups than
regions in a country. Moreover, in the case of regions of one country generally the
comparability of data will be better than between countries, and therefore the results
of analysis may be more accurate.
The most obvious link between regional and national economic growth, in the
light of the review of the empirical articles, occurs between innovations and therein,
as well as between economic development and the factors related to knowledge,
investment and exports (Fleisher et al. 2010, Raspe and van Oort 2011, Strahl 2008,
Ganne and Lecler 2009). Externalities from the location close to dynamic areas and
the knowledge diffusion effects also definitely positively influence growth (Quigley
2008, van Stel 2006). Important for development, particularly regional and local, is
also leadership, initiative, and the presence of leaders who inspire positive change
(Stimson et. al. 2009). Among the policies the most clearly associated with develop-
ment is the policy combatting corruption, since the latter weakens economic growth
(Del Monte and Papagni 2001).
26 Elżbieta Wojnicka-Sycz
Factor
Obvious positive influence
Controver- sial influence
- negative, neutral or positive
Nonlinear relationship with economic development
Remarks
Trade openness + In general, greater trade brings benefits due to f.ex. access to technology, but trade barriers may also be beneficial, particularly for developing countries. Clusters + There are positive case stud- ies; however, clusters not always are related to regional development, there are few cross-sectional studies in this regard. Agglomera- tions
+ Rather positive effect, al- though there are different effects of agglomeration (of various types: based on specialization, competition and diversity). There are also disadvantages of excessive agglomeration, even of in- novative companies in one place, because they have to cope with increased compe- tition. External ben- efits from the location nearby dynamic areas, spread effects of knowledge
+ Most studies indicate benefits of the location close to areas with higher technology activ- ities, knowledge abundance, diffusion of ICT infrastruc- ture as a result of its dissem- ination in the adjoining terri- tory, higher productivity as a result of better infrastructure in the neighbouring region, although these effects are of- ten very limited in space; as in the case of agglomeration spread effects of knowledge may be varied for different entities and in the case of its different sources.
continued table 1
Growth pole theory as a concept based on innovation activity development … 27
Factor
Obvious positive influence
Controver- sial influence
- negative, neutral or positive
Nonlinear relationship with economic development
Remarks
Transportation infrastructure
+ There are different effects of different types of facilities and for different regions depending on their level of development. ICT infrastructure
+ Rather positive impact, but it is more a prerequisite for competitiveness, but not the factor allowing winning with competitors. Private investment
++ The positive effect is ob- served already within a short period of time. Public investment
+ Rather positive impact, al- though they may displace private investment. Foreign direct investment
+ Rather positive impact especially in developing countries, important are proper relations of national companies with foreign; in mature markets, they may displace too much local com- petition, at the level of states, equipment in other resources, particularly human capital is important to achieve the effects of FDI; their effects are different in countries with different income. Institutions Reversed U-shape
Too small institutional thick- ness reduces growth, too large also, important are not only formal institutions but also informal. Public institu- tions should not crowd out private activity. Leadership, initiative
+ (^) It is a prerequisite for posi- tive change.
continued table 1
Growth pole theory as a concept based on innovation activity development … 29
Factor
Obvious positive influence
Controver- sial influence
- negative, neutral or positive
Nonlinear relationship with economic development
Remarks
Foreign aid + It may result in Dutch dis- ease, although it is advanta- geous especially in post-con- flict and high debt countries. Natural resources
+ Currently, many countries rich in natural resources have weaker results in terms of rate of development. Green investments
+ May lower growth due to the shifting of resources from other investments, especially in poor countries. Fiscal policy, public spending
+ Various effects of different types of spending and spend- ing of various levels of gov- ernment. Monetary policy stabilizing of prices
+ The positive impact of the stabilization of inflation in developed countries, in de- veloping lack of significant relation between inflation and growth. Policy combating corruption
+ The negative impact of cor- ruption on economic growth.
Financial sector
+ (^) Different results depending on the analysed variables, the level of development of countries and regions, differ- ent types of regions and dif- ferent time perspective.
Source : (Wojnicka-Sycz, 2013)
The increasing importance of knowledge and innovation activity for econom-
ic development means that development will occur more and more in certain points,
because not all locations are able to have universities, research centres, and attrac-
tive environment for creative and high technology activities, and it would not be
good for the economy if every location had such advantages. To ensure balanced
development, assuming that only a moderate level of differentiation of various types
stimulates growth, it is important to create appropriate channels for the diffusion of
continued table 1
30 Elżbieta Wojnicka-Sycz
growth from innovative centres / companies / industries. Promoting the development
of productivity must nevertheless be followed everywhere, on the basis of bottom-up
local initiatives, supported by relevant activities at the regional and central levels,
but strong growth poles may not be built in each place.
The concept of growth poles corresponds to the above scheme of innova-
tive development based on some centres – poles or locomotives and the spreading
of growth from them. Particular locations should try to find the right driving forc-
es for themselves, but they must be adapted to certain conditions and possibilities.
With regard to the concept of growth poles, it is important to draw on the experi-
ence of Japanese, and recent Greek strategy where with the use of growth poles the
aims of both economic growth and a certain alignment of development are achieved
(Christofakis et al. 2011, Miyoshi 1997). This may be done by directing productive
industries not to major metropolitan areas, but to other major cities, with suitable
conditions for their development, as was done by the growth pole strategy in Japan
in the 60s. In the Greek case growth poles strategy is supplemented by endogenous
development. This is also true from the perspective of the necessity of having a hier-
archy of cities for the diffusion of growth effects and innovation, which was noticed
in both theory and empirical research. At the same time, due to the need for inter-
national connections, the location of productive industries in the area often depends
on the presence in the vicinity of such facilities like airports and highways, but they
would not necessarily want to invest in the city, especially in the case of manufactur-
ing. This corresponds to the location of the industry mainly in metropolitan area and
not in metropolis themselves. As a result as innovative growth centres today appear
rather metro-regions than the cities-metropolis themselves. The development poli-
cy should only support bottom-up location trends of industry but not take the form
of excessive and often unfinished investments, like for example in Latin America,
where efforts to create “poles in the desert” were undertaken (Hite 2004, Parr 1999).
It is also important to complement growth pole strategies with stimulating of endog-
enous potential of territories.
Studies on growth poles show that this term is used in different contexts.
Also the aims of growth pole strategies were changing. Currently such strategies are
mainly aimed at national competitiveness in the form of development of metropoli-
tan areas in polycentric systems of cities than at restructuring of weak regions, which
was often the case in the 60s and 70s (Parr 1990, Knapp, Schmitt 2008, 1191, EIB
2010). Two major elements of growth poles may be indicated, such as the presence
of propulsive industries and the benefits of agglomeration which are achieved main-
ly in certain urban agglomerations. Instruments supporting poles of growth have
evolved and now increasingly involve the formation of pro-innovation infrastructure
- like technology parks. (House 1978, Hansen 1990) In some countries, particularly
developing ones free trade zones were used as an instrument in growth pole strate-
gy (Chien i Yang 2007). Many researchers currently consider clusters as a modern
form of growth poles (Li 2005, Ganne, Lecler 2009, Heijman 2009, MG 2011).
32 Elżbieta Wojnicka-Sycz
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