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A Theory Of Regional Economic Growth: Growth Poles And Development Axes
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A Theory Of Regional Economic Growth: Growth Poles And Development Axes
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71-12,418 SONG, Byung Nak, 1939- A THEORY OF REGIONAL ECONOMIC GROWTH: GROWTH POLES AND DEVELOPMENT AXES. University of Southern California, Ph.D., 1970 Economics, theory University Microfilms, A X E R O X Company, Ann Arbor, Michigan THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED A THEORY OF REGIONAL ECONOMIC GROWTH GROWTH POLES AND DEVELOPMENT AXES by Byung Nak Song A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (Economics) August 1970 UNIVERSITY O F SOUTHERN CALIFORNIA THE GRADUATE SCHOOL UNIVERSITY PARK LOS ANGELES, CALIFORNIA 9 0 0 0 7 This dissertation, written by under the direction of h.i.S . . . . Dissertation Com mittee, and approved by all its members, has been presented to and accepted by The Gradu ate School, in partial fulfillment of require ments of the degree of D O C T O R O F P H IL O S O P H Y Date August.i9.7O DISSERTATION COMMITTEE ' T ' U Chair / / Chairman ACKNOWLEDGEMENTS | I wish to express my sincere gratitude to Professor John H. Niedercorn, my major professor and chairman of my I j dissertation committee and the department of economics for guidance,, inspiration, and help at all stages of my work. My cordial thanks are also due: First, to the other members of my dissertation ; committee, Professor Gerhard Tintner and Professor Ira M. ; Robinson who read the manuscript. I am indebted to ' Professor Tintner for valuable inspiration throughout my study and to Professor Robinson for arousing my interest in the planning problems of underdeveloped countries. | Second, to Professor John R. P. Friedmann, U.C.L.A. ! ; for his assistance in obtaining most up-to-date materials ' related to my work. His suggestions for formulating a national regional development plan for Korea, based on the strategy of growth poles and development axes, intending to urbanize the whole country encouraged me greatly. His ! .experience as an economic adviser to the International Cooperation Administration mission to Korea and his knowledge and understanding of the Korean economy helped me greatly in formulating the Korean regional development plan ii in Chapter VII. ! Third, to the other professors and members of the I ! department of economics, U.S.C., who extended various co- i i | operations to me, and especially for providing financial i ! arrangements which enabled me to use the computer facili- I | ties of the University. | Fourth, to the Korean Economic Planning Board for ! financial support for my study and to the Agency for Inter- I ! national Development and the members of the Center for International Education for various assistance and coopera tion in obtaining materials related to Korean regional and i national economic planning and the data for my study. ! I Lastly, to my colleagues, Professor Norman j | Nicholson, Illinois Institute of Technology, and Professor i ! Paul R. Gardner, University of San Diego, for editorial j | assistance and the others for their cooperation, especially | to those who helped me in understanding the regional I | economic plans of their own countries, to name only a few, Andreas A. Andrikopoulos of Greece, Selgio Ferri of Italy, j Marco Careno of Venezuela, Gopal Kadekodi of India, Mabid | A. M. Mahmoud of Egypt. Finally, I should mention the encouragement I received from Professor Niles M. Hansen, I University of Texas, Austin, who showed great interest in my dissertation and placed an order for a copy of my dissertation even before it was completed. iii TABLE OF CONTENTS Page ACKNOWLEDGMENTS..................................... ii LIST OF T A B L E S .................................... viii LIST OF ILLUSTRATIONS.............................. ix Chapter I. INTRODUCTION ............................. 1 Brief Outline of the Study Purpose of the Study Organization of the Study Importance of the Study - A Need for a Theory of Spatial Economic Growth Growth and Development Balanced Growth and Unbalanced Growth Scope and Approach of the Study II. THEORIES OF URBAN AND REGIONAL ECONOMIC GROWTH................................. 20 Introduction Theories of Urban Economic Growth Central Place Theory Urban Economic Base Theory Communication Theory City Size Theory Theories of Regional Economic Growth Export-Base Theory The Sector Theory Development Stage Theory Growth Industry Theory Siebert's Theory Conclusion iv Chapter Page III. THEORIES OF GROWTH POLES AND DEVELOPMENT Introduction Theories of Growth Poles Perroux's Theory of Poles de Croissance Theories of Non-Spatial Growth Pole Theories Hirschmann, Paelinck, Isard and Schooler, Davin, Aydalot Theories of Spatial Growth Poles Boudeville, Hirschman, Myrdal, Isard and Schooler, Lebret, Parr, Hautreux, Fox, Friedmann, Korner, Siebert, Antoine and Serge, Hansen, Nichols, Berry Review of Major Concepts of Various Extensions Criticism and Conclusions Theories of Development Axes Introduction Pottier's Theory of Communication Axes Friedmann and Alonso's Theory of Development Axes Conclusion Theories of Growth Poles and Development Axes Growth Pole Theory and Other Regional Growth Theories Conelusion Introduction Analysis of Perroux's Growth Pole Theory Concepts of Space and Region Concepts of Poles and Centers Scale Economies Externalities Further Analysis of Growth Pole Theory Linkage Effects Dominance Propulsive Industries Polarization AXES 49 IV. ANALYSIS OF GROWTH POLES 87 .V . Chapter Page Agglomeration Economies Accessibility and Transfer Economies Scale Economies in the Private Sector Scale Economies in the Public Sector Communication Economies and Informa tion Transferal Decision Making Aspects Market Structure and Urban Size Linkage Effects Innovation Diffusion Location Factors Center-Periphery Conelusion V. THEORETICAL MODELS .......................... 136 Introduction Growth Pole Model Development Axis Models Development Axis Model with One Growth Pole Development Axis Model with Two Growth Poles General Model Model of Seoul-Pusan Development Axis Conclusion VI. EMPIRICAL TESTS OF THE MODEL AND EMPIRICAL ANALYSIS OF GROWTH POLES AND DEVELOPMENT AXIS: GROWTH POLES OF SEOUL, PUSAN AND THE POTENTIAL SEOUL-PUSAN DEVELOPMENT A X I S ..................................... 165 Introduction A Hierarchy of Polarized Regions Empirical Tests of the Model Analysis of Agricultural Production Analysis of Gross Domestic Products Comparative Advantage of Highway and Railway Transportation The Effects of Seoul-Pusan Highway The General Test of the Model: GNP vi Chapter Page Growth Poles of Seoul and Pusan Seoul Growth Pole Pusan Growth Pole Potential Seoul-Pusan Development Axis Economic Effects Non-Economic Effects Conclusion VII. EMPIRICAL STUDIES OF GROWTH POLES AND DEVELOPMENT AXES OF VARIOUS COUNTRIES................................. 190 Introduction Growth Poles Studies Venezuela by Friedmann Growth Poles of Venezuela Guayana Program France by Hansen The United States by Hansen, Blome Other Countries: Italy by Higgins, Chenery; Brazil by Higgins, Boudeville; Greece by Higgins; and Others Development Axes Studies The Valencia-Maracay-Caracas Development Axis of Venezuela by Friedmann The Potential Great Central European Development Axis of France by Hansen Conclusion VIII. SUMMARY AND CONCLUSIONS................. 208 Introduction Summary Conclusions and Comments Suggestions for Further Studies BIBLIOGRAPHY.......................................... 227 vii LIST OF TABLES Table Page 1. Chronological Extensions of Growth Pole Theory..................................... 55 2. Development Axes of Various Countries .... 80 3. Hierarchy of Growth Poles and Types of Agglomeration Economies ................. 120 4. Area, Population and Level of Income of Various Regions, 1967........................ 169 5. Percentage Rates of Growth of Agricultural Products: Rice, Dr(t), Summer Grains, Ds(t), Total Food Crops, Df(t), and Total Agricultural Production, Da(t) . . 173 6. Comparison of Contribution by Highway Transport and Railway Transport to G N P ......................................175 7. GNP, GNP Created by Highway, Railway, and Freight Ton-km, Passenger-km of High way and Railway (GNP in Million at 1965 Constant Market Price, Ton-km and Passenger-km in Million................l8l viii LIST OF ILLUSTRATIONS Figure 1. Spatial Location of Production . , 2. Increased Area of Cultivation . , 3. The Rent Bid Curve............... 4. Extended Area of Development . . , | Map 5. Extended Area of Cultivation Before Connecting the Two GP's , 6. Extended Area of Development After Connecting Two GP's ........... 7. Transport Route by Foot and by Motor Vehicle .......................... 8. Locus of Minimum Transportation Costs 9. A Hierarchy of Poles................ • • • Chart I. Base Theory Versus Sector Theory . , II. Hypothetical Self-Sufficiency Chart I. Polarized Regions of Korea | CHAPTER I | INTRODUCTION i J I Brief Outline of the Study Schumpeter1 s idea of economic leadership (3 6 8:8 8 ) ' ' ' as well as Perroux's idea of economic dominance (3 2 8:8 5) emphasizes the importance, in the process of economic growth, of the leading or dominant economic units such as Rostow's leading sectors (362:52), Hirschman's master industries (195)j and Perroux's dominant industries (3 2 6), ietc., which tend to concentrate, as Hicks explains (l87: 1 6 3), in "a particular center." This process of growth |which tends to be concentrated economically (or industrial- I ly) as well as geonomically (or spatially or geographic ally) is the subject of study of this dissertation. The process of economic growth over time and over space, or spatial or regional economic growth, has not |been satisfactorily explained or analyzed by either the |traditional location theories or abstract theories of 1 1 1The number in the parentheses refer to the refer ence whose number in the bibliography is 368 and the page number is 8 8. This system of reference will be used throughout the dissertation. 2 national or regional economic growth as explained and !discussed in Chapter II. As a result a new approach to |spatial economic growth has been attempted by various j j economists centering on the concept of "growth poles" and i" '"development axes" as discussed and reviewed in Chapter III :of this dissertation. i | The term "growth pole" or "p6le de croissance," which will be analyzed in Chapter IV, was introduced into economic literature by Perroux (324) in 1949 and was formu lated as "growth pole theory" by Perroux (326) in 1955 to explain spatial or regional economic growth. Major con- :cepts of various economists, who have attempted to improve and extend Perroux's idea of p6les de croissance and his theory of growth poles, are, to name only a few, Hick's i I industrial "conurbation" (1 8 7:1 6 3), Hirschman's "growing I points" (194:183), Friedmann's "core regions" (l43:xv), ilsard's "industrial complex" (214:375)* Higgins' "focal j point of growth" (188:765)5 etc., as will be presented in Chapter III. Economists succeeding Peroux have not only tried to extend his theory but also have attempted to develop 1 the pole de croissance theory as a tool of regional analysis, especially for the analysis of interactions or interrela- i jtionships between growth poles and lagging regions. Major ideas of the economists who studied and discussed the interrelationships between growth poles and lagging 3 regions are Hirschman's model of the "North-South" region '(194), Myrdal's idea of the "rich-poor" region (294), and 'Friedmann's "center-periphery" model, etc., as will be i !discussed in Chapters III and IV. I j I Recently growth pole theory has been developed as a policy tool or has become considered as a strategy of i Sregional or national economic development. Major econom- ists who have attempted to develop growth pole theory as a policy tool or as a strategy of economic development are i Hirschman (194), Friedmann (143, 146), Hansen, (l8l, 182), ;Nichols (297)j Boudeville {6j, 70) etc., as will be dis cussed in Chapters III and VII. i The idea that economic development not only con centrates on a pole but also follows a linear spatial path | ■ :along the major transportation routes gives rise to a ! |theory of the development axis, which has been formulated | by Pottier (340), Hansen (l8l), and Friedmann (148, 143), ietc., as will be discussed in Chapter II, and also has been adopted by developed (e.g., France, etc.) as well as |developing countries (e.g., Korea, etc.), as a strategy I of formation of a development zone along the development j axis as will be presented in Chapters III, VI, and VII. Theories combining growth pole theory and develop ment axis theory have not yet been formulated and do not exist. In this dissertation an attempt will be made to formulate a simple model of economic development combining 4 both theories, and to test the model, and to show that a combination of both theories is possible and is a more ] ■ effective policy tool than either theory considered alone. I This analysis will be presented in Chapters V, VI, and ! vii. 4* The idea of growth poles and development axis has, ! as a theory, a history of only slightly over two decades j ^ since Perroux (324) introduced the notion of "pole de croissance" into economic literature in 19^9* It is still a developing field in the area of urban and regional economics as well as in the field of economic development ;(188, 1 8 9). Numerous contributions by various economists | have been made to the theory of growth poles and develop- : ment axes and still continue. Thus, this dissertation attempt to collect the relevant references to the subject and will try to relate them to our discussion throughout j the text whenever possible. Thus we have a lengthy i bibliography and frequent quotation of the references in the bibliography throughout the dissertation. i Purpose of the Study The following may be considered as the objectives |of this study; 1) To examine the existing theories of growth poles and development axes as well as theories of urban and regional economic growth. 5 2) To investigate the forces determining the i process of spatial economic growth or forces determining ; the growth poles and development axes. i 3) To formulate the theoretical models which will 1 explain the process of spatial economic growth and to empirically test some of them. 4) To examine the growth pole and development axis policies of various countries and to investigate the appropriateness of growth poles and development axes as policy tools of economic development. 5) To extend the existing theories of growth poles and development axes, and to contribute to the formulation of a complete theory of growth poles and development axes which will satisfactorily explain the spatial process of economic growth. These topics or subjects are organized in this dissertation as outlined in Section 3 of this chapter and will be discussed in various sections and chapters. Organization of the Study The study, organized in eight chapters, begins from stating the subject and contents of the study in section one of Chapter I. It also presents a brief outline i ^ of the study, and discusses the purpose, organization, i ; importance, scope and approach of the study. It also j includes two sections for the discussion of terminologies 6 such as growth and development, and balanced-growth and I unbalanced-growth. | In Chapter II, existing theories of urban economic | growth as well as various theories of regional economic j growth will be presented. The discussion of the existing ; theories of urban and regional economic growth precedes j the discussion of existing growth pole theories and j development axis theories presented in Chapter III. This is because growth pole and development axis theories will be discussed in the light of and in relation to existing theories of spatial economic growth. In Chapter IV, an analysis and investigation of growth poles is attempted. This chapter analyzes Perroux's own growth pole theory and attempts to extend the original attributes of Perroux's growth poles. It also tries to | extend Perroux's growth pole theory by discussing various ! attributes of growth poles and by analyzing the various forces causing polarization or the formation of growth poles. Extensions of Perroux's growth pole idea include ; the discussions of linkage effects, transfer economies, scale economies, communication economies, decision-making ! ! aspects, location factors, and other factors causing agglomeration economies. In this chapter the discussion I j of the relationships between growth poles and lagging i regions or between center and periphery is also presented. In Chapter V, Theoretical models are developed 7 and presented. They include a growth pole model, a ; development axis model with one growth pole, a develop- | ment axis model with two growth poles, a general model j of economic development formulated in terms of accessibil- i ity variables, and a model of the Seoul-Pusan development axis. Chapter VI attempts to empirically test the models j | presented in Chapter V by the analysis of the two Korean 1 growth poles of Seoul and Pusan and by the analysis of the Seoul-Pusan development axis. Chapter VII tries to investigate the growth poles , and development axes of various countries to supplement - the empirical studies of Korean growth poles and develop- ■ ment axes and to examine the appropriateness of the idea j of growth poles and development axes as policy tools. In : this chapter studies by various economists of growth poles | ' and development axes of different countries are discussed. They are growth pole studies of Venezuela by Friedmann, France by Hansen, the United States by Hansen, and Blome, Italy by Higgins and Chenery, etc. Development i axis studies are Hansen's study of the Rhine-Rhone axis, I and Friedmann's study of the Valencia-Maracay-Caracas ' development axis. Chapter VIII, the final chapter, attempts to | review the major findings of the study, and to suggest I directions for further study in the area of spatial economic growth. 8 Importance of the Study and a Need for a Theory of Spatial Economic Growth i The process of economic growth over time and over I | space has been explained by: 1) the theory of national i economic growth (175) such as the theories of Harrod, j Domar, Hicks, Solow, etc.; 2) classical location theory i such as the theories of Losch (260), Alonso (10), etc.; | I j | 3) spatial organization theory such as theories of Boventer ! I (74), etc.; 4) regional growth theory such as the theories of Perloff and others (321, 320), etc., and recently by ; ! Friedmann’s general theory of polarized development (146), Traditional theories of national economic growth.-- Such as theories of Harrod-Domar, Hicks, Solow, Kaldor, 1 i i Duesenberry, and Arrow, etc. (175), are too abstract and j | limited by unrealistic assumptions, and irrelevant to give i practical solutions to the concrete problems of developed ! as well as developing economies. As a result spatial I theories of economic growth have been attempted by various economists such as Rosenstein-Rodan's theory of "Big Push" i(359j 357* 358)i Nurkse's and Lewis' theories of ' "Balanced Growth" (309? 2 5 5, 2 5 6), Hirschmann's theory of ! "Unbalanced Growth" (194), and Leibenstein's theory of the | "Critical Minimum Effort" thesis (247), etc. However, 'even the special growth theories, except for Hirschmann's, ignore the spatial dimension of the growth process. Thus these theories are deficient in explaining the spatial !process of economic growth. Classical location theory.--As discussed by Alons ;(9, 10, 11, 12), Friedrich (151), Greenhut (1 6 5, 166), Hoover (1983 199, 197) Beckman (39, 40, 3 8, 4l), Dunn j (115), Isard (208), Lefeber (244), Losch (260, 259, Von Thunen (404), concentrates on the optimum location of | economic activities (micro-location theory). But the explanation of systems of locations or the treatment of growth aspects of economic activities (macro-theory) is not adequate. That is, while emphasizing the importance of locational aspects of economic activities classical location theory ignores or de-emphasizes the importance of the growth aspects of economic activities. Thus this theory also is deficient in explaining the process of spatial economic growth. Spatial organization theory.--As discussed by Boventer (73, 74), Bos (60), etc., is an advance over classical location theory, in that it adopts a systems approach and emphasizes the importance of external econo mies, spatial linkages and interdependencies, etc. How ever, this theory, originally formulated to give a theo retical basis for regional planning, is static or compara tive static. Thus it is unable to explain the spatial process of economic growth. i 1 0 i I Theories of urban economic growth.— Such as central i i place theory, urban base theory, communication theory, city size theory, and theories of regional economic j growth such as export-base theory, the sector theory, 1 development stage theory, growth industry theory, etc., emphasize only partial aspects of the process of economic 1 growth. Thus these theories also cannot be considered as complete theories of spatial economic growth. As discussed above and in section one of this chapter, and also in Chapter II, none of the existing theories of economic growth such as general theories of national economic growth, special theories of economic growth, classical location theory, spatial organization theory, theories of urban economic growth, theories of regional economic growth, etc., satisfactorily explains ! the spatial process of economic growth. Thus a new approach to spatial economic growth has been attempted by numerous economists centering on the concepts of growth poles and development axes, as already mentioned. However, numerous efforts of various economists to formulate a :general theory of growth poles and development axes which i :explains satisfactorily the spatial process of economic |growth remains unsuccessful. Therefore, this dissertation |attempts to contribute to the development of a complete theory of spatial economic growth. 11 j Growth and Development I The terms "growth" and "development" are used together with terms "poles" and "axes" e.g., growth poles, I : growth axes, development poles, and development axes, etc. i | The meanings of growth and development are as explained 1 below. However, throughout the dissertation the terms ! "growth" and "development" are used interchangeably. 1 Economists such as Domar (111), Friedmann (146), ' Boulding (71)* and Morse (288) distinguish between growth and developmer+ Both growth and development may be defined as expansions of the system in one or more dimen sions. However, growth does not involve a change in the I structure of the system while development involves a struc tural transformation of the system. Thus, economic growth implies an expansion of the magnitude of economic vari- j ables such as output, per capita income, etc., without a ! change in the nature of the goods produced or in the social structure. On the other hand, economic development means an expansion of economic variables mentioned above as well as a change in the structure of the system. Thus, I the scope of economic development is larger than that of | economic growth. Also, the approach of economic develop- j ment must necessarily be broader than that of economic growth, etc. Recently Friedmann (146) defined development as an "innovative process" causing the transformation of the 12 ! social structure. The importance of innovation in the process of economic development has already been empha- | sized by various economists. Schumpeter (368) emphasizes 1 the importance of "creative destruction/' Eisenstadt (122, ! 1 2 3, 124) a large capacity for carrying out innovative change of society, Kuznets (235) "epochal innovation," Gillespie (160) "a vast complex of technical, cultural, and institutional innovation," Lipset (240) different propensities to innovation of different cultural groups of people. Pred (3^-1) stresses the role of rapidly expanding urban areas as an innovational environment, Hoselitz (201, 200) and Epstein (126) the role of different urban structures in innovative ability, Dahrendorf (104) an ability of the people to carry out innovations, Toscano and Jacob (415) the role of systems of communications, Germani (157) possible conflicts between the innovator and the society. Eisenstadt (124) emphasizes attitudes of the society in accepting innovative change, Selznic (375) limited adoption of innovative change by the society, , Hagerstrand (172, 173) systematic transmittal of innova tions between growth poles and lagging regions, Kunkel :(234) successful diffusion of innovation between center |and periphery, etc. | For our purpose, growth will be defined as an i expansion of the economy in only its economic dimension without a change in the spatial structure of the economy. 13 Development will be defined as an expansion of the t 1 economy in its economic dimension as well as a change in the spatial structure of the system. The reason that ; economists prefer the name "growth pole" instead of ' "development pole" is that the growth aspects of the pole and the economic aspects of the growth pole are emphasized. S However, as a development axis generates a development i zone along a major transport route, it usually brings ; about a change in the spatial structure of the economy. Thus it is to be called a "development axis" instead of a j "growth axis." If a pole is a development pole, an expan- | I ; sion of the pole involves a structural transformation on j | the growth pole itself. Thus when we discuss growth pole, j : we concentrate on the economic dimension of the pole, and | when we study a development pole, we study the economic j dimension as well as the non-economic structure of the I pole. The same logic applies to the development or growth axis. For instance, if an axis is a growth axis, it is probably an outgrowth of a development axis. Thus when ! we study a growth axis, we concentrate only on the ; economic dimension, and do not worry about structural i l change of the area along the axis. Balanced Growth and Unbalanced Growth The idea of balanced and unbalanced growth has I been discussed by various economists such as Nurkse (309)* 14 = Lewis (255, 2 5 6), Rosenstein-Rodan (358), Hirschman 1 (194), Scitovsky (370, 371), Singer (3 8 1), Streeten (399), ! De Vries (110), Fleming (132), Lipton (257), Sutcliffe I (400), Leibenstein (247), Furtado (1 5 2, 153), etc. ! Balanced growth means a pattern of economic growth in which all sectors of the economy grow at the same rate ! so that the composition of gross domestic product (in the ! case of the closed turnpike model) or gross national products (in the case of the open turnpike model) remains unchanged over time. An optimal balanced growth path is represented by the Von Neumann ray of the Von Neumann model : as explained by Tintner (413:46). A solution to the Von Neumann model gives an optimal growth rate for each sec tor, say g %. per annum, etc. Therefore, if the rates of growth of various sectors of the economy are different I , from each other, growth is unbalanced. The idea of balanced and unbalanced growth has been applied to the problem of economic development of poor countries. Balanced-growth economists like Nurkse : (309), Lewis (255,256), and Rosenstein-Rodan (358) think that simultaneous, comprehensive investment in a large ’ number of interdependent projects best stimulates economic | development of the poor countries. They believe that a | "big push" (3 5 8) will provide external economies and enlarged markets for new industries to be initiated. This theory assumes available resources, capital, an efficient 15 public sector, and a closed economy (no trade), etc. 1 However, developing countries are characterized by lack of ! capital and resources, a poor public sector, and heavy 1 reliance on the foreign sector, etc. In keeping with this | reality economists such as Hirschman (19*+) advocate a theory of unbalanced growth, and maintain that development is best achieved if one or a number of leading sectors or key sectors or leading regions or growth poles with powerful linkage effects are developed first (2 6 3). This idea of balanced-unbalanced growth has been applied also to the problem of developing lagging regions of the economy. Hansen (l8l) states that balanced growth theory may be more relevant to the development of lagging regions, especially lagging regions of the developed countries, than to the development of lagging countries. i 1 I On the other hand, Hirschman advocates that an economy should first develop one or a number of centers of regional economic expansion or growth poles. He advocates a policy of "controlled imbalance" and a policy of implanting new growth poles progressively in the lagging regions. In a similar way Rodwin (3 5 1, 3 5 2, 353* 35^-) advocates a ! policy of "concentrated decentralization." Unfortunately, | both Hirschman's policy of "optimum imbalance" or Rodwin's 1 (351) policy of concentrated decentralization are difficult } to apply. However, the idea of balanced-growth is also difficult to apply as a policy tool. The criterion or 16 criteria of balance and the size of the region to be ; balanced are difficult to specify. Nevertheless* ! our discussion of growth poles and development axes I is based on the idea of spatially unbalanced economic growth as mentioned in section one of this chapter. | Scope and Approach of the Study This dissertation* in discussing the topics outlined and organized in sections one* two, and three of this chapter, attempts to discuss each topic* not only in relation to the analysis of the general subject of the dissertation* but also individually, and will try to indicate whatever specific conclusions ; for growth pole and development axis theory followed from ! the treatment of each topic in each chapter. ! i This dissertation tries also to discuss a regional growth policy for Korea in the light of a growth pole policy. Korea, which fits roughly* as Adelmann (4:7) | explains, Rostow's take-off stage (3 6 2) and Friedmann's | transitional phase of national development* must face, | as Friedmann (143) explains* at its present stage of ; national development, the problem of formulating a na- j tional regional development plan for the country. In j addition to Friedmann's (143) case of Venezuela* Korea 17 may be considered as the "perfect prototype for a study of regional economic policy" (143:123). Thus, this dissertation will not only analyze the regional devel opment plan of Korea itself, which is basically a growth pole program, but also will discuss it in relation to the models developed in Chapter V. I Whatever conclusions follow from our discussions [ and empirical tests of the Korean growth poles and develop ment axis models in Chapters VI and V, together with empirical studies of the growth poles and development i axis policies of various countries presented in Chapter | VI, will provide a theoretical basis for the national regional policy of Korea as well as an empirical valida tion of that theory. This dissertation attempts to discuss our topics mathematically as well as non-mathematically. Thus mathematical equations and formulations follow the non- ! mathematical discussion of the topics throughout the I dissertation wherever pertinent. In addition, tables, charts, figures and maps containing and giving the ideas discussed in the text are presented throughout the dissertation. As mentioned already in section one of this chapter, the theory of growth poles and a development axis has a history of only slightly over two decades isince Perroux (324) introduced the growth pole idea I into the economic literature in 1949. This theory is | still in a stage of rapid development and is an import- |ant research field in the area of urban and regional ; economics. Numerous valuable contributions by vari- l 1ous economists have been made to this subject and I still continue. This dissertation attempts to col- :lect all the relevant references related to the theory of growth poles and development axes and tries to integrate them throughout the text wherever possi- ible. This explains the numerous quotations and :references which appear in the text and accounts i also for the lengthy bibliography. ! So far we have discussed the purpose, organ- ; ization, importance, scope and approach of this |dissertation. We have also discussed two important ■ topics, growth versus development, and balanced growth versus unbalanced growth, which appear to ;be closely related to our topic. Now we are ready to shift to the discussion of our main subject that is, reexamination of existing theories of regional economic growth, growth poles and development axes, and the formulation of a spatial development model combining the idea of the theories of growth poles and development axes and the empirical study of growth pole and the development axis policies of various countries already- mentioned. Thus we proceed to the discussion of the exist ing theories of urban and regional economic growth in Chapter II. CHAPTER II THEORIES OF URBAN AND REGIONAL ECONOMIC GROWTH Introduction Analysis of growth poles and development axes will be done in the light of theories of urban and regional economic growth. Therefore existing theories of urban and regional growth will be presented in this chapter. Theories of urban and regional economic growth may be divided into two categories: 1) Theories originally developed for the analysis of urban-regional growth, such as central place theory, economic base theory, sector theory, stage theory, communication theory, growth indus try theory, and Siebert's general theory, etc. 2) Theories originally developed for national economies but applied to the analysis of urban and regional growth, such as Harrod- Domar theories, neoclassical theories, etc. as has been presented by Richardson (3^8). In this chapter only theories originally developed for the analysis of urban and regional growth will be pre sented and reviewed. 20 Theories of Urban Economic Growth 21 Central place theory was formulated by Christaller i (9 3*3 3) to explain the principles governing "the size, ; number and distributions of towns and cities." He desig- i 1 nated his theory as "the theory of urban trade and in stitutions" to be placed alongside Weber’s (429) theory of industrial location and Thunen's (404) theory of . agricultural location (50:15). Christaller’s theory has been extended and generalized in several ways by Losch (260), by Beckmann (39) and by Berry and Garrison (49). According to Richardson (348), central place theory is "the most widely known theory of urban growth," : which explains the growth of the city as a function of tertiary activities it provides for the surrounding hinter- ] land. Thus the growth of an urban area depends on the ' degree of its specialization in the urban service activities, and its rate of growth depends on the rate of increase in the demand of the hinterland for the urban service. Central place theory is a theory of growth of not only a single city but also a system of cities. ! Berry and Pred (50) summarizes Christaller's centra] I place theory as follows: (1) The basic function of a ! central place is to provide central goods and services for j the surrounding hinterland; (2) The degree of centrality of a central place determines the order of the city, and 22 the order of goods it provides. The higher the degree of 1 centrality, the higher is the order of the city and the ‘ higher is the order of goods it provides for the wider ; area. (3) Central places of various order constitute a hierarchy of cities or central places with a hierarchy of transport routes connecting the central places. (4) The I hierarchy of central places may be formed according to several principles: the market principle, the principle of traffic and the administrative separation principle. According to a market principle, the pattern of hierarchy follows a rule of threes, and according to the principle of traffic it follows a linear spatial path or a rule of fours, and according to administrative principle it follows a rule of sevens. Losch (260) generalized Christaller's hierarchical | system into a general system of hierarchies. According to Ldsch, Christaller's principles of market, traffic and administrative separation are special cases of his general system of central places. Beckmann (39) formulates the theory as a mathematical model. To illustrate the idea, 'we denote by the total population of ith order central j place, by SP^ the population served by ith order central place, by rPj the rural population of first order, by n |the number of (i - l)th places served by ith order place, and by c the proportion of population served located in central place. Then we have, 23 (2 .1 ) tpi = csPi> and ' (2.2) = tPi + nsP1_1. Solving (2.1) and (2.2) for | sPj_i we have (2.3) spi = (n/(l - c))* spi-l* and same relation holds for any order central places, that is, gPj__l = (n/(l - c)'). spj__ 2 3 etc. Thus in | general, (2.4) eF± = (n/(l - c))sFl-l = (n/(z - c)]2sP1.2 = /n v1 -1 P-i . For first-order place, (Fc) s 1 : (2 -5) spi = rpl + tpl» and tpl = c(rpl + tpi)> and (2 .6) = yPi • c/(l - c), thus I (2.7) spi = rpi/(l - c). | ; From (2.7) and (2.4), the following equation results, j (2.8) SP± = ^n/(l-c)J1 -1 • rP1/(l-c) = rP1n 1_1/(l-c)1. ! From (2.8) and (2.1), we have ; (2.9) teL = rPi • c ^ ’Vtl-c)1. | From the above equations we know the total population of each order place, and how the total population and the population served change with the change in the order of I central places. j Berry and Garrison (48) tried to generalize Christaller's market principle. They used the concepts of ! | population and demand thresholds and range of service and demonstrated that the theory can be applied to tertiary activities in general. Nichols (297) considers this theory as "a theory of the spatial distribution of consumer spending." Thus, lower order central places provide lower order goods. The demand for lower order goods is inelastic. Thus the rate of increase in demand for lower order goods is less than the rate of increase in regional income. This means a smaller marginal propensity to consume and smaller spatial multiplier effects. Furthermore, it means a lower rate of growth of lower order places. Thus, accord ing to central place theory, a higher rate of growth is assocfated with higher order central places. Despite its valuable contributions to the analysis of urban growth, central place theory has been criticized. (1) Focusing on the tertiary sector, it ignores the secondary industries and activities. Thus this theory cannot explain the growth of industrial cities. (2) Empirical application of ideal patterns of hexagonal trade areas is difficult. For these reasons central place theory is not a complete theory of urban growth. Urban Economic Base Theory postulates that the initiator and the determinant of regional growth is the export-base. Then the growth of the region depends on the growth of the export-base. The idea of this theory is that the increase in export-base sets off a multiplier process similar to the Keynesian investment-multiplier I 2 5 j and foreign-trade multiplier process in the determination ' of regional income. Empirical evidence is given by Innis (206) and Meier (272) in the studies of the regional and i national economy of Canada and by North (304) in the study I of regional economic growth in the United States. Based i 1 on their empirical studies they conclude that the role of I export-base is crucial to the growth of the region. : ! This theory started as a theory of urban growth j | and was later applied to regions. Urban economic base ! ! theory has been developed by Tiebout (407), Pfouts (334), j Sirkin (3 8 2), Hoyt (203), Andrews (15), Blumenfeld (54), and others. According to the urban or regional economic base theory, all the economic output of the urban area or j ; i ! the region can be divided into (a) output produced to ! satisfy interregional demand (economic base) and (b) output produced to satisfy regional demand (non-basic or resi- 1 dentiary output). If a linear relationship exists ■ between basic and non-basic output, then it is possible to forecast the total output or activity from the forecasts : of the economic base. This relationship is expressed as (2.10) Q = Qb + Qn i (2.11) dQ = 1/(1 - s) • d ^ where Q denotes output, Qb basic output, Qn non-basic output, d the change operator, and s the marginal propen sity to spend regionally. Then 1/(1- s) is the multiplier. Thus the equation (2.11) says that an increase in basic 26 output will result in an increase in total output. How- 1 ever, the distinction between basic and non-basic outputs and measurement thereof are difficult. Thus this theory i ! in most cases uses employment instead of income because it I can be measured easily at the regional level as a proxy for output and income in the region. Then equations ; (2*1 0) and (2 . 1 1) become (2.12) Nt = Nb + Nn (2.13) dNt = 1/(1 - s) • dNb where Nb is total employment, Nb is basic employment, and Nn is non-basic employment. Also, s is the ratio of Nn to N-t as a proxy for the marginal propensity to spend : regionally. Then the multiplier can be shown as, (2.14) 1 1 1 N^/N-u • 1-s " 1 - Nn/Nt Nb/Nt ' Here the multiplier is the ratio of total employment to basic employment. According to the theory, growth of out put depends on two factors: the size of the increment in basic output and the size of the propensity to spend regionally. Thus the higher the increment of basic output and the higher the propensity to spend regionally, the j greater will be the increment of output or the growth. : In the case of the employment model, the higher the incre- | ■ ment of basic employment, the larger will be the increment | iof total employment or growth. A numerical example will i I demonstrate this. If the marginal propensity to spend 27 locally is £ and an increase of basic output is $1,0 0 0, ) then the increase in total output is $1,3 3 3.3 3. If the i marginal propensity to spend locally is l/3» the increase ; in total output is $1,500* And if an increase of basic ! output is $2,0 0 0, and the propensity to spend locally is £, the increase then in total output will be $2,666.66. If ! the propensity to spend locally is 1 /3 and an increase in : basic output is $2,0 0 0, then the total output becomes $3,000. Thus as is shown by the numerical example, a region will grow if any of the following happens: (1 ) an increase in the propensity to spend locally (or an increase in the ratio of total employment to basic em ployment). (2) An increase in the level of exports (or an increase in the level of basic employment). (3) Both (1 ) and (2 ) occur. I But this theory is subject to the following criticisms: (1) distinction between basic and non-basic activities is difficult. Delimitation of the size or the boundary of an urban area is difficult. (2) The economic base is not the only indicator or determinant of urban growth. As indicated by Pfouts (334) the service sector can be the main determinant and indicator of urban growth, j (3) As Richardson (348) suggests, urban income analysis | may be better than economic base analysis. And input- output study is a better technique than the base analysis. (4) As indicated by Blumenfeld (54) a division of closely ------------------------------------------------------------- 2B interdependent activities into basic and non-basic activities is meaningless. It can be said from the above criticisms that ! urban base analysis may be regarded not as a theoretically ] I complete approach but as a crude tool for urban growth analysis. Urban economic base theory, despite its short- j ; comings and limitations, has been extended by economists j into the export-base theory which will be discussed in the next section. Communication Theory of Urban Growth. Meier (27^) formulates a theory of urban growth in terms of information flows. According to Meier, the urban center is a center j of human interaction, and the media of human interaction is communications. Thus the growth of an urban area is a ; function of the available amount of information. As an analytical tool he adopts quantum theory instead of field theories, such as gravity model, potential model, etc. Nichols (297:33) illustrates quantum theory as follows: "The bonds between two different elementary units are created by the sharing of other units which are ; still smaller and simpler - mesons in the molecular i nucleus or genes in a biological species." In our case * the bond is Meier's "civic bond" and its strength depends I | on the speed of message exchange. The policy prescrip tions resulting from this theory are to increase the ab- 29 solute amount of information available for the economic i decision maker and to increase the speed of information ; exchange and to induce research type activities which pro- i vide high quality information. But this theory has been ! criticized. (1) It is not empirically operational. (2) The relation between available information and economic j i growth is not measurable. j i : I City Size Theory of Urban Growth. According to Richardson (3^-8) urban size is the determining factor of urban growth. This theory is associated with the concepts j of minimum size of city or an optimum size of city. It maintains that in order for scale economies, agglomeration I economies, and urban-regional economies to take place, the j ; size of the city must be greater than the minimum economic ! size of the city, where minimum size is defined as the : size below which the urban area tends to decline. Numerous : efforts have been made to find the optimum size or the best size of cities. But as Howard (99) indicates satisfactory theory has not yet been formulated. The effort to link the size of the city to its rank has been represented by I rank size rule as formulated by H. W. Singer and G. K. Zipf. However, this approach cannot be regarded as a theory of urban growth. It only exposes the possible I relationships between size and growth of cities. 30 Theories of Regional Economic Growth Export-base theory, formulated and advanced by I Andrews (15)* North (304), and Tlebout (405, 407) empha- i sizes the role of exports in explaining regional growth. ! The basic idea is that the growth of a region is a function ! of export-base and demand. This relationship can be j ; illustrated as follows. The level of income Y of region i, depends on the exports X of region i, : (2.15) Yi = f(X±) ■ . The exports of region i, X^, are a function of income of region J, Yj. (2 .1 6) X± = f(Yj) ' The same relation holds for region j. (2.17) Yj = f(X.) i ; (2.18) Xj = f(Y1). Imports M of region i, Mj_, and region j, Mj, depend on the incomes of region i and region j. (2.19) Mi = f ( Yjl ) i (2.2 0) Mj = f(Yj) : The export-base multiplier can be derived from either | equations (2.1 6) and (2.1 9) or from equations (2 .1 8) and | (2.20). Here equations (2.16) and (2.19) will be used to derive the export-base multiplier. The method of deriva tion is based on Siebert’s procedure (379). The basic equation relating income to consumption 31 and Investment in a closed region i is, | (2.21) Y± = C± + I1. ; Introducing exports, X^, and imports, Mj_, into this model i |and making region i as an open region, | (2.22) Yi = C± + Ij _ + Xi - Mj_ We assume that consumption is a function of income of the i ! same region and that investment in basic industries Ib is autonomous I(2.23) Y± = Ci(Yi) + Ib± + X. - M. And from equations (2.16) and (2.19) equation (2.23) becomes !(2.24) Yi = C1(Yi) + Ibi + X1(Yj) - M1(Y1) We denote by c the average and marginal propensities to consume and by m the average and marginal propensities to import, then (2.25) Yt = CiYi + mjYj - m ^ + Ib±. And income for the region j is expressed in the same way as (2.2 6) *_, = CjYj + - mjYj + IbJ. We assume for the sake of simplicity that autonomous !investment in region j does not exist, then equation (2.2 6) becomes (2.27) Y. = c Y. + m.Y. - m.Y.. j J 1 1 J J Thus we have two equations, i.e., equations (2.25) and (2.27) and two variables Yi and Yj. Solving equations (2 .2 5) and (2.2 7) for Y^, and assuming that Iai results 32 from the increase in export demand Dx^ and = Dxj_, |we have j (2.28) Y-l = Dxi • (1-Cj + mj)/ (1-Cj + mJ .)(l-ci + mj_ ) - m., m j . ! 1 « To get the export-base multiplier we differentiate equation ;(2.28) with respect to Dxi, then we have :(2.2 9) dYi = (1 - Cj + mj) I dDxi (1 " cj + mj)(l - ct + n^) - m-jmj | : i 1 As shown in the equations, export-base theory says that j the growth of the region depends on three factors: the I level of investment in basic activities, the propensity to consume in region i and j, and the propensity to import I in both regions i and j. According to equation (2.29)j income of region i depends on the propensity to import of | region j, that is, on interregional demand. The assumptions of export-base theory are as follows: (1) Exports play a key role in regional growth. (2) The dichotomy between the region and the rest of the !world is possible. (3) The simple distinction between basic and non-basic activities is possible. (4) Existence of production capacity and availability of resources, jMajor limitations of this theory are as follows: (1) I 1 While emphasizing the role of exports, it ignores the role of consumption, investment and government spending, and the role of technology, etc. (2) Breaking down the world | 33 j economy into two parts— the region and the rest of the i ' world , it regards interregional demand as homogeneous. | The source of interregional demand is not considered. All j other regions are considered as equal and interregional ' analysis of demand is ignored. The question of the size of the region is not fully answered. (3) The distinction ! I I between basic and non-basic activities is not simple. The | : i relative importance of basic activities decreases as the size of the region increases. (4) The movement of resources between regions is not considered. If regional economy j is at the full-employment level export demand does not j increase real regional income. Further criticisms of the theory are: (1) The interregional demand may include investment goods, but it j I does not specify whether demand is for consumption goods or investment goods. (2) It does not explain the source of the increase in export demand. (3) This theory is a single region theory and is not good for interregional analysis or for systems of regions. (4) As the size of the region increases, other factors become relatively more important. (5) Interregional terms of trade and compara- itive cost analysis are ignored. (6 ) This theory is |external growth theory and does not explain the internal |growth sequence. The interrelationships between internal growth factors are ignored. 34 The sector theory, or the sectoral-growth theory, ; is based on the empirical observations of Clark (94) and Fisher (129* 130) and their hypotheses that a change in per capita incomes results in the change in the income ! elasticities of demand for the outputs of various sectors. This theory is associated with Engel’s Law. An increase ; i ! in per capita incomes will increase the demand for : primary-secondary-tertiary products, but the percentage j increase in demand for primary products will decline, and that for secondary products and later for tertiary products J will increase. Thus shifts in demand for products result i in shifts in resources employed in each sector. That is, j | a rise in per capita income decreases the proportion of : i the labor force (and resources) employed in the primary sector and increases the proportion of labor force (and I ; resources) employed in the secondary and tertiary sectors. | The shifts in sectors and resources depends on both supply and demand. On the demand side it depends on the rate of increase in income and the rate of change in demand. On the supply side it depends on differential rate of pro ductivity in primary, secondary and tertiary industries. I Thus the growth of the region depends on three factors: j (1) The rate of increase in per capita income. (2) The | rate of shifts in demand. (3) The rate of increase in productivity. These three factors explain the shifts in resources, sectors and the regional growth. 35 The assumptions of this theory are: (1) The j hypothesis that a low level of per capita income is asso- ! ciated with a high income elasticity of demand for primary ! | products and with a high proportion of labor force ; (factors of production) employed in primary industry. (2 ) The income elasticities of demand for products and labor j productivity differentials cause the shifts in the sequence j of the priraary-secondary-tertiary sector. (3) The shift ; in sectors determines the rate of growth. Major criticisms are: (1) It focuses on the internal factors ! of growth and neglects the analysis of interregional interrelationships and the analysis of the relation of the J region to other regions and to nations. (2) The sectoral aggregation is empirically not simple. (3) The rigid ] j sequence of primary-secondary-tertiary growth is merely a | suggested process of growth. J ! The theory of development stages results from both { I the theory of regional economic growth and location theory and is an extension of the sector theory. The sector ! | theory has been extended to explain the sequence of j development stages of a region by disaggregating the sectors of the sector theory and incorporating the loca tional factors from the theory of location. The basic idea of the theory says that the sequence of primary-secondary- tertiary activities depends on the locational factors of 36 CHART I Base Theory Versus Sector Theory Export Base Theory Sector Theory Approach Partial Partial Focus on External relation ships Internal rela tionships Key Variables Export Elasticity, pro ductivity, per capita income Classification of Activities Basic vs. Non-Basic Primary-second ary-tertiary activities Theoretical Back ground Keynesian income and multiplier theory Clark-Fisher hypothesis Emphasis on Demand side Demand and supply side Problems Aggregation and dichotomy Aggregation and trichotomy Theory of Growth Growth depends on the level of exports Growth depends on the rate of shifts in sectors Further Develop ment Limitations exist Two extensions of the sector theory; de velopment stage theory and growth industry theory 37 each activity. | Formal theory and the sequence of the development ; stages starts from the statement of E. M. Hoover and J. i Fisher (30^)* The Hoover-Fisher theory of development stages may be stated as follows: the first stage is the : stage of a self-sufficient subsistence economy dominated i ] by agriculture. The second stage is the transitory stage. Local trade, local transportation, local industries (village industries) emerge and develop. The third stage | is the stage of intensive agricultural development based i | on improved transportation and interregional trade. The | fourth stage is the stage of industrialization and the I stage of secondary industries. The final stage is the stage of tertiary activities. Exports of tertiary pro ducts, including capital, personal skills and technology take place. Major criticisms are: (1) As in the case of the sector theory, the elasticity of income associated with a rising per capita income plays a key role in the stage i theory, but the role of transport may be more important I and is a pre-requisite for economic development. (2) I J Quantitative relationship between the level of income and i j the amount of resources employed in each industry is supposed to exist. However, changes in technology, and factor prices also influence the amount of resources employed in each industry. Thus, the level of income is 38 not the only factor affecting the resources employed. (3) I | This theory ignores interregional relationships. It may | be applicable to the early stages of a self-sufficient i ! subsistence economy. But at the later stages interregional ! | demand becomes more important and the external economic interrelationships determine the development of stages. | (4) As a demand-oriented theory it overlooks the supply j side of the economy. (5) This theory assumes the existence of available resources. Growth Industry theory stems from the sector ; theory and especially from the Clark-Fisher hypothesis ! of relating economic growth to the growth of primary- I | secondary-tertiary industries (320, 318). The basic idea , of this theory is that the growth of industry is the ! determinant of the growth of a region. Growth industries i : expand at a rate which is higher than the rate of growth J of the national average. Empirical analysis of the rela- I tion between regional growth and the growth of industries : is given by Perloff (318, 420). Perloff finds that, in ; general, primary industries are slow-growing and secondary I and tertiary industries are fast-growing industries. Differences in growth rates of the U.S. regions are asso ciated with uneven distribution of fast and slow-growing industries (420). This point has also been made by Perloff, Dunn, Lampard, and Muth (320). Based on their empirical investigations of the U.S. regions, they derive the_________ 39 conclusion that many factors explain the growth of regions, ;but the crucial factors affecting regional growth are jlocational and other business decisions of growing indus tries in the region. Two methods are proposed to analyze the growth ! industry by Richardson (3^-8). They are share analysis, i which is concerned with the problem of finding the propor tion of national industries shared by a specific region, ;and shift analysis, which is concerned with the problem of finding the level of shift of the regional growth rate from the national average. To measure the level of shift and share, employment is used instead of output or income. 1 The reason for this is, as already mentioned in the sec tion on urban economic base analysis, that employment is ; not only easily measurable, but also gives good estimates I | of the level of regional income and total population. ! Richardson presents the method of measuring share and ■ shift of regional growth industries. His methods are presented as follows. I Let the employment be denoted by N, the region by ! subscript j, the industry by superscript i, and time by t ! ; (initial period t = 1, terminal period t = n). Then employment in i-th industry is denoted by N^, and the employment in i-th industry in j-th region is denoted by i Nj1. Thus regional employment in i-th industry in j-th region is 40 (2.3 0) Nj1, and total regional employment is, ; (2.31) Nj = ! and national employment in the i-th industry is, ; (2.32) N± = ^Nj1, and total national employment in all industries is, ! (2-33) M = Thus the share of regional industry i in region j is found by dividing (2.3 0) by (2.3 2). (2.34) N.Vn., d X and the share of total regional industry in region j is found by dividing (2.31) by (2.33), i (2.35) Nj/N. Then total shift S is, : (2-36) S = NJ>t = n - (Nj=n/Kl=0) • Kjjt=0. ; And by summing up the differential shifts by all the industries we get, i : (2.38) sd = ^(s1), where subscript d denotes the term differential. The i proportionality shift Sp is the difference between S and ;Sd. Thus we have, (2.39) Sp = S - sd. Differential shift measures the regional differ ences in the growth rate of the same industries. Propor tionality shift measures the industrial differences in the growth of the region. 4l Growth Industry theory says that regional growth ! depends on two factors: growth industries and regional i growth advantages. The magnitude of regional growth :depends on the regional share of the industries, and the !rate of regional growth depends on the level of shift. j Siebert's theory is represented by his growth jmodels (379). In building the model, he tries to incor- ! |porate the time dimension as well as the space dimension i into growth theory. He has two types of regions, closed and open, two types of growth determinants, internal and external, and two types of models, explication and deci- J sion. Explication models, as Schneider (3 6 5) explains, | consist of two types of variables, the central variable or the target variable and a set of explanatory variables. i | Decision models consist of three types of variables. In ! ! addition to the central variable and the explanatory | variables, decision models include policy variables or ! | instrument variables, such as interest rate and tax rate, etc. The examples of explication models are Siebert's model of regional growth and input-output models. An ! example of a decision model is a linear programming model. ; In the light of growth pole theory, an input-output model i | is relevant to our discussion. Thus, Siebert's own presen- i j tation of an input-output model and a linear programming model will be reviewed in this section. 42 (1) Explication Model; Input-Output Model I According to Siebert (379) the input-output model, | even as an explication model, can still be used for deci- i sion-making purposes. In this case the target is the j | maximization of regional income and the policy problem is i i to determine the following: (a) the level of output of l the different sectors, (b) the change in regional income, (c) the sector which has the strongest impact on regional j income, (d) the impact of government expenditures on the i output of the different sectors, (e) the dependency of j each sector on interregional trade as explained by j Miernyk (2 7 8), (f) the linkage effects of the new industry | as explained by Miernyk (2 7 8) and Aujac (22). I i Let X be the vector of the n outputs and M be the i 1 matrix of the production coefficients, and D be the vector of final demand for n goods. Then the following relation holds for the region i at time t. (2.40) Xlt = MitXlt + Dlt, | (2.41) Dlt = (I - Mit)Xlt. j Then the levels of output of the different sectors are (2.42) Xit = (I - | Following Dorfman, Samuelson and Solow (112), we denote | the level of income of the region i at time t by the | following equation: (2.43) Yit = CltXit, where C is a vector of prices of outputs. 43 The change in income of the region resulting from new ! sectors of the region i at time t is (2.44) dYlt = Clt+1Xft+l ' Clt+1Xlt | j where the prices are t+1 constant prices, and is a vector of n + 1 outputs and are Prices of ! n + 1 outputs. If a new sector is not added to the original vector of outputs, then the vectors of outputs and prices are equal in the two periods. Equation (2.44) shows the change in regional income over time. I The sector with the strongest impact on regional | income can be found in the same way. Government expendi tures alter the final demand sector. The impact of govern ment expenditures on regional income can be analyzed by partitioned vectors and matrices. A simple two region system in the form of partitioned matrices and vectors is V “ii ! Mij' + ✓ \ Di X4 D j / . ji • jjj L j where subscript i indicates region i, and j region j. Subscripts ij and ji denote interregional and ii and jj indicate intraregional coefficients. Then the change in final demand vector resulting from the government expendi tures determines regional income. This impact can be measured by equations (2.41) and (2.42). The dependency of the sector or the industry on exports or imports is analyzed by the technique of the self-sufficiency chart or skyline chart developed by j Leontief (251) and illustrated by Miernyk (2 7 8). This | chart measures the degree of self-sufficiency of the sector 1 ! along the vertical axes and the relative importance of the 1 i sector in the economy along the horizontal axes. Thus 100 per cent self-sufficiency implies that the industry is | completely self-sufficient and that it produces just j sufficient amount of outputs to meet the demands of the i : economy. The horizontal scale measures the proportion of I output produced by each sector to the total output of the I economy. To illustrate the idea we assume two types of regions: a developed region and a developing region. According to Colin Clark (9^, 9 6) sectors are classified , into three types: primary, secondary and tertiary sectors. I 1 ! Secondary and tertiary sectors are further classified into ! 1 | hypothetically three types. And we assume also that trade 1 |takes place between the developed region and a developing !region. Thus, exports of one region are imports of the other region. • Hypothetical skyline charts are illustrated :by Chart 2. The skyline charts show several character istics: (a) the level of self-sufficiency of the develop- !ing economy is highef than that of the developed economy, |(b) the developing economy is heavily dependent upon I exports and imports, (c) the primary sector is relatively i more important in the developing economy than in the developed economy, (d) the developing economy exports I 45 j | primary products and imports secondary and tertiary pro- | ducts, while the developed economy exports secondary and ' tertiary products and imports primary products, etc. , The self-sufficiency chart has been actually used by ; Leontief (251) for the analysis of the national economies of Peru, Egypt, the United States, and Israel, and by i | Garden and Whittington (278:100) for the analysis of the ! regional economy of the state of Mississippi. i I The linkage effects are measured by the method of ’ triangularization of the input-output matrix. This method I has been developed by Leontief (251) and illustrated by iMiernyk (2 7 8). A triangularization of the transactions j matrix rearranges the elements in the input-output matrix i according to their dominance below the diagonal. Then the ! columns show the backward linkages and the rows the forward linkages. i I (2) Decision Model; Linear Programming Model An example of a decision model is a linear pro- ! gramming model. Following Dorfman, Samuelson and Solow i ; (1 1 2), we denote by c the vector of prices, by x the vector I of activities, by Y the income, by A the matrix of the i production coefficients, by r the vector of the fixed 1 I , factors of production or resources, and by p the vector I j of accounting or shadow prices, and by k a vector of J capacity level of activities, and by d a vector of final 46 CHART II i ! Hypothetical Self-Sufficiency Chart i , 1. Developed Region % lOO 1— 1_____ | 1 — 1 r ■ 1 ------1 8o ________1 | ' i i i Primary Secondary Tejrtiary 60 Sector •Sector Spctor Type, 40 I i II i III I II 1 1 III 20 . i i i * 1 1 0 i i 1 1 Total Output ( = $Y billion) 2. Developing Region % 100 I T - , r n _ 80 1— 1 : ! i • i 60 Primary i i Secbndary i i Tertiary Sector S^ctojr Sector, 40 i i i i i i i | Type I i II i II] I ' II i III 20 i i • i 1 i ' 0 • i i i i 1 i i Total Output ( = $X million) | 47 j demand, and by z total cost. And c', r' and A' are the 1 transposes of c, r, and A. j Then the primal problem is to maximize the objec tive function, (2.46) Y = c * x, | Subject to the resource constraints, (2.47) Ax^r., and capacity constraints, (2.48) x<k, ! and non-negativity conditions, ! (2.49) x > 0, I and final demand constraints, j (2.5 0) x - Ax^d, ; The dual problem is to minimize the objective function, (2.51) Z = pr', subject to cost condition (2.5 2) A'p^r c ......................(46) and nonnegativity condition (2.53) P— 0 ........................ (47) | An example of an application of a linear program ming model to a decision making for regional policy is a model of a five-county area in central Kentucky (379: 184-85). The objective function of their model is to j minimize the use of scarce resources, that is, the use of external capital. Similar models are those of Moser (290) and Chenery and Kretschmer (8 9). 48 Conclusion | None of the theories reviewed in this chapter can ; be considered as a complete theory of urban and regional I growth and none of these theories has provided practical guidelines for policy decisions. As a result a new body of thought emerged which centered on the concept of growth poles and development axes. In the next chapter theories of growth poles and development axes will be presented. CHAPTER III THEORIES OF GROWTH POLES AND DEVELOPMENT AXES ! Introduction As Friedmann (146), Hansen (l8l), Rodwin (352), ! and Bauchet (35) point out, traditional location theories I j as well as abstract theories of regional and national ! economic growth have not provided satisfactory guidelines i | for practical purposes. As a result a new approach to | j spatial economic growth has been attempted by various economists, centering on the concept of growth poles. The term "growth pole" was introduced into economic literature in 1949 by Perroux (324) and was systematically i i formulated as growth pole theory in 1955 by Perroux (326). His idea of growth poles (poles de croissance) is stated in (3 2 6). He advocates that the process of spatial and sectoral development is that growth does not appear everywhere and all at once; it appears in points or development poles, with . variable intensities; it spreads along diverse channels and with varying terminal effects for the whole of the economy. (1 7 8:7 1 0) 49 50 Extensions of the theory have been made by French 1 economists such as Boudeville (6 7), Lajugie (2 39), and 1 Belgain economists such as Paelink (312, 313, 31^-), Davin (107), and lately by American economists such as Hirschman (19^), Friedmann (143, 1^6), Hansen (179, l8l, 182), i Alonso (13), Berry (47), Higgins (1 8 9), Spanish economist i J as Lasuen (242), and Swedish economist such as Myrdal | (293, 294). I Empirical studies of growth pole theory have been made by Boudeville on the Brazilian province of Minas ! Gerais (6l), and on the Paris basin (70); by Rosenfeld j (3 6 0) on the Italian province of Turin; by Friedmann (143) on the Venezuelan region of Guayana; by Higgins | (1 8 9) on the Mezzogiorno of Italy, on the Brazilian regions j ! of Minas Gerais and Espirito Santo, on the Greek Zone I | Pilote of Epirus and Peloponnesus, and on Canadian growth | center policy (190); by Berry (47) on the hierarchical I ! diffusion and spread effects of the television industry i , in New York, Chicago and Philadelphia; by Laber (237) on I employment of 3,100 counties in the United States; by Blome (5 3) on the United States region of Appalachia; by Hansen (l8l) on the French growth poles; and by the study of the International Information Center on different countries such as Austria, Belgium, Canada, Denmark, France, Germany, Great Britain, Italy, Holland, Norway, Portugal, Spain, Switzerland, etc. (164). 51 The theory of development axes is, according to ! Hansen (l8l), another version of growth pole theory. | While growth pole theory maintains that the process of economic growth takes a form of focal points or areas, development axis theory advocates that the process of economic growth follows a linear spatial path along the major transportation routes connecting two or more growth I poles. The theory of development axes has been formulated i | by Pottier (340) from his "thesis of communication axes," i and by Friedmann (148, 143), and Alonso (148) from their j concepts of regions. | The theory of growth poles and development axes | (growth poles and axes) may be considered as an extension I [ i of and a combination of both growth poles and development | axes. It is equally important to develop particular re gions intensively up to the level of growth poles, and to spread out the growth of the growth poles along the major transportation routes. As a strategy of economic develop- : ment, the sequence of development is first to develop growth poles, and next to develop development axes. In the case of Parr's (315) natural growth poles, the emphasis will be put on the development axes, and in the case of his planned growth poles, the emphasis will be put on the development of both poles and axes. But the sequence of development is as mentioned above. There has not been any theory explaining both growth poles and development axes. 52 But there are many empirical examples of growth poles and axes. One of them is planned Korean growth poles and development axes. The growth poles are the two big cities of Seoul and Pusan. The development axis lies along the planned Seoul-Pusan highway. The development area along the planned Seoul-Pusan development axis includes 63 per cent of the national population, 80 percent of national industrial production and about 66 percent of Korean GNP | (231). Another example is the planned French Rhine-Rhone | axis. In this chapter various versions of theories of growth poles and theories of development axes will be reviewed. Since there is no combined theory of growth poles and growth axes, it will not be reviewed. Since the theory of growth poles was formulated by Perrous, his own theory will be reviewed in the first section of this chapter. Extensions of his theory can be classified into two groups as indicated by Darwent (106); nonspatial | growth pole theory (Darwent's growth pole) and spatial j growth pole theory (Darwent's growth center). The differ ence between the two groups of theories is whether Perroux's original growth pole theory has been discussed with reference to geographic space. Theories of non spatial growth poles are presented in section two-two, and theories of spatial growth poles are reviewed in section two-three of this chapter. In section five, the 53 relationships between growth pole theories and other i 1 growth theories will be discussed. Existing theories of j development axes can be divided into two groups; Pottier’s theory, and Friedmann and Alonso type theory. | These theories will be reviewed in section three of this i j chapter. The combined theory of growth poles and development axes is to be treated separately in section four of this chapter, however there is as yet no such ! theory. Theories of Growth Poles Perroux1s Theory of Poles de Croissance i j Perroux^ growth pole is an aggregation of dominant ; economic units such as leading industries or propulsive industries. The idea of Perroux!s (3 2 9) pSles de croissance is stated as a field of forces, economic space consists of centers or poles or foci from which centrifugal forces emanate and to which centripetal forces are attracted. Each center being a center of attraction and repulsion has its proper field ; which is set in the field of all other centers, i (324:95) As stated above, his pole is defined in relation to economic space not in relation to geonomic space. He classifies economic space into three types: economic space defined (1) as a plan, (2) as a field of forces, and (3) as a homogeneous aggregate. He defines growth poles in relation to the second type of economic space, 54 that is, economic space as a field of forces. Perroux's I i theory of growth poles is based on his theory of economic | domination, theorie de l'economie dominant (324, 5 2). i His theory of economic dominance is discussed in Perroux (328), and will be presented in section two of Chapter IV. I Perroux's growth pole is subject to the following J constraints: (1 ) the large scale of activity, (2 ) the f j high degree of dominance, and (3) the high degree of ! interconnection. According to Perroux's explanation, the < size of a propulsive firm is large enough to dominate all 1 other closely related industries. He says a dominant I I firm can supply about 60 percent of the inputs and | demands about 60 percent of the outputs of dependent j industries. And the degree of dominance is also very 1 high. A dominant industry can dominate about ten dependent industries. The interconnection between activities is ! externalities, mainly pecuniary external economies. 1 The main shortcoming of Perroux's growth pole theory is that it ignores geographical space. His theory 1 defines growth pole in relation to abstract economic space. i Therefore, it cannot handle the locational problems of growth poles. Thus, economists following Perroux have attempted to extend Perroux's approach to growth pole theory. Contributors to growth pole theory are shown chronologically in Table 1. Extensions of growth pole theories will be chronologically reviewed. 55 TABLE 1 CHRONOLOGICAL EXTENSIONS OF GROWTH POLE THEORY Perroux 1955 Nonspatial Theory Hirschman, 1958 Paelinck, 1959 Isard-Schooler, 1959 ' Davin, 1959 ! Aydalot, 19^5 i j i Spatial Theory Boudeville, 1957 Myrdal, 1957 Hirschman, 1958 Isard-Schooler, 1959 Lebret, 1961 Parr, 1965 Hautreux, 1966 Fox, i960 Friedmann, 1967 Korner, 1967 Slebert, 1967 Antoine*Serge, 1968 Hansen, i960 Nichols, 1969 Berry, 1969 Friedmann, 1969 I 1 56 Theories of Non-spatial Growth Poles Hirschman (195) extends the third constraint of j Perroux's growth pole theory, that is, linkages. He i i emphasizes the role of linkage effects on the growth of firms in discussing non-spatial growth poles in relation ! to his thesis of unbalanced growth. Analysis of linkage effects has been extended by Chenery and Watanabe (194: 105). Hirschman's analysis of linkage effects and the extension of linkage effects by Chenery and Watanabe will I be presented in section three of Chapter IV. His spatial ! growth theory is reviewed in the following section. Paelinck (313) considers growth pole theory as a conditional theory of regional growth. He introduces | economic as well as non-economic concepts into Perroux1s I model, i.e., polarization des revenues (similar to the Keynesian multiplier effect), polarization psychologique, (psychological polarization), and polarization geographi- que, (geographical polarization), etc. He considers the original growth pole as well as an induced pole brought into existence by either forward or backward linkages related to the growth of the dominant firm. Examples of the induced poles are a chemical industry (a derived pole) induced by the textile industry in Lyons in the nineteenth century, and a larger chemical industry induced by a small chemical firm (a lateral pole). He considers the locational factors and the problem of actual location 57 j of growth poles In geographic space. But his extension of ! Perroux's growth pole notion is neither based on theory | nor is it empirically verified. According to Darwent his approach has at most heuistic value (1 0 6). Isard and Schooler's (2l4, 215) contributions are extensions of Perroux's linkage effects and considerations of scale economies and localization economies. In discuss ing linkage effects, they considered both direct and : indirect linkages. Their method of analysis is industrial complex analysis. They used industrial complex analysis | in determining the overall advantages and disadvantages of i a Puerto Rican location of an industrial complex whose | major products are dacron, orlon, and nylon. Important j constraints of their model are the proximity of Venezuelan crude oil, the available market for the products, and the availability of cheap labor. Further contributions of Isard and Schooler to the theory of growth poles will be discussed in the following section and in Chapter IV. i Davin (107, 108) emphasizes the role of potential linkage between the poles, the important influence of business decisions of dominant industries, and the role of institutional arrangements in discussing the theory. Bauchet (3^-) maintains that growth of the region depends upon the behavior of the large economic units; IDavin also emphasizes the role of large economic units. Davin states that the heavy and highly capitalized industry jconstitutes the principal poles. I I Aydalot (23) emphasizes a role of external econom ies in explaining growth poles. According to Aydalot, the main cause of polarization is external economies. Thus, he advocates that in order for a propulsive firm to act !as a growth pole it must be a producer of external econom ies. An example of a propulsive industry is the automobile industry and an example of a propulsive firm is the Regie Renault. His growth pole is Renault, the center is Paris land the periphery is the rest of the world. But Paris as I a pole is only in economic space, not in geographic space. I . I Aydalot's main contribution is to remove one of Perroux's jlimiting assumptions about growth poles, that is, externalities. I Theories of Spatial Growth Poles ] A common characteristic of this theory is to I I j introduce non-economic variables into the economic analysis | of growth poles, that is, locational, social, political, | institutional, cultural and psychological factors, and especially to introduce geographical space into growth pole analysis. Various aspects of this theory will be reviewed in this section. Boudeville (6 7, 6 8) starts from his own concepts of space and regions. Boudeville's concepts of space are homogeneous, polarized and planning space. Based on three 59 concepts of space, he defines three types of regions. 1 They are the homogeneous region, the polarized region and the planning region. The concepts of space and region relevant to the discussion of growth pole theory are polarized space and polarized region. A polarized region contains a central point or pole. The pole dominates the rest of the polarized region. Based on his own approach, Boudeville (62) attempts to relate the growth pole to its location in the Brazilian region of Minas Gerais. He tries I to analyze the polarization effect and the agglomeration effect from measuring the industrial linkage effect of the i steel smelting industry on the steel fabricating industry. Boudeville's idea has been the basis for the later I development of spatial growth pole theory and French regional planning as well. His idea of a central point or pole is similar to Wittlesley's nodal region (3 1 0), Darwent's growth center (106), and Friedmann's (1^+6) con- ! cepts of core region and center-periphery model. As ; already noted French regional planning (180, 6 7) is based j on the concepts of Boudeville's regions. Major regions of French regional planning are (1) three homogeneous regions: East, West and Paris; (2) nine polarized regions, each with a pole in it; eight "metropole d'equilibrium" (pole of equilibrium) plus Paris (eight poles of equilibr ium are Lille, Nancy-Metz, Strasbourg, Lyon, Marseille, Toulouse, Bordeaux, Nantes); (3) twenty-one programming 60 regions. Hirschman (190) and Myrdal's (293> 294) work which is based on two concepts of regions, center (Hirschman1s north and Myrdal's rich region), concentrates on the two processes of interregional growth. They are Hirschman1s polarization (Myrdal’s backwash) and trickling down effect (Myrdal's spread effect). The polarization effect is caused by different levels of efficiency of industries in both regions. Trickling down effects are j caused by the increase of the center's investments and demands for goods in the periphery. These effects are presented in Chapter IV. Hirschman's policy prescription is that a nation j or an economy must first develop one or several regional I | centers of rapid and intensive growth. He says that this need for the emergence of 'growing points' or 'growth poles' in the course of the develop ment process means that international and inter regional inequality of growth is an inevitable concomitant and condition of growth itself. (194:183) I Among other policy proposals, his suggestions of setting up of a steel mill in Columbia's Oriente and the building of Brazil's new capital in Brazil's interior are based on his growth pole notion. Myrdal discusses center-periphery relations based on his main hypothesis that a social process is normally cumulative because of circular causation. According to 6l Myrdal, market forces work to increase the inequalities between center and periphery. Thus, polarization is explained as a result of normal social processes and is considered as a result of the interplay of market forces. Isard and Schooler (214) attempt to relate the growth pole to its location. Their pole is an industrial complex of oil refinery, petrochemical and synthetic | fiber industries, that is, refinery-petrochemical-synthet- ! ic fiber complex. Their geographical space is Puerto | Rico. Their objective is to maximize the regional growth | and development and the outputs of a group of industrial i | activities subject to the constraints of availability of resources (cheap labor and the proximity of Venezuelan i crude oil) and of the markets for oil-based products. Their problem is to make a decision about a major invest ment in Puerto Rico and to find its location in Puerto Rico. Their approach is modern Weberian doctrine. Assumptions are (1) a fixed output market, (2) geograph ically given input sites. Procedures are (1) a specifica tion of internal structure for a whole complex, i.e., "dacron A complex" in a refinery-petrochemical-synthetic fiber complex, etc.; (2) an estimation of input-output J relations (via an input-output table), that is, calcula- J tions of input requirements and output yields; (3) deter- I mination of the point of optimal transport cost (via Weberian locational polygon, or Palander-Hoover isodapane 62 method, or simple transport cost). In their model minimum transport cost location is the Gulf Coast rather than Puerto Rico. (4) Determination of cheap power location, or cheap labour location; (5) comparison of the cheap labor location and minimum power location; (6) considera- ! tion of other factors such as (a) substitution among factor inputs and product outputs, (b) scale economies, (c) localization economies, (d) urbanization economies, j ! etc. In the Isard-Schooler model the optimum scale ' economies location is the Gulf Coast. They assume that localization economies in their complex will tend not to I exist. Urbanization economies are not analyzed in their j model. But they emphasized the importance of urbanization- i regionalization economies and also of spatial juxtaposition i economies. Isard and Schooler's industrial complex analysis may be the most advanced method of growth pole analysis. I Major advantages are (1) precise quantification of the i ! interactivity matrix of inputs and outputs; (2) determina- j tion of the location of the industrial complex, based on i I the methods of typical comparative cost approaches; and (3) analysis of agglomeration economies. Major limitations are that (1 ) estimation and quantification of other types of urbanization-regionalization economies are difficult, i.e., (a) administrative economies, (b) other sources of savings in production and transportation costs, and (c) 63 quality and welfare aspects; and (2) if interrelationships among activities are insignificant, or if non-quantifiable economies are significant, this method cannot be applied. Lebret (243), in his article "Agglomerations and Development Poles," emphasizes the role of agglomerations. | His "unite motrice" (propulsive firm) produces external economies and creates linkage effects favorable to the regional growth. His policy prescription is to organize "unite motrice" to create maximum external economies, linkage effects, etc. | Parr (315) defines growth poles as "areas | experiencing marked growth" and distinguishes between natural growth poles and planned growth poles. Factors explaining growth poles are "lead industries, central- place functions, agglomeration economies, and concentra tions of entrepreneurial ability" (3 1 5:6 3 8). He considers the growth pole as a tool of spatial economic planning. He suggests specifically four areas of applications: (1) I I development of depressed regions; (2 ) prevention of over concentration in developed regions; (3) stimulation of factor movements, especially labor; and (4) regional equity. Parr regards the growth pole as a tool of achiev ing long-run optimal, spatial economic development. Hautreux (1 8 5) asserts that tertiary industries are propulsive industries. Thus, his policy proposal is to build up service sectors. He classifies service sectors 64 into government service sectors and private service sectors. Both sectors are important but as government has no control over private service industries, government must build up government service sectors to build up and attract private commercial service industries. His policy proposal is consistent with the French regional plan of scattering government service activities away from Paris. Fox (134) defines the role of the growth pole as | a focal point for the development of the region. Attri- 1 butes of his growth pole are as follows: (1) high level tertiary activities, i.e., the center of wholesale and retail trade; (2) center of a labor market; (3) high level of linkage to the national economy; (4) good communication facilities, etc. His policy prescription is to increase productivity through investment in the growth pole. Friedmann (146) formulates a general theory of polarized development from his center periphery model (140, 143, 147) which is presented in Chapter IV. ! j Based on the center-periphery model he specifies the role of the center, and the relationships between the center and the periphery. The role of the center depends on the scale or size of the center and on the spatial system such as the center of the whole world, the nation, the subnational region, and the province. But Friedmann generalized the role of core regions into five proposi tions: (1) core regions organize their peripheries into 65 areas of specific functions, that is, resource supply I | areas, market areas for the products of core regions, or a set of administrative areas; (2) the role of the core regions depends on the hierarchical system of core regions. If a hierarchy of core regions exists the functional role of hierarchical regions is asymmetrical; (3) core regions transmit innovation to their peripheries; (4) organized dependency may he self-reinforcing; and | | (5) increased exchange of information and technology may weaken the organized dependence. j Based on these roles of core regions he relates core regions to peripheries. As he regards development as a discontinuous and cumulative process of innovation, he defines the role of core regions as a center of inno vative change. He states the relationship between core regions and peripheries as four propositions: (1) organ ized dependency will be imposed by core regions over their peripheries; (2 ) dominance of core regions over the peri- i i pheries may be self-reinforcing; (3) penetration of core | regions' innovation into their peripheries will increase the information flow; and (4) substantial spread of innova tion and information will result in substantial sharing of decision power between two areas. These propositions are closely related to his six effects of core regions. They are dominance effect, information effect, psychological | effect, modernization effect, linkage effects and produc- 66 tion effects. Based on his own definitions of space (as a field of forces, i.e., communications, energy levels, decision making powers, etc., which obeys its own law of transfor mation), and his own definitions and sets of regions, homogeneous regions and interdependent regions, Friedmann i derives his center-periphery model. Defining development as an innovative process, he specifies the six conditions of innovation, and defines the role of core regions as a ; center of innovative change. He relates the innovation ! to the existing power and authority structure of the spatial system. Then he specifies the role of the center and the relationship between the center and its peripher ies. Then he derives his general theory of polarized i j development. i j Friedmann's theory is an advance over growth pole | theory. His center-periphery model is simple and is | independent of the size of the region, and thus it has general applicability. His theory of polarized develop ment is an advance over growth pole theory as well as classical regional growth theory. It considers economic growth as a function of structural changes. Thus, his theory considers institutional, organizational factors and innovation-power-authority relationships of the system as well as economic variables. Thus, his theory is much broader than growth pole theory and other regional growth theory. I j Korner (233) attempts to generalize Perroux's p&le de croissance theory in defining and analyzing effects of economic polarization (wirtschaftliche polar- isierung), institutional polarization (institutionelle polarisierung), psychological polarization (psychische polarisierung), and geographical polarization (geograph- ische polarisierung). He analyzes the role of these j effects as inducement-mechanisms inducing and accelerating j regional growth. As a policy prescription, he states i that possibilities of developing small industries in the poles exist and that the polarization effects can be maximized through the optimization of sets of industries j in growth poles. I Siebert (379) defines a regional growth pole "as a set of interdependent expanding industries of an area" (3 7 9: 1 9 1)* In his growth pole a set of industries in- i eludes one key industry and a number of other activities : closely linked to the key industry. He defines the key industry as the one which has a high level of growth, both rate and output, and strong linkages with other regional activities. According to Siebert, the roles of the key industry in polarization are stated as: (1) On the input side it increases its demand for outputs of linked industries, (2) on the output side it provides inputs for other activities at lower prices, (3) by pro- 68 ducing large amounts, it realizes scale economies, and innovations, (4) economies of scale and innovations of the key industry provide external economies for the other regional activities, (5) it transmits new technologies to other firms, (6) agglomeration economies result from key industries, (7) the reinforcing effects (Hirschman's polarization effects) arise, (8) polarization of other growth determinants takes place, (9) a psychological polarization also takes place, (1 0) eventually the social I system will change. Siebert's cause for a growth pole is | the existence of at least one immobile growth determinant, ji.e., immobile factors of production, etc. He maintains that only the immobility of a growth determinant can ex- |plain the growth pole theory. As stated above, Siebert I | i combines the key industry to a specific location where one or more immobile resources exist. ! Antoine and Serge (16, 17) maintains that tertiary i I sectors are propulsive industries and are the fastest ;growing sectors of the economy. Their policy prescription is to build tertiary sectors and to invest in tertiary industries to develop the economy. Like Hautreux, they regard the tertiary sector as the basis for growth. Hansen (178, l8l) considers development pole theory as a conditional theory of regional development. He main tains that growth pole theory and closely related problems need further clarification. That is, the clarification 69 of growth pole's relation to external economies of ag glomerations, big industries, public policy goals and |regional goals, etc. And he also emphasizes the importance of semantic clarifications. | Nichols' (297) main concern is the development of jdepressed regions. Thus, he considers the growth pole as a tool for a strategy of development of lagging regions. In examining the appropriateness of the growth pole as a tool for development strategy, he maintains that four iproblems must be answered. They are (1) the balanced i i versus unbalanced growth controversy, (2 ) the mechanism of urban growth and aspects of self-sustaining growth, (3) the diffusion of economic growth, and (4) the optimal distribution of growth poles. As to the first problem, he advocates that growth pole policy, based on the thesis of unbalanced growth, can be justifiable if the spatial equilibrating forces work via the urban network. In examining the second prob- i Ilem, he distinguishes between the theories of a single region and a system of regions. In the case of a system of cities, the growth of a city depends on the degree of interrelationships between cities. In the case of a single urban area, the role of urban structure is import ant. Diffusion of growth is classified into interurban diffusion and urban-rural diffusion, and optimal distribu tion of growth poles over the spatial area is related to 70 the process of diffusion. Berry (47) relates growth to the diffusion of innovations and regards the development role of growth centers as the simultaneous diffusion and the spreading of innovations through the urban hierarchical system. Thus, a high level of diffusion and spreading of innova tion leads to a high level of growth. Levels of diffusion of innovations and of growth depend on three variables: (1) threshold limitations--a minimum size of a region, i (2) diffusion time, and (3) accessibility. Thus, the i problem of maximization of income and thus of growth is to minimize diffusion time and to maximize the accessi bility variable subject to the constraint of minimum regional size. He attempts to generalize Perroux's growth pole notion by defining the role of growth centers as a part of a general diffusion process of innovation. Review of Major Concepts of Various Extensions i i In this section major concepts of various theorists will be reviewed. Contributors Major Concepts and Ideas____ Hirschman: Model of North-South region, analysis of polarization and trickling down effects, emphasis on linkage effects, concepts of firm— master versus satellite firms, doctrine of leading sector, leading industry or leading region (growing points or growth poles). 71 J Myrdal: I Paelinck: Isard and Schooler: | David: j Aydalot: Boudeville: Lebret: Hautreux: Fox: Friedmann: Korner: Siebert: Antoine and Serge: Hansen: Model of rich-poor region, analysis of backwash and spread effects, and doctrine of cumulative process. Model of a lateral pole and a derived pole, incorporation of Keynesian income multiplier concept, consideration of growth pole theory as a conditional theory of regional economic development. Industrial complex analysis, analysis of direct as well as indirect linkages, analysis of agglomeration economies and urbanization-regionalization economies, combination of location analysis and growth pole analysis. Analysis of linkage between the poles, emphasis on the importance of insti tutions and on the importance of busi ness decisions of big industries. Emphasis on external economies. Concept of polarized region and combination of growth pole analysis and location analysis, analysis of agglomeration versus polarization effects. Emphasis on the role of agglomeration. Tertiary sector growth pole notion. Normative analysis of growth pole theory and criteria of growth poles. Model of center-periphery. Economic, institutional, psychological and geographical pole, analysis of complementary effects. Immobile growth determinant as a reason for growth pole. Tertiary sector as a growth pole. Growth pole theory as a conditional theory of regional development. 72 Nichols: Growth pole as a tool for regional development. Concepts of natural growth pole and planned growth pole. Berry: Growth as a process of innovation diffusion. Friedmann: General Theory of polarized development. Criticisms and Conclusions All these extensions represent the efforts of the growth pole theorists who have attempted and tried to generalize the growth pole theory. However, none of them | has succeeded in formulating a generally useful theory I of growth poles. However, their efforts have contributed towards the development of growth pole theory and have indicated the directors for further developments. Before analyzing the growth pole theory, the values and short comings of the theory will be discussed. Based on the notion of the propulsive economic unit which is characterized by its large size, fast growth, and creation of great linkage effects, growth pole i theorists maintain that economic development tends not to occur simultaneously and evenly over the whole region but tends to concentrate on one or several points (nodes, foci, focal points, centers) form which economic develop ment is created and transmitted to the rest of the economy over time and space. Major concepts of theory are (1) growth pole, development pole, growth center, growing points, leading 73 regions, focal points, nodes, centers, central places, i ietc.; (2) propulsive industries, dominant industries, propulsive economic units, key industries, master indus tries, leading sectors (unites exonomiques motrices), etc.; (3) economic dominance, economic space, geonomic space, etc.; (4) linkage effects, spread effects, polarization effects, agglomeration effects, urbanization-regionaliza- tion economies, etc.; and (5) economic versus non-economic ! variables, etc. | Major uses of the theory are (1) historical expla- ! nation of development process, (2) as a positive theory, ! and (3) as an instrument of policy. Major criticisms of the theory are as follows: (1 ) as a tool of explanation of historical process of | i economic development, it has great value; (2 ) as a posi tive theory it is valuable only as a conditional theory of regional growth as mentioned by Paellnck (313) and Hansen (178, l8l); (3) as a normative theory, it has still ; only heuristic value; (4) the theory does not explain | satisfactorily the initiation of growth. According to i the theory attributes of propulsive industries are bigness, fast growth, and great linkages. But these criteria fail to explain some empirical observations of growth initia tion, that is, they fail to explain the cases of steel industry in Lorraine, the case of the Lacq complex initiated by the discovery of natural gas deposits at 74 Lacq, and the case of Cassa di Mezzogiorno. In the case | of Lorraine, development of the steel industry was sup posed to induce other industries to the area. But in reality, other closely related industries were not initiat ed or attracted to the Lorraine areas. As Paelinck (313) points out, any single isolated industry cannot be relied upon as a growth pole. In the case of Lacq, France, the Lacq complex satisfied Perroux’s criteria of the propul- i sive firm, but it failed to create new industries around Lacq (178). The case of Denmark defies Perroux's growth 1 | pole notion. Perroux says that Denmark is a minimum scale j of region in European scale (66). But as a region 1 Denmark’s development was not initiated by a big propul sive industry, but by small scale agricultural units. And as Vernon (424) indicates the industries which can be most easily attracted by urban external economies are not big propulsive industries, but are rather small scale industries. In order for the growth pole theory to deal properly with these problems it must be able to explain S the ways in which growth is initiated; (5) growth pole theory does not adequately treat external economies; (6 ) it does not properly explain agglomeration effects; (7) it does not fully explain the relation of polarization effects to other growth inducing effects; (8) adequate treatment of locational factors and of locational and spatial aspects is necessary; (9 ) non-economic factors 75 such as social, political, cultural and institutional factors must be explained satisfactorily; (10) other variables such as cost economies, scale economies, external economies, economies in the provision of overhead capital, urban economies, communication economies, access to in- | puts and output markets, locational factors, law of variable proportions, economies of certainty and risk, industrial atmosphere and diffusion of innovation and | technology must be handled more properly; (11) conflicts between national goals and regional goals must be properly 1 , X i handled; and (1 2) semantic clarifications are needed, j As Paelinck (313) states the growth pole notion j has been confused with the notion of key industry, basic ! industry, etc. Furthermore, the concept of space has I i been used by growth pole theorists with different meanings. | Sometimes they used abstract economic space and sometimes well defined geographic space and sometimes both inter changeably, etc. Theories of Development Axes j Introduction Growth pole theorists maintain that growth takes a form of spatial foci, whereas development axes theorists assert that development takes a form of a linear spatial path (axis). Development axis theory maintains that the increase in traffic volume along the major transport 7 6 routes sets off a cumulative process of development, that I is, a cumulative process of traffic growth-economies of scale-low transport cost-increased traffic volume. This cumulative process attracts both transport industries and other industries along the transport axes. Then these industries clustered along the development axes attract further expansion along the axes. This theory is based on the historic evidence of French regional growth (l8l) and it has been advanced by Pottier (3^0) and others such as Friedmann and Alonso. i | j Pottier1s theory of Communication | Axes j Pottier’s analysis of development axes starts from his notion of communication axes. According to Pottier development axes act as an "agent of development impulse and as a vector of development propagation." Development impulse is due to three factors: (1) creation of new infrastructure, (2 ) lower unit transport costs, I ;(3) autonomous expansion of demand. As a vector of jdevelopment propagation, development axes induce profits, I new activities and cause a cumulative process of expansion, that become the forces of concentration. Pottier states that the communication axes with these factors properly working become development axes. 77 Friedmann and Alonso’s Theory of Development Axes Pottier's notion of development axes starts from the analysis of communication axes. But the notion of development axes of Friedmann and Alonso starts from the classification and definition of development areas (194:3). Friedmann and Alonso classify development areas into four regions: (1) growth pole regions, (2) development axes or development corridors, (3) frontier regions, (4) depressed regions. j j According to Friedmann and Alonso, growth pole I regions include growth poles and the regions of their immediate influence. These regions are metropolitan areas and are called also growth centers, core regions, etc. When two or more growth poles exist, major transportation routes usually connect these growth poles. Then develop ment takes place along the major transportation routes. Thus, the areas along the transportation routes becomes I development axes. A frontier region is "a zone of new i settlement in otherwise virgin territory" (l43:xvi), and can be divided into contiguous and noncontiguous frontier regions. The former is characterized by a new development along a wide frontier, whereas the latter is characterized by substantial investments in the development of resources, i.e., mineral, forest resources, and by urbanization. Depressed regions are problem regions and are characterized 78 by a stagnant or declining economy. | As defined above by Friedmann and Alonso, develop ment axes are a stretch between growth poles and "elongated corridors" along the major transport routes. Development axes or development corridors together with connected i jgrowth poles form the basis of a megalopolis. The United jStates1 megalopolis in the area of the urbanized north eastern Atlantic seaboard that has been developing along |a north-south axis connecting growth poles in southern New i Hampshire to growth poles in northern Virginia and the t East-West axes connecting growth poles on the Atlantic j shore to the growth poles in the Appalachian foothills as discussed by Gottmann (1 6 3). i Conclusion The theory of development axes has been the theo retical basis of French and European regional development planning exemplified by the potential Rhine-Rhone axis, i I the Moselle-Saone-Rhone axis, the East-West transversal ;axis connecting Turin-Genova-Milan in Italy, and the great central European axis, etc. Also the theory of development axes has been adopted by many developing countries as a development strategy. There is the Cochabamba-Santa Cruz development axis in Bolivia, the Zacatecoluca-la Union development axis in El Salvador, the Guatemala-Puerto Barrios development axis in Guatemala, the Seoul-Pusan 79 development axis in Korea, the Managua-Leon-Chinandega- Corinto development axis in Nicaragua, the Lima-Pucallpa { development axis in Peru, and the Pitsanulok-Lamsak East- j iWest development axis in Thailand, etc. Major development axes are shown in Table 2. | Transport routes result in development axis for l I !the following reasons. i J 1. As Rostow maintains the railroad has been |"historically the most powerful single initiator of take offs" (3 6 2:2 5-6 2): transportation is the leading sector ; or key sector in the early stages of economic development. 1 Furthermore, it plays a vital role in the initiating of | economic development. Then transportation induces develop- iment along the routes and transportation routes become I | development axes. ! 2. As Adam Smith (383:147) maintains, the produc- | tivity of labor depends on the division of labor , and ! the division of labor depends on market size. Market size is a crucial factor in economic development and is deter- I mined by transportation. Therefore, transport is crucial I 1 in extending the size of market, and in increasing labour productivity and in initiating economic development. 3. Improvement in service dimensions, that is, in safety factor, cost factor, speed factor, and depend ability factor, induces an expansion of existing activities or a creation of new activities. An improvement in the TABLE 2 DEVELOPMENT AXES OF VARIOUS COUNTRIES Country Name of Axes Connected Poles Axes or Routes Bolivia Cochabamba-Santa Cruz development axis Cochabamba City Santa Cruz City Highway France Rhone-Rhine development axis Marseille, Lyon Waterway Italy * Turin-Genova-Milan development axis Turin, Genova, Milan Highway Korea Seoul-Pusan development axis Seoul, Taegu, Pusan Highway Peru Lima-Pucallpa development axis Lima, Tingo, Maria, Satipo, San Ramon, Oxapampa Highway Thailand Saraburi-Korat, Pitsanulok-Lamsak development axis Saraburi, Korat, Pitsanulok, Lamsak Friendship Highway Venezuela Valencia-Maracay-Caracas Valencia, Maracay, Caracas Highway 00 o 81 safety factor results in two further effects; a cost effect and psychological effects. Improvement in the j safety level means reduced damage, loss, etc. Thus, it reduces cost and induces increased use of transportation through psychological effects, etc. Improvement in speed factors results in capital saving in two ways. Deprecia tion is more or less an increasing function of time and is not affected much by improvement in speed. Thus, | improvement in the speed factor means more intensive use I of capital and less depreciation. Also, if the speed | factor improves industries may keep smaller amounts of I inventories and thus more real investment is possible. An improvement in the dependability factor results in j reduced costs in the non-transportation sector and thus results in more efficient production activities. 4. Non-economic roles of transport routes and also of development axes are important. Non-economic ! benefits are expanded cultural opportunity, political and social cohesion and unity, meeting of military and j logistic needs, etc. Theories of Growth Poles and Development Axes; Theories of Growth Poles and Axes As was already mentioned, growth pole theorists emphasize the role of growth poles while development axis theorists focus on the role of development axes. But there has not been any theory combining the two theories. 82 Thus in this section theories of growth poles and axes j will not be reviewed. A combined theory of growth poles and development axes will be formulated in Chapter V. Growth Pole Theory and Other Growth Theories Growth theories reviewed in Chapter II will be i related to the theory of growth poles. In this section only growth aspects of the theory will be reviewed. I I Central Place Theory Similarity between two theories is that as a ! central place has its complementary region, a growth pole has its periphery, and that a growth pole is a high rank- j ing central place. The difference is that many central | places actually exist while only a few growth poles | exist. Central place theory explains the growth of a j central place in terms of tertiary activities and mar- I ginal propensity to consume as indicated by Parr (315:^0* I According to central place theory, different orders of I goods have different demand elasticities and the demand | for lower order good is generally inelastic. A lower order good is associated with a smaller town. Thus, marginal propensity to consume locally, and thus, the level of the multiplier is small in a small town. Thus, a small town and a lower order good are associated with lower rate of growth. Therefore, according to central place theory a high rate of growth is always associated 83 j with a high ranking central place which is growth pole. I j However, growth of growth poles is associated with many | factors; not only tertiary activities but also industrial activities, linkage effects, externalities, agglomeration economies, etc. Thus, we can conclude that central place | theory explains only a part of growth problems of growth j ! poles. ! Economic Base Theory According to economic base theory growth of a town or a region depends on the export demand and thus on the export-base. According to one version of growth pole theory, growth of a growth pole depends on a propulsive | industry. A propulsive industry is likely to satisfy i interregional demand and national demand, and is likely to be an export industry. Thus, export base theory | explains partial aspects of growth poles. i I ! I Communication Theory Communication theory is a theory of urban growth. | Growth poles are likely to be always urban areas. Thus, | communication theory is not only a theory of urban growth j j but also a theory of growth poles if it can be recognized as a sound theory. City Size Theory Growth pole theory implicitly relies on the 84 optimum size of a city. According to the growth pole theory, the size of the growth pole must he greater than the minimum size. The minimum size is the size which can provide scale economies and external economies and agglomeration economies, etc. Also growth pole theory assumes an upper limit to the size of a growth pole. The upper limit size is associated with diseconomies which cause growth poles to decline. ! The Sector Theory i i The sector theory focuses on the internal rela- j tionships between growth determinants while growth pole | theory emphasizes both internal and external relation- i ships. The shifts in primary, secondary and tertiary j sectors are major concepts. But growth pole theory does I I not distinguish between sectors. The major variables of | sector theory, that is, the concepts of elasticity, ! productivity and per capita income, are only parts of j i the growth pole variables as shown by Siebert (379)« I Development Stage Theory ! This theory, like growth pole theory, considers sectors and locational factors in explaining the growth of the region. But this theory is a demand-oriented theory and ignores interregional relationships. 85 Growth Industry Theory I j This theory explains a part of growth pole theory, j Growth pole theory explains not only the growth industry's ! role in bringing about growth, but also other factors such as locational factors, etc. As shown above the theory j of regional growth fails to explain some aspects of | regional growth. And growth pole theory which relies explicitly and implicitly on almost all the theories | discussed above fails to give a complete explanation of regional growth. Conclusion Growth pole theorists succeeding Perroux | attempted to extend and to generalize his growth pole I theory by discussing growth poles in relation not only to abstract economic space, but also to geonomic space, and by developing and extending Perroux's attributes. ! But most growth pole theorists emphasized only a subset I of growth pole problems, that is, some emphasized the key role of propulsive industries, some focused on the | locational aspects of growth poles, some stress the role j of linkages, externalities and dominance effects, etc. i Thus, none of the theories can be considered as a com plete theory and can be considered only as a conditional theory of growth as indicated by Paelinck (313) and Hansen (178, l8l). Among the various approaches to the 86 growth pole theory, the Isard and Schooler (215) approach of industrial complex analysis can be considered as the most advanced technique. Recently, Friedmann (146) attempted to generalize growth pole theory. His general theory of polarized development investigates extensively not only economic variables but also non-economic vari ables. His theory can be considered the most advanced growth pole theory. Theories of development axes, formu lated by Pottier (340) and Friedmann (148), rely on the ! theory of transportation, and have been the basis of i I French regional planning and of the development plans of t j various developing countries. These theories are repre- | sented by theories of transportation development. Com- | bined theories of growth poles and growth axes, which can i be called growth poles and axes, remain to be developed. In Chapter IV growth pole theory will be analyzed s with special reference to scale economies, externalities, agglomeration economies, urbanization economies, etc. i ! i i CHAPTER IV ANALYSIS OF GROWTH POLES Introduction As already mentioned, Perroux's (324, 326) theory of growth poles was formulated in relation to the con cepts of space and in terms of three attributes of growth poles; scale, dominance, and interconnectivity. Thus in section two of this chapter the concept of space and the three attributes of growth pole will be presented. Other concepts such as poles and centers which are closely related to Perroux's concept of space will also be presented in section two. In section three further analysis of growth poles covers what is not discussed in section two. In this section linkage effects, dominance, propulsive industries, polarization, and agglomeration economies will be discussed. Agglomeration factors have been partially discussed in various sections of chapters II, III, and IV. Thus, in this chapter only the basic concepts of agglomeration factors will be presented. In section four of this chapter the center-periphery model is 87 o6 presented. Analysis of Perroux's Growth Pole Theory Concepts of Space and Region In this section, approaches of Perroux, Boudeville, j Friedman, and Siebert will be presented, j As discussed already, Perroux (324) distinguishes | between economic space and geonomic space. Geonomic | space which he calls banal space is defined by the geo- ■ nomic relations between volumes, surfaces, lines, points, ! etc., and economic space by the economic relations. "Economic space can be conceived as defined by a plan, | as a field of forces, and as a homogeneous aggregate." His economic space as a field of forces is defined by economic forces arising from and emanating from an economic unit. His growth pole is defined in relation to economic space as a field of forces. Each activity, j | e.g., firm, industry, etc., has both a geonomic space and economic space. Its geonomic space is the space where | it actually is located, that is, where inputs, equipment, ! | and buildings are located. Its economic space as defined ! by a plan is a set of relations existing between the activity and other activities. The economic space of the j activity as defined by a field of forces "consists of centers (or poles or foci) from which centrifugal forces emanate and to which centripetal forces are attracted" 89 (324:95). Thus the economic activity as a centre attracts and repels economic influences; if the specific activity is the firm, then the firm as a center buys outputs from and sells them to other economic units. The geonomic space in this case is the place where the centre is located and the place which these forces cover. i The economic space of the economic unit, or the firm, as a homogeneous aggregate, is, roughly speaking, the place where an identical price prevails. ! Boudeville (67) considers economic space as a i concept relevant to economic analysis. Following I j Aristotle's logic which defines things in terms of firstly | material relations, secondly formal relations, and lastly goal relations, he defines economic space as firstly homogeneous (descriptive), secondly polarized (abstract) and lastly programming (political) space. Boudeville distinguishes three types of regions corresponding to 1 1 ! three types of space; a homogeneous region, a polarized region, and a programming region. The difference between | space and region is the continuity and localization of the area. An economic region is a continuous space and a localized area, but space is not necessarily continuous i and localized. A homogeneous region is the region whose elements have similar characteristics. Examples are three homo geneous regions of France which are classified according 90 to the degree of development, and are (l) the under developed region of West and Central France, (2) the newly developing region of Lyon, and (3) the developed region of Paris and Northeast France. A polarized region is defined as "the set of neighboring towns exchanging more with the regional metropolis than with other cities of the same order in the nation" (67:10). An example is the region of Lyon. A programming region is a region where one economic policy or decision dominates or reigns. Boudeville (64) considers polarized regions the | same as nodal regions. I Among the three types of regions, nodal region is i a relevant one to the growth pole analysis. A nodal region contains a pole in it and is defined in terms of function or interrelationships, that is, interrelations between nodal regions and other regions, and interrela tions between hierarchies of nodal regions or between hierarchies of cities. Interrelations between nodal i I regions can be analyzed by the interregional trade matrix j or interregional input-output study, base study, etc. Interrelations between centers of different hierarchical order can be analyzed by studying flows of goods and services. Analysis of flows of commodities can be done by Reilly's law of retail gravitation. Reilly's law, according to Isard (2 0 9), is represented by the formula 91 (4.1) F = ab - J - g . d where F Is the force of centre is attraction for retail trade from hinterland ih, a Is some constant, b Is pur chasing power (b = 1 in case of Isard). P is population ! (number of retailers in the oase of Boudeville), d is i | distance, is a constant (jt = 2 in the case of Isard). | The boundary between centers i and j is given by : ( 4. 2) i j | where P^ is population of center i, Pj is that of town j, j j and dxi and dxj are the distances of centers or towns i | and j from some point x on the boundary. Friedmann (139* 148:497) as explained in section two of Chapter III, distinguishes between two types of concepts, homogeneous region (similar to Boudeville's homogeneous region) and interdependent region (analogous i to Boudeville’s polarized region). His programming region (143:247) is defined in relation to geonomic delimitation of the area. The interdependent region is divided into five development regions; core, upward transitional, down ward transitional, resource frontier, and finally special problem region. Brief examinations of these regions were already given in section two of Chapter III. Siebert (379) defines space in relation to the 92 location of economic activity. The space of the economy is shown in the Eucledian two-dimensional space as the finite set S consisting of n2 spatial points or location units or locational points. (4.3) £s = ^sn, ... s^n, snl ... snn j . The region is defined as the subset of the economy. If we assume that the national economy consists of two regions, region i and region j, then the set S consists | of subsets and Sj. (4.4) S = {Sj., Sj} | Introduction of the space dimension into economic j theory gives rise to several problems, (1) the problem of location of economic activity, (2) the problem of de limitation of regions, (3) the problem of study of inter relations between regions, (4) the problem of spatial optimum, and (5) the problem of control of regional economic activities. Then the initial problem for the economist is how to delimitate the subsets or regions. The subset Sj_ or S. can be formed according to several ’ J criteria. These criteria are (1) interdependence, (2) homogeneity, and (3) the distance, etc. In any case any one spatial point must not belong to more than one region, that is, (4.5) SjOSj = 0 where symbol A means an intersection, and 0 is a null set. The criterion relevant to the growth pole analysis 93 is that of interdependence. The interdependent region includes nodal regions and polarized regions. The inter dependence between regions can be analyzed by a spatial matrix and also by graph theory (310* 55)* etc. Concepts of Poles or Centres Perroux's (324:95) poles or centres are defined in relation to his concept of economic space as a field of forces, "centers of attracting centrepetal forces and emanating centrifugal forces." His pole is a center of | economic influences and each pole has a sphere of economic influences. Perroux's growth pole is an aggregation of economic units which have three attributes, (1) large scale, (2) strong interconnections or linkages, and (3) powerful dominance effects. Boudeville's (64:382) pole is defined as "a spatially integrating focal point" and is defined in relation to his concepts of a nodal region or a polarized region. Boudeville's (67:41) growth pole is "a set of interdependent expanding industries located ! in an urban area and inducing further development of economic activity throughout its zone of influence." Friedmann's (143:217) core regions, Perroux's growth poles, are defined as "metropolitan areas which have a high potential for economic growth and for filtering this growth to other parts of the space economy." His hier archy of core regions of four ranks is, national metro- 94 polls, regional capital, subregional centre, and local service centre. In a recent article (146) he defines core regions as "centres of innovative change." Each region has its own periphery. Hirschman (194:183) defines growth poles, growing points, and growing centres as leading regions and as regional centers of economic i j strength. Darwent (106) distinguishes between growth | poles and growth centers. His growth centers are defined | in relation to geographical space while his growth poles are defined in terms of abstract economy. j In our discussion growth pole will be defined as I | a growing area with a set of highly interdependent ex panding firms or industries and having a high potential j of further growth. i j ! Scale Economies i 1 “ " r One of the three conditions or constraints of Perroux's growth pole is the large scale of the activity i i or industry and is related to the concept of scale economies. Two kinds of scale economies can be dis- | | tinguished: (1) the economies of scale accruing to the economic activity and (2) the economies of scale accruing to the urban area or growth poles. Perroux's original economies of scale refer to the first type. The economies of scale accruing to the economic units results from two factors, (l) Adam Smith's specialization and the division 95 of labor and (2) technological factors, and can be divided into the following types as shown by Nourse (306). (1) Internal economies of scale to the firm, (2) external economies of scale to the firm which are internal econo mies of scale to the industry, and (3) external economies of scale to the industry. External economies of scale can be divided into two types, mobile and immobile. Internal economies of scale to the firm are the decrease in costs of production due to the increase in the scale of production of the firm. External economies i of scale are the lower production cost of the firm due to the increase in the scale of the industry. Mobile external economies occur to all firms of the industry regardless of the location. Immobile external economies of scale occur to the firms located only in specific areas. Examples are the existence of a labor pool and research activity in a specific area. External economies of scale to the industry are the decrease in production ! | costs of each firm of the industry due to the expansion of many industries in a specific place. These economies are urbanization economies. Examples are availability of better input markets (labor pool, etc.), better trans portation services, improved commercial and financial services, and improved public services, etc. The economies of scale to the urban area are the lower production costs of industries and the decrease in 96 the costs of government services due to the increase in the scale of the urban area. These are urbanization economies. As an analytical tool, Isard (20 7) uses a net economies curve for each service. The economies curve is roughly an increasing function of the size of the urban area up to a certain size of urban area. Internal economies of scale to the firm may or may not cause the concentration of firms at a specific location but immobile external economies of scale to the firm and external ! economies of scale to the industry cause a concentration of firms and industries at a specific area. Perroux's propulsive firm not only generates scale economies for the other firms but also supplies and demands a large amount of inputs and outputs. Measurement of scale economies has been attempted by Chenery (82), Moore (2 8 3), and Manne (262, 264) and Isard (209:400). Chenery used the factor rule equation which shows the relation of cost to scale in measuring i the scale economies. The factor rule equation is given as (4.6) C = hQe, where C is total cost, h is a factor of proportionality, Q is plant capacity level, and e is the elasticity of cost with respect to scale. Thus if e = £ , total costs 3 increase less than proportionally as capacity increases. Moore (2 8 3) provides statistical evidence and 97 Manne (262) extends Chenery's analysis. In his later model Manne (264) considers multiple producing regions. He indicates that scale is important to cost but trans portation cost is also important. Thus* large plants may reduce cost but may also increase transportation costs. Isard (209:528) calculates the economies of scale to the administrative area by comparing the size of the area to unit service cost. As the size of area increases the unit service cost decreases up to some minimum point and is 1 supposed to rise if area gets too big. Also, Isard i (209:401) computes the scale economies in an industrial complex analysis by estimating cost and revenues for each activity at different scales and at different locations. Isard (215) considers the Gulf Coast as the location yielding greatest scale economies for the petrochemical complex. According to Isard scale economies are one of several basic interdependent variables causing agglomera- i tion. According to Chenery (84) scale economies depend ! on the type of production processes, the type of indus tries, location factors, location sites, and the size and structure of markets. Spiegelman (387:13) distinguishes between scale . economies in the private sector and scale economies in the public sector. According to Spiegelman scale econom ies in the private sector are associated with the optimum size of firm and industry and also are associated with 98 market size. Thus a large metropolitan market justifies the agglomeration of industries. The scale economies in the public sector are stated as follows. "Just as there are economies of scale in manufacturing, average municipal costs and expenditures likewise decline as the size of the local government unit increases" (406:442). However, according to Tiebout (406), Hirsch's empirical study of economies of scale in the public sector of St. Louis reveals no economies of scale. But Tiebout (406) main- ! tains that a large urban area is associated with more i i adequate public services than those of a smaller urban area. Recently Westphall (431, 4:147) calculated the economies of scale of a petrochemical-integrated steel i mill complex in Korea using the fixed-charge cost func tion of the form; C = Fak + FQ, where C is total cost, Fa is a fixed charge, and F unit cost of construction, k represents actual construction of the plant. (Q is the same as in equation (4.6). If the plant is actually con- i j structed, k is one, if not, it is zero. Westphall finds that the value of e in equation (4.6) ranges between 0.6 and 0.8. Further discussions of scale economies are in Haldi (176), Haldi and Whitcomb (178). Chenery and Westphall (90), Tiebout (406) and others. The bigness of Perroux's propulsive industry has been also emphasized by Bauchet and Davin. Bauchet (34:10) maintains that the growth of a developing region 99 depends on the big economic units. The origin of the | growth is the big industry. Davin (107:56) advocates that "the principal poles are found in heavy, highly capitalized industry, and are the domain of large firms." Externalities I The second attribute of Perroux's growth pole, j ! the interconnection between activities, implies two things, externalities and linkages. Externalities will be presented in this section and linkages in the next. The term externalities was originated by Marshall j ! (84:83) and has been extended by Scitovsky (370), Pigou i ; (397:269), Ellis and Fellner (125), Meade (271), Buchanan I | and Stubblebine (78), Davis and Winston (109), and | others. Rosenstein-Rodan (359* 357) discusses external J economies in relation to the industrial sectors of de- | pressed regions. Chenery (84) discusses them in relation 1 | to the coordination of investment decisions. Fleming i (1 3 2) discusses external disconomies in relation to : balanced growth. Arnt (18) discusses them with regard | to economic growth, Wellisz (430) in relation to govern ment policy, and Isard (207:172, 215, 2l6) in relation to location of industrial complexes. Externalities are classified into three types: externalities in consumption activities, externalities in production activities, and externalities between con- 100 sumption activities and production activities. Following Siebert (3 8 0), externalities in production activities will be presented in this section. Following Scitovsky (370), Siebert (379) distinguishes between technological externalities and pecuniary externalities. Technological externalities exist if output of an industry i is not only a function g of the factors f of production, f^ used in producing but also, a function of output j and the | factors of production fj used in producing Qj. (4.7) Q± = g(fu Qj, fj) (i * j). | Pecuniary externalities exist if is not only j j a function of prices P of Q^, PQ^, and prices of fi, l Pf^, but also a function of PQ^ and Pfj. (4.8) = g(PQi, PflS PQj, Pfj). (i * j). ! As shown above technological externalities are not con nected to price structure and concern only physical rela tionships. If is an increasing function of Qjfj* then i i external economies exist. In the opposite case external 1 diseconomies are said to exist. Further discussions of externalities are given by Stockfish (397). External economies are contrast to internal economies. Internal economies are the benefits created and absorbed internally by the economic unit. External economies are the benefits not created internally by the economic unit. Stockfish (397) classifies the sources of external economies into four types: (1) 101 technical external economies, (2) external economies of scale, (3) external economies of industrial expansion, and (4) external economies of economic growth (Scitovsky's pecuniary external economies). Examples of technical external economies are producers of multiproduct activit ies such as multipurpose river basin development projects. Examples of economies of scale are decreasing cost indus tries. If the lower costs of decreasing cost industries i J are passed on to other industries, pecuniary external ! economies result. Stockfish's example is coal-mine rall- | road industries. Industrial development and growth are | associated with lower costs of inputs and outputs. In dustrial expansion causes, through a high degree of i specialization and division of labor, decreases in produc- i tion costs and the increases in the level of output. This process, according to Stockfish (397), explains the growth of an industrial area. Growth and investment | repercussions also cause the decreases in costs. Addi- I tional investment causes an increase in productive capa- | city which again causes growth of output and lower produc tion costs, etc. According to Darwent (106:5) Perroux's external economies are close to Scitovsky's pecuniary external economies which arise in economic development. Scitovsky (370) explains the situation in which pecuniary external economies arise as follows: "Expansion in industry A may also give rise to 102 profits (1) in an industry that produces a factor used in industry A, (2) in an industry whose product is comple mentary in use to the product of industry A, (3) in an industry whose product is a substitute for a factor used in industry A or (4) in an industry whose product is con- i i sumed by persons whose incomes are raised by the expan sion of industry A." (370:149) Scitovsky's pecuniary external economies may imply I | that an increase in profits will result from decreased i transportation costs of the products located in the same | area. Hirschman (19^) emphasizes the role of external i I economies in industrial development. Industries benefit j from external economies created by themselves and by | other industries created previously and create external economies for other industries. Hirschman (195:185) recognizes the importance of external economies created by growth poles, but he suspects that too much emphasis has been put on them. The importance of externalities, i especially pecuniary external economies, was emphasized by Rosenstein-Rodan (359» 357). Another aspect of Perroux's interconnections between activities, that is, linkage, will be presented in the next section. 103 Further Analysis of Growth Pole Theory Linkage Effects Perroux (326) emphasized the role of interconnect ivity between economic activities or linkage effects in discussing growth poles. The analysis of linkage effects i has been extended by Hirschman (194) for a different pur pose in a different field. However, Hirschman classified and simplified many of the linkage effects discussed in I the field of growth poles. i will be induced. Major concepts of Hirschman's linkage analysis are forward linkage, backward linkage, combined linkage, the importance of the link, the strength of the link, the master firm (Perroux's propulsive industry and the satellite firm Pelinck's derived pole). The strength of the link is the probability that industry j will be induced. The importance of the link is the potential net output of industry i. Forward linkage exists when Hirschman's idea of linkage effects is given by I | his formula (1 9 4:101). n (i, j = 1...n) where = total linkage effects of industry i, Qj = potential net output of industry j, P. = probability that industry j linked to industry J 104 the industry producing outputs is induced to link to the industry producing inputs. Hirschman's example of forward linkage is a metal fabricating industry induced to be linked to an iron and steel industry. The backward linkage is the linkage which exists when the industry producing inputs is induced to link to the industry pro ducing outputs. Hirschman's example of backward linkage is a multi-wall bag industry which induces a pulp and paper industry. The combined linkage is the combination | of the forward linkage and the backward linkage. The I ! satellite industries are the industries with small 0's and large P's. Hirschman’s formula (4.9) implies that the total linkage effects of industry i, depend upon the importance of the link and the strength of the link. Hirschman1s analysis of linkage is subject to two types of criticisms: (1) it is concerned only with the direct effects and ignores indirect relationships between firms, (2) it does not consider locational factors of the firm. Extension of linkage effects has been done also by Chenery and Watanabe (195:105). However, their analy sis is not related to a growth pole idea. They computed the average degree of interdependence between various industries in Japan, Italy and the United States. According to their study industries of equally high backward and forward linkages are the petro-chemical and 105 iron-steel industries. Industries of equally low backward and forward linkage are the fishing and service indus tries. Industries of high backward and low forward linkage are the leather and lumberwood industries. In dustries of high forward linkage and low backward linkage are metal mining, agriculture and forestry. They rank industries according to the combined linkage score of backward and forward linkage. Chenery and Watanabe (51:316) give the following formula to measure the linkages. The backward linkage Lb is the ratio of intersectoral transactions from sector i to j, xij* to the total output of sector (4.10) Lb = Y l J A J And the forward linkage Lf is the ratio of intersectoral transactions from sector i to J to the total available output of sector i. Total available outputs of sector i include inventories v of sector i,X^v, and the import m of sector i, X^m. (4.11) Lf = ^ij/tXi + Xla + Xlv) Rasmussen (51:316) computes backward linkages (his power of dispersion) using the inverse of matrix. Let a^j denote an element of the inverse matrix. And Aj is sum of that is, Aj Then the backward linkage is (4.12) Lb = l A / l X V n d n2 ± J 106 and the forward linkage is (4.13) Lf = 1 _ A^/ 1 ^A^. n nd Hirschman stresses the role of backward linkage and considers forward linkage as a reinforcement to back ward linkage. In case of forward linkage the industries I ! to be created and to be linked to the existing industry are satellite industries characterized by smaller size ! than the master industry and by the use of by-products of i the master industry as principal inputs and outputs, and ; by the exploitation of locational advantages from prox- ; imity to the existing industry. But in the case of back ward linkage, industries to be created and to be linked to the existing industry are non-satellite type of indus- j tries characterized by larger size than the inducing industry. Thus backward linkage is considered a more important development mechanism. According to Hirschman the measurement of certain linkages can be done by input- i output analysis. But the measurement of the uncertain i linkage, that is, externalities and complementarities is j difficult. I The measurement of the certain linkage, that is, backward and forward linkage, is done by a triangularized matrix. According to Hirschman, a backward linkage effect can be measured also by the method of the inverse of the input-output matrix. That method is also suggested by the 107 Danish economist Rasmussen (194:108) and is called the "power of dispersion." The inverse matrix form given by equation (2.42) makes it possible to follow the impacts of final demand of one industry onto other industries. Rasmussen suggests this method as a tool for a recovery policy in depression. An input-output matrix shows the industrial link ages or structural linkages or structural interdependence. An input-output matrix with many zero entries implies i weak structural linkages and one with few zero entries i j means strong industrial linkages. To get a triangularized | input-output matrix we arrange the elements in the matrix | according to their dominance. Miernyk (278:94) suggests two criteria for arranging the elements. The industry I I with the largest number of zero elements is put at the top of the matrix and the industry with the least number of zero elements is put at the bottom. The other criter ion is the ratio of final demand to the total output of the sector. Then the rows show the backward linkages j and the columns indicate forward linkages. As shown above Hirschman's analysis of linkage effects is not related to locational aspects of the industries. Isard (2 09) and Isard and Schooler (214) attempted to generalize the analysis of linkage effects. As Isard (2 09) explains, input-output analysis fails to consider scale economies and external economies. He uses 108 comparative cost and industrial complex analysis. Com parative cost analysis deals with internal economies while industrial complex analysis deals with the external economies. In their analysis, they considered not only industrial linkage effects but also locational factors as well as scale economies, external economies, and localization economies. Thus their approach is a most elaborate and advanced method of linkage analysis. Recently Siebert (379:20) attempted to analyze | the regional linkages by using a graph theory (55) and | matrix form. A graph is represented by a following ! I i formula I j (4.14) G = (S.F), or G = (s1) ! 7 where G represents graph, S a set as in equation (4.3)* and F the function relating all elements of S (domain of F) to all elements of S (range of F). The letter s denotes a spatial point, and i and j denote spatial ! points which are the nodes of the graph. Using a graph he analyzes regional forward and backward linkages. In his matrix form entries with zeroes imply no linkages. His analysis of regional linkage or spatial linkage has been done in delimiting a region based on the criterion of interdependence. His interregional linkage depends on interregional interaction. Thus the stronger the inter action the larger the linkage. The analysis of linkage 109 effects in a spatial context requires an analysis of both industrial linkages and regional or spatial linkages. i Dominance The last attribute of Perroux's growth poles is economic dominance. His idea of economic dominance is analogous to Schumpeter’s (368) idea of economic leader ship. Perroux’s idea of dominance has only an abstract economic dimension. But the effect of economic dominance j has both economic and geonomic dimensions. Dominant i | economic units are considered as firms or industries. Thus dominant industries create growth poles in the geo graphic spaces where they are located. According to Perroux (328) economic dominance is said to exist when ever between any two economic units, say i and j, i exercises on unit j or j exercises on unit i "an inver- sible or asymmetric effect" (3 2 8:3 0). In the base of the existence of more than two economic units, i could be a i dominant economic unit and the rest of economic units, represented by j, could be dependent units. If economic units are firms or industries, then economic dominance and growth poles can be analyzed by input-output matrix as attempted by Aujac (22). He triangularized the input- output matrix of the French economy based on the notion of economic dominance. He orders sectors of the French economy according to their level of intermediate demand. 110 Then he arranges the industries with high intermediate demand below the diagonal of the matrix and sectors with small intermediate demand above it. Finally, a dominant sector can be found in the following way. Industry i is a dominant industry and industry j is a dependent industry if (4.15) Slj/Si<SJi/Sj, and industry j is a dominant industry and i a dependent industry if W W where Sj_j denotes sales from i to j, sales from j to i, total sales of i, and S. total sales of j. Perroux's theory of economic domination has been discussed by Blaug (52). Blaug maintains that Perroux’s theory is similar to Schumpeters’ theory of innovation and that the meaning of Perroux's theory has undergone a change. His theory started as a generalization of monopoly power and then combined the idea of dominance with innovative motive, and later considered dominant units as growth poles. According to Blaug, Perroux's theory which maintains that economic domination provides an engine of growth is only a slogan rather than a theory. Apart from the theory of economic domination, the theory of spatial domination has been developed by McKenzie, Bogue, Kish, and Duncan and others. McKenzie Ill (348:171) considers a cluster of cities formed around a dominant central city, similar satellite industries formed around a master industry. Bogue (348:171) extended McKenzie’s idea into a systematic study of a dominance and subdominance relationships between a complex and a systematic cluster of cities. Kish (348:172) also extends McKenzie's idea and studies the dominance-subdominance relationship between a dominant central city, the emerg ing subdominant centres and the rest of the region. Duncan (114) tries to study the dominance-subdominance relationships in relation to a whole system of regions or national economy. Haavelmo (6 7:6 0) attempts to analyze the competition of regions for domination among regions. Recently Perroux (64:387) also attempted to analyze inter regional dominance by analyzing the relations between a polarized region and other regions. Apart from inter industrial domination and interregional domination, Aujac's (22) technical domination stresses the importance of purchase activity of industry. According to Aujac industry i is said to dominate industry j if its percent age purchase of j’s products is larger than j's percentage purchase of i's products. Propulsive Industry Perroux’s poles are propulsive industries located in geographic space. His propulsive industry is charac- 112 terized by (1 ) large scale, (2 ) rapid growth, and (3) high interconnectivity between industries. Different aspects of propulsive industry have been emphasized by Davin, Bauchet, Aydalot, Boudeville, and others. Bauchet (3^) emphasized the importance of bigness and Davin (1 0 7) also regards poles as heavy, highly capitalized industries. Aydalot (23) emphasized the importance of interconnectivity between firms and considered propulsive industry as a producer of external economies. Boudeville (64) distinguishes between a propulsive industry, or key industry, and a dominant industry. His propulsive indus try is an industry with great influence or impact on the activities of the region and is not merely the employer of a large labor force. His key industry is defined as a propulsive industry located in a specific region and having the greatest activity of any industry in the region. His dominant industry is similar to his propul sive and key industry but the influence and the impact of the dominant industry are irreversible and asymmetric whereas those of propulsive industry and key industry are reciprocal. Hirschman's (19^) version of propulsive industry is master industry. His master industry is defined in relation to satellite industries. His satel lite industries are those which have small Q's and large P’s in equation (4.9), that is, small potential net out put and large probability of satellite formation through 113 linkages. A satellite industry usually is located close to the master industry and uses the by-products of the master industry, etc. Thus, his master industry is close to Boudeville's dominant industry and his satellite in dustries are similar to the dependent industries. Re cently, Bharadwaj (51) attempts to define and measure the key sector using the formula. The forward and backward linkages given by equations (4.12) and (4.13) measure the average values. From equations (4.12) and (4.13) he formulates the following relations measuring variability characteristics. (4.16) var± = 1 - 1 A±f/l A± n-1 n n 1 2 and r o > 1 (4.17) var. =[ __1_ 2=(A - 1 A V l A 2 J I n-1 J n J n J Equations (4.12) and (4.13) measure the linkages and equations (4.16) and (4.17) measure the variability. Then the sector with largest linkage (or highest power of dispersion) and low variability is the key industry. Polarization A growth pole is defined as a growing area with a set of highly interdependent expanding firms or industries having a high potential of further growth. As Siebert (379) explains, a growth pole is characterized by (1) the 114 polarized or immobile spatial origin of growth deter minants, or (2) the polarized or immobile spatial des tination of growth determinants or (3)* both (1) and (2). The existence of polarized or immobile growth determinants induce firms or industries to the place where immobile growth determinants are located. Those firms or indus tries taking advantage of these immobile or polarized growth determinants grow faster than those which do not take advantage of immobile growth determinants. Those firms or industries growing rapidly induce other firms or industries through linkage effects, both backward and forward. Thus, a set of rapidly expanding industries consists of a propulsive industry and a set of dependent industries. Growth of propulsive industries realizes scale economies and produce external economies for inter dependent activities. A set of expanding firms or industries located in a growing area creates and realizes agglomeration economies, that is, transfer economies, i localization economies, urbanization economies, and other economies such as communication economies, economies of uncertainty, and provides locational advantages and facili tates innovation diffusion, etc. The more immobile or strong are these economies, the more strong and large are the polarization process and polarization effect. These economies will be discussed in the following section. As industrial polarization takes place spatial polariza- 115 tion occurs with the change in the size of urban area and the boundary of the growth pole. Thus the process of industrial polarization and the spatial polarization continues. Hansen (l8l) attributes the process of polarization to the various effects generated by the growth and expansion of growth poles or propulsive indus tries. The growth of propulsive industries results in an increase in the level of regional income. Then the change in regional income may be ascribable to the Keynes effect which explains the change in regional income in terms of the investment and economic base multipliers. The increase in the level of consumption resulting from the increase in regional income increases the level of investment through the operation of acceleration principle. This feedback phenomenon is called the Aftalion effect. The effect concerning the diffusion of technology and the psychological aspects in business decision making is called the publication effect (313:3^). The effect concerning the interrelated prices of various sectors and firms and industries is called the Scitovsky effect (313)- In addition to a set of above effects, Boudeville (67: 113) emphasizes the role of the polarization effect. Boudeville's polarization effect states that as the expansion of propulsive industry takes place new activi ties or industries will be induced and linked to the existing propulsive industry. Three different mechanisms 116 of creating new activities are the upstream mechanism, the downstream mechanism, and the lateral mechanism. The upstream mechanism is analogous to Hirschman's backward linkage, and the downstream mechanism is Hirschman’s forward linkage. The difference between Boudeville and Hirschman is the lateral mechanism which concerns the availability of social overhead capital and the available resources, especially labor. Another concept of polariza tion effect concerns the changes in the level of activity j over time. For the measurement of upstream and downstream I mechanism, Boudeville uses Rasmussen's formulas which are given in section two-five of Chapter IV. For the measurement of the polarization effect over time he uses the input-output technique. His method of estimating i polarization effects will be briefly reviewed. Boude ville defines the polarization effect as the total in crease in production minus the increase in production I resulting from the multiplier effect. This relation can I j be derived from equation (2.42). If we remove new sector | n from equation (2.42) to examine the impact of the new sector, the following relation results (4.18) XJt = (I-MJJ-1 (Dlt - Dln), where D^n is the demand for the new sector, and the asterisk implies the vestors and matrices without new sector n. Then the multiplier effect M is 117 (4.19) M = xlt - X*t. And the polarization effect is (4.20) P = Xlt - X J ^ Adding equations (4.19) and (4.20) we have the following equation (4.21) M + P = X±t - X^t_2 which denotes the net increase in production resulting from the new sector. The analysis of polarization includes the analysis of a separate pole, as well as, the analysis of inter connection between growth poles. The study of a separate pole can be done by the analysis of polarization effects. The analysis of interconnections between poles can be done by either a graph analysis, a double entry table, or an interregional accounting method, etc. Boudeville attempts to find the growth pole in the European Economic Community by studying economic flows between countries in terms of a matrix of trade between the EEC countries. He analyzes six economic nodes and n(n-l)/2, that is, fif teen economic flows between countries and finds that Germany is the European growth pole. In determining the satellite poles when there are more than two growth poles, he uses the regionalization function which compares the amount of total economic flows between satellite poles and the growth poles. For the sake of simplicity we assume two growth poles and one satellite pole. Then the 118 problem Is to determine the growth pole to which the satellite pole belongs. In this case Perroux suggests the method of comparing the total transactions or economic flows between poles and a satellite pole. Let F denote total economic flow, and the subscripts denote poles, s the satellite pole, i pole i and j pole j. i Then the following relation results: (4.22) | aFj. | If the > sign holds then the satellite pole belongs to ( or is dominated by growth pole i, if the = sign holds it ! doesn't belong to either i or j, and if the < sign holds i [ the satellite pole belongs to pole j. Based on the | analytical tools discussed above, Perroux formulates I | a polarization model. The model will be presented in | Chapter V. I i j Agglomeration Economies j As Isard (207:172) explains, Ohlin (311) and ! Hoover (199> 198) divide the agglomeration factors into three types: scale economies, localization economies, and urbanization economies. But Nourse (306) classifies agglomeration economies into two classes; transfer economies and scale economies. Transfer economies are the decrease in transportation costs resulting from the agglomeration of activities. Various types of scale economies have already been discussed. And he further classifies scale economies into two types: internal________ 119 economies and external economies. Internal economies are i | internal economies of scale to the firm. External econo mies are divided further into two types; external econom ies of scale external to the firm but are internal to the industry, and external economies of scale external to the industry. Isard's localization economies are analogous | to Nourse's external economies of scale external to the I • firm, but internal to the industry. And Isard's urban- | ization economies are similar to Nourse's external economies of scale to the industry. External economies ; of scale to the industry or urbanization economies are j external economies external to the industry but internal to the urban area or growth pole. Thus, we may add some j additional categories to the above classification. For ■ example, external economies of scale external to the urban area or growth pole but internal to the nation, etc. Theoretically if we consider a hierarchy of growth poles we can derive a hierarchy of agglomeration economies I | which can be shown on Table 3. Spiegelman (387) attempts to generalize the agglomeration analysis and tries to formulate a theory of agglomeration. Spiegelman's approach is economic in the context, but includes non-economic factors as well. While Isard, Hoover, and Nourse consider agglomeration economies, Spiegelman considers all agglomeration factors including agglomeration economies. The term agglomeration 120 TABLE 3 HIERARCHY OF GROWTH POLES AND TYPES OF AGGLOMERATION ECONOMIES Types of agglomeration economies Hierarchy of G P Remarks IES to the firm G P of any level Internal economies EES to the firm but internal to the industry G P of any level Economies of •industry localization EES to the industry but internal to the G P G P of town level Economies of urbanization EES to the subregional G P but internal to the region Subregional G P Regionaliza tion economies EES to the regional G P but internal to the system of sub national regions Regional G P Regionaliza tion economies EES to the regional G P but internal to the nation National G P Nationaliza tion economies EES to the national G P but internal to the system of nations G P of systems of nations i.e., EEC, LAFTA Example: Germany as a G P of EEC 121 TABLE 3— continued EES to the G P of World G P Example: EEC, and systems of nations North America as but internal to the growth poles the world of the world Note: G P ; Growth Pole IES ; Internal Economies of Scale EES ; External Economies of Scale EEC ; European Economic Community LAFTA; Latin American Free Trade Association i was first used by Losch (260) in formulating his theory | of individual location and in extending Christaller's ] | (93) central place theory. Thus, his agglomeration i I theory was formulated In relation to the locational fac- i j tors of economic activities. According to location theory and agglomeration theory, firms and industries seek maximum-profit locations and generally the maximum profit locations of firms coincide so they tend to locate in the i same urban area. This tendency results in agglomeration of firms and industries as already indicated by Losch (260). For instance, the maximum profit location for firms serving several markets is the largest city (median location), and the firms (especially two firms) serving linear spatial markets tend to agglomerate in the middle of the market as indicated by Hotelling (202). Location of resources or transportation cost explains also 122 • agglomeration phenomena which tend to occur either at input-sites or market place or at transhipment points. This locational aspect of agglomeration has been extended and modified by Koopmans, Moses and Tiebout and others. Tiebout (2 3 6:9) tries to formulate a theory of maximum- profit location mathematically. Koopmans (228) mathemati cally shows that a single firm can maximize profit by moving rather than staying at the same location. Moses | (2 9 0) analyzes the effect of factor substitutability on i the location, and he finds that, if factors are substit- ! utable, the optimal location of the firm is insoluble. Locational factors alone are not adequate to handle agglomeration phenomena. Thus other factors have been i emphasized in analyzing them. Boventer (7^) emphasizes the importance of wage differentials between an agglo merated urban area and its hinterland. Other agglomera tion factors are Perroux's (326) interindustry linkages, Friedmann's (137) external advantages such as transporta- 1 tion economies and interindustry linkages, Hagestrand's | (1 7 2, 1 7 3* 17^) personal transfer of information and ideas, Alonso's (10) personal contact, Meier's (273) I communication theory of urban growth, Scitovsky's (370) externalities, Hirschmann's (19^) linkage effects, Tiebout's (387:15) uncertainty factor, and Isard's (387:5) decision aspects, etc. Empirical analysis of agglomeration economies are Marcus' (2 6 5) analysis of 123 six industries in the New York metropolitan region, and Chinitz's (91) analysis of New York and Pittsburgh, and Isard and Schooler (2l4) analysis of an industrial com plex to be located in Puerto Rico in relation to a Gulf Coast location. As a result of his analysis, Marcus finds that three of six industries in the New York metropolitan j region benefit from agglomeration economies. Chinitz (9 1) finds that agglomeration economies are not highly related to scale economies. Isard and Schooler (215) 1 find that the maximum scale location of their complex is ' Gulf Coast. j Spiegelman (3 8 7) classifies all these factors into the following categories and maintains that the theory of i agglomeration must include all of them: (1) accessibility, I (2) communication and information, (3) scale economies in the private sector and in the public sector, (4) market structure, (5) centralized executive decision making, (6) the historical process of location decision, 1 and (7) the effects of regional growth prospects and others. This paper will add some more factors to Spiegel- man’s set and will attempt to refine the matter. Agglomeration Factors For our purpose we classify agglomeration factors into nine types: (1) Accessibility and transfer 124 economies (2) Scale economies in the private sector a. Internal economies a). Internal economies of scale to the firm b. External economies a). External economies of scale to the firm but internal to the industry - economies of localization b). External economies of scale to the industry but internal to the growth pole - economies of urbaniza tion c). External economies of scale to the growth pole but internal to the region - regionalization econom ies (3 (* (5 (6 (7 (8 (9 (1 Scale economies in the public sector Communication economies and information transfer Centralized executive decision making Market structure and urban size Linkage effects Innovation diffusion Location factors Accessibility and transfer economies Accessibility is associated with a time factor* a demand factor* and a cost factor. Improved accessibility results in a decrease in the amount of time required for given economic activities and in the increase in the 125 supply through easy access to the market and in reduced manufacturing and transportation costs resulting from the adjacent locations. The savings in transportation costs are the transfer economies. Thus, the accessibility variable as a time factor, a cost factor, and a demand factor causes the agglomeration of economic activities. (2) Scale economies in the private sector Scale economies have already been discussed. In ! this section localization and urbanization economies will j be presented. As indicated above, Isard's localization | economies are analogous to Nourse's external economies j of scale to the firm but are internal to the industry. These economies arise when like firms agglomerate at one site. Isard's urbanization economies are similar to Nourse's external economies of scale to the industry. These economies arise when unlike firms agglomerate at one location. Examples of localization economies are i spatial integration economies like heat economies and ! power economies, administrative economies, etc. Urbaniza tion economies are associated with both private sector and public sector. According to Isard, scale economies, economies of localization, and economies of urbanization are the economies obtained from spatial juxtaposition. (3) Scale economies in the public sector These economies are the lower cost of public 126 services resulting from the Increased size of the urban area. Isard (207:187) attempts to measure various economies by using an economies curve which relates the size of the population to the amount of net annual eco nomies. According to Isard all urbanization economies ! such as education economies, power economies, labor j I economies, transportation economies, etc., increase up ’ to a certain level with increasing population size, but after a certain urban size is reached urbanization economies ceases and diseconomies begin. i (4) Communication economies and information transfer i | Hagestrand (172, 173, 174) emphasized the role of person-to-person transfer of ideas and information in the I analysis of agglomeration phenomena. Alonso (10) also I emphasized the importance of personal contacts in economic I j activities. Meier (273) attempts to formulate a com- I ! J munication theory of urban growth. Further discussion of i communication theory is in Chapter II. The basic thing is that the maximum level of information transferal and I I personal contact is associated with the agglomerated urban center. (5) Decision-making aspects Uncertainty is considered as an agglomeration fac tor. The tendency of activities or firms to agglomerate at the urban center results from the efforts of firms to 127 reduce uncertainty in making business decisions. As | Tiebout (387:15) explains this behavior is a form of hedging against uncertainty, or minimizing risk. The minimum uncertainty location is an urban center. Isard attempts to formalize decision aspects of agglomeration (387:5). (6) Market structure and urban size Market structure is associated with the concept 1 of economic size of cities and scale economies. Thus . market structure limits scale economies. This fact is s stated by Harris (387:73) that the optimum location of ! industry which serves the whole United States is in Pittsburgh. The urban market size is also constrained not only by the growth prospects of the urban area, but also, the growth aspects of a whole region or nation. (7) Linkage effects: discussed already. j (8) Innovation diffusion j Friedmann (146) considers development as an ! innovational process and states that innovation tends to agglomerate into innovative clusters. Berry (^-7) con siders the hierarchy of growth poles and regards the role of growth poles as the diffusion of innovation. The role of growth poles is more specifically the spreading of innovations from the growth poles to the other poles or 128 regions and the filtering of innovations from the higher order growth poles to the lower order poles. The basic thing is that innovation causes the agglomeration of economic activities. (9) Location factors Isard (207) classifies location factors into three groups: (a) Transportation costs and transfer costs which are generally a function of distance. (b) Other 1 costs such as cost of labor, water, insurance, capital, power, and other costs associated with taxes, topography, j | climate, and others. (c) Various factors causing agglo- | meration and deglomeration economies. Factors explaining j agglomeration economies are scale economies, economies j of localization, and urbanization economies. Factors i explaining deglomeration economies are diseconomies of scale to the firm, such as rises in rents and the costs j of urban services and the costs of food supply, and I pollution, traffic congestion, etc. Center-Periphery The center-periphery relationships which exist between the rapidly expanding growth center and its slowly growing periphery have been empirically observed by Meier and Baldwin (143:10), Perloff and Wingo (322), Schultz (3 6 6), and others, and have been the basis for the general theory of economic growth attempted by Myrdal 129 (293)* Hlrschmann (19*0* and Perroux (328), and others, and have been systematically formulated in a model by Friedmann (143, 140). Friedmann's formulation of the center-periphery model is based on his concepts and definitions of regions. His set of regions are homogeneous regions (similar to Boudeville's homogeneous regions) and inter- | dependent regions (analogous to Boudeville's polarized j regions). He classifies interdependent regions into five I categories and relates them to center-periphery system. I I Regions (development) i | (1) Core Center (2) Upward-transitional [ (3) Downward-transitional t j (4) Resource frontier (5) Special problem region I I i I His core region is a highly expanding center and is similar to Perroux's pole de croissance. He considers a hierarchy of four core regions of local, subregional, regional, and national level. The upward-transitional region, located close to core regions, possesses a high potential for growth. The downward-transitional region is a stagnant and rural area. A resource frontier region is a new settlement area and is characterized by intensive investment in the expoloitation of the resource. Periphery 130 A special problem area can be any region. According to Friedmann, (1^-3* 1^0) the center- periphery model will handle the problems of regional economic planning which arises when a nation reaches a specific phase of national development. That is, it arises when a nation reaches a transitional stage. And j when an economy reaches an industrial stage or national development, then the center-periphery relationships 1 emerge. To explain the idea he classifies the phases of national development into four categories: preindustrial, | transitional, industrial, and post-industrial phases. In i ( preindustrial societies, regional economic policy is not important. In transitional economies regional policy is I necessary to provide the economy with necessary precondi tions for industrialization. In industrial societies, industrialization takes place. Once industrialization starts, it leads to a concentration of industries in specific areas that grow rapidly. Inevitably the rest of i , the areas grow less rapidly or become stagnant or even decline. Thus, at this stage of national development a dualistic structure of spatial economy emerges that con sists of a rapidly expanding growth center and a stagnant periphery. Thus, at this stage center-periphery rela tionships emerge. His analysis of the role of core regions and the relationships between center and periphery are discussed in Chapter III. 131 Empirical observations of center-periphery model demonstrate that the relationships hold for spatial sys- i terns of any level, that is, local area, subregion, region, nation, systems of nations, and lastly world level. The existence of center-periphery relationships relative to a local area was observed by Schultz (3 6 6). He explains that economic development occurs in the urban or industrial center. The rest of the area becomes stag nant or grows slowly. This conjecture is stated by his thesis that the further the region locates from the urban 1 center, the less will be the growth rate of the area. Center-periphery relationships on the national scale were emphasized by Perloff and Wingo (322). They maintain that the center-periphery relationships play a key role in 1 the development of the United States economy. On the continental scale Boudeville (6 7) demonstrated that Germany is the center of the European Economic Community and the study by the United Nations Economic Commission for Europe (UNEEC) finds that the European center is i England and the Rhine river valley region (417:138). Center-periphery relationships on a world-wide scale were noticed by Meier and Baldwin (143:10), who explains that the centers of the world are England, Western Europe, and the Eastern United States. Myrdal (293)* Hirschmann (194), Perroux (328) and others attempted to formulate a theory of economic growth 132 from the center-periphery hypothesis. Myrdal (293* 29^) relates center-periphery model to his thesis of cumulative and circular causation. Myrdal's interregional and international center-periphery model is based on his thesis of circular and cumulative causation and his two concepts of backwash effects and spread effects. Accord ing to Myrdal unrestrained market forces with the help of backwash effect result in the inevitable interregional and international inequalities. His backwash effects are similar to Perroux's centrepetal forces and Hirschmann's i j polarization effects which consists of perverse immigra- I i tion of skilled labors and capital from the periphery to | ! the center. Thus, it means a "brain drain" and resource I drain in the periphery. Against these effects, spread effects which are analogous to Perroux's centrifugal forces and Hirschmann's trickling-down effects operate to spread the growth momentum of the center toward the peri phery. These effects consist of the increased demand of the center for the products of the periphery, and the provision of cheap and better products for the periphery. This spread effect is associated with demand factors, supply factors and others such as technology, entrepreneur ship, etc. Hirschmann (19^) discusses the center-peri phery model in relation to his thesis of unbalanced growth or "controlled disequilibrium." His policy pre scription is to develop the center first and later to 133 develop the periphery. In discussing the center-periphery relationships, he distinguishes between polarization | effects and trickling down effects which are presented above in this section and in Chapter III. Perroux (3 2 8) and others developed growth pole theory based on the i center-periphery notion. The discussion of growth pole 1 j theory is in Chapter III. Prebisch (143:10) uses the > center-periphery relationship as a basis for political i | argument. He tries to defend the economic and political position of Latin America with the thesis that a long-run tendency for the terms of trade between manufactured | products (or center) and the primary products (or | periphery) is to turn in favor of the former and against i 1 the latter (143:10). Friedmann explains the relationship t | between the center and the periphery. The general rela- 1 I tionships are discussed in Chapter III. In this section ! his analysis of structural relationships will be covered. j He summarizes the center-periphery relationships in three categories: a colonial relationship politically, i continuously unfavorable terms of trade for the periphery, and the appearance of political tension in the periphery to reverse the adverse trends. The growth of the center requires the capital, labor, resources, entrepreneurships, etc. The center obtains these factors of production from the periphery at artificially low costs. Thus an exploitative colonial relationship exists between the 134 center and the periphery. And if the periphery continues to produce primary products the terms of trade between the center and the periphery will turn against the peri phery as proclaimed by Prebisch. The continuous inequal ities between the center and periphery will eventually | give rise to political action which will reverse and | correct the center-periphery relationships. I Conclusion Growth pole theory is closely associated with various theories of regional growth. According to central place theory, a growth pole must be a high ranking central place and according to economic base theory it must have a propulsive industry such as an export industry and according to city size theory the size of growth pole must be greater than the minimum size of city so that it can create scale and other economies. However, it must I i not be larger than the optimum size so that it may not j create degglomeration economies which offset the effects : of agglomeration economies. According to sector theory, ! the growth pole must not stick to the production of prim ary products and it must produce secondary and tertiary i products. According to growth industry theory, the growth pole must possess rapidly expanding and growing indus tries. According to communication theory, the growth pole must provide a high degree of information transferal. 135 According to transportation theory the growth pole must be able to improve transportation services in several dimensions, that is, in safety, cost, speed and depend ability. As maintained by Perroux, a growth pole must possess large industries whose rate of growth and expan sion are large and whose degree of dominance must be great enough to dominate many firms and industries, and which can realize a high level of scale economies, external economies, linkage effects, and agglomeration I economies. A growth pole must possess favorable loca- ! tion, efficient public sectors, and a large market. It ! j must possess efficient communication facilities to diffuse I information as well as innovation. And lastly, a growth i j I pole must be a part of a rapidly growing region or nation in order to expand or grow rapidly. CHAPTER V THEORETICAL MODELS Introduction In this chapter the following theoretical models will be presented: 1) One growth pole model. I 2) Two development axis models. ! | (1) Development axis model with one growth pole. i | (2) Development axis model with two growth poles. 3) General model. 4) Model of Seoul-Pusan development axis. As the theories and analysis of growth poles and development axes have been already presented in Chapters III and IV, only theoretical models will be presented in ! this chapter. | Growth Pole Models Regional growth models of Siebert (379), Leontief (250), and Chenery (8 7) show the direction and the magni tude of industrial growth and the regional income growth. 136 137 However, the polarized growth model tries to show both the change in regional income and the change in boundaries. The change in the level of regional income or welfare can be analyzed by the explanatory models or decision models already discussed in Chapter II. In this chapter, only the change in the boundaries and the change in the radius of influence or the intensity of interchange will be dis cussed . The change in the boundaries or the change in the ! radius of influence can be found by analyzing the total i interchange or the total economic flows between poles. Analysis of economic interchange can be done by the Isard- Reilly law (210, 6 7, 3^0> which states that the total economic interchange I between poles i and j, is directly proportional to the populations of pole i, P^, and pole j, Pj, and is inversely proportional to the distance D between poles i and j, (5.1) ilj = G PjPj/Dfj, ! where G is a constant and d is a distance elasticity and j is assumed to be close to 2 if the poles are large and the economic flow represents the total economic flows. (5.2) 1Ij = G PiPj/bij. Following Leontief (2 5 0), we introduce total population P-t(=P^+Pj) into equation (5-2) to obtain the linear approximation of the equation. (5.3) = G P ^ / P ^ 138 Then (5.3) is a linear approximation of (5.2), Thus, if populations of pole i and j double, the total interchange between two poles also roughly doubles, not quadruples. Following Boudeville (6 7), we find the radius of influence of pole i, Dx^, and the area of influence of ! pole i, A^, from equation (5.2) and Reilly's law of retail gravitation. Reilly's law of retail gravitation, | given by equation (4.1), for pole i becomes i circular boundary of influence and that the radius of the j area of influence is then equation (5.4) becomes only two growth poles i and j. Thus distance between pole i and j, Dj_j, is where a. is a constant. We assume that pole i has a | The same relation holds for pole j. (5.6) Fj = For the sake of simplicity we assume a region has (5 .7) D±j - Dxi + DxJ, and DxJ - Dx±. Setting (5*5) equal to (5*6), we have Then the radius of pole i D , can be found by Ai. solving equation (5 .8) for D where b is a constant. Then the area of influence of pole i, Aj_, becomes 139 (5.10) A± = * Dxf = ’fb2Di^ (P^PjjS-/ (1 + (P±/P For a simple illustration of the idea, we assume that both poles i and j have equal population, then the following relation results (5.11) A± = 1J The same relation holds for pole j. The similar relationship holds not only for total transactions but also for transaction of each commodity r. Thus, £>xjj and Aj can be found in the same way as shown above. For instance, the interchange of commodity r r between pole i and pole j, can shown as J cr (5.12) ^ = OaP^Pj/D- where a and b are weight factors and c is a distance elasticity for commodity r. We assume that each commodity has different weight factors and different distance elasticity. Tinbergen and others (67:110) tried to extend the above function of polarized trade flows by introducing additional concepts; that is, income elasticities, local ization coefficients, and by specifying one country as exporting and the other as importing country instead of regions. They substitute localization coefficient L of region i, L^, and region j, L., for G in equation (5.1)* 140 and the national products X of region i, X^, and region j, Xj raised to the elasticities of region i, e^, and of region j, ej, for P^ and Pj. Then the equation (5*1) becomes (5.13) jlj = L^X^xf/D^j This model is an advance over equation (5.1) in the sense that it uses outputs instead of population. But it involves difficulties in estimating the values of e^, ej, Lj_, and Lj. Also the measurement of outputs is more difficult than that of population. The above model is presented for the analysis of change in the boundary or the radius of influence of the growth poles and thus is not concerned with the analysis of the change in regional income or welfare. The explanatory models or decision models discussed in Chapter II are concerned only with the change in the level of output or in regional income and do not consider j the change in the radius of influence or in the boundaries of growth poles. Thus, a combination of a growth pole model and a regional growth model such as explanatory model or a decision model is necessary for the complete analysis of growth poles. Development Axes Models In this section, we will discuss two types of l4l models of development axes. The first model is the development axis model of one growth pole. In this case, the development axis originates from the growth pole in one direction and ends in the middle of hinterland without reaching other growth poles (428). The second model is the development axis model of two growth poles. In this case two growth poles are linked to each other by the development axis. Development Axis Model of One Growth Pole i ! The discussion of this model heavily relies on Niedercorn (301* 302, 303). For the sake of simplicity we assume that the growth pole is a port which is located on the coast which is assumed to be straight. We assume further that development can only take place either along the coast or along the transport route which is perpen dicular to the straight coast. We need these assumptions for our discussion in the next chapter. The two growth poles to be discussed in this paper are the port of Pusan ! which is the second largest city in Korea and the capital city of Seoul. Both cities of Pusan and Seoul fit our assumptions. Pusan is a port located on the coast, and the city of Seoul is located near the truce line or the demilitarized zone. The economic function of the truce line is similar to the sea coast in our discussion. The transport or development can not take place across 142 either the demilitarized zone or the coastal sea. Therefore, in either case the development axis can take place along the coastal line or the truce line, or along the one directional transport route which originates from the growth poles and ends at sone points in the hinter land without reaching other growth poles. Thus, the development axis model of one growth pole fits both the city of Pusan and the city of Seoul. | For our discussion, we assume one activity which i is the production of a single product, r, i.e., rice, ! etc. Further assumptions are constant market price P of i i r, constant production cost Cp of r, constant cost of j transport by foot (headloading or back-loading) Cf before I the road is built, and constant output per unit of land | in the supply area, and constant cost of transport by [ | motor vehicle Ca after the road is completed. The unit I of freight-distance is ton-kilometer, ton-km. The | difference between the market price P and the costs (production costs Cp and transportation costs C^.) is the | economic rent R and the maximum economic rent occurs at the market place where the transportation cost is zero, | that is, Ct = 0, then (5.14) R = P - Cp - Ct, and if Ct = 0, then - *-Cp And we assume that each producer (farmer) attempts 143 to minimize the costs of transporting his product to the pole and the land market operates in a manner that both maximizes rents and maximizes the area under cultivation. We use a two-dimensional Euclidian space to dis cuss our model. The vertical axis measures the distance along the sea coast or the distance along the truce line in the case of growth poles like the cities of Pusan and Seoul. The horizontal axis measures the distance of the road or the development axis. Then, the location of pro- i ductive activity or the production point can be shown on i | the figure in terms of X, Y coordinates. i For the sake of simplicity, we add one more assumption that the area indicated as the fourth quad- randt is not suitable for the cultivation. Then the pro duction takes place only in the first quadrandt. If production takes place at some point such as (XQ, Y), then the area of cultivation is constrained by the following conditions. Before the transport route is built, the j total transport cost by foot cannot be greater than the I maximum available economic rent as defined by equation (5.14). (5.15) CfV/^o + y2 - P “ Cp And after the transport route is built, if we assume that transport by motor vehicle is from B to 0, then we have 144 Y 0: GP Y' YY' GP ■- coast or truce line growth line development axis or transport route Fig. 1--Spatial Location of Production (5.16) CfY + CaX0< P - cp Equations (5.15) and (5.16) indicate that the transport cost cannot exceed the maximum rent which is defined as equation (5.14) and also determine the area of cultiva tion. For the sake of comparison we assume that transport takes place by foot from production point A to B and then to the market 0. Then equation (5.15) becomes (5.17) CfY + CfXQ< P - Cp Comparing equations (5*17) and (5.16) we can find the development effects of the construction of the transport route. The major effects are (1) the extended area of cultivation, (2) the increased amount of benefits (rents), (3) the increased freight tonnage and production, and (4) the length of the development axis. (1) The extended area of cultivation.--We assume 145 Y P 0:GP Increased area of cultivation OP=OQ Q Q1 X Fig. 2--Increased Area of Cultivation ! that cultivation takes place only in the first quadrandt. Then the area of cultivation before the road is AOPQ and the area of cultivation after the road is 40PQ*. The extended area of cultivation is APQQ'. The maximum rent R is as already defined by equation (5.14) which is | repeated below | and it occurs at the market place. As C^> CQj the length of = OF is H/C^, and the length of is R/Ca, and OQ* > Then the area of cultivation before the road (5.19) A OPQ' = 1 ( ( V C a) (V ° f )) = ) /2 (5.14) Em = P - Cp , is (5.18) AOPQ = ((V°f)2J /2 and after the road is 146 unit of land benefit curve D D' distance The maximum rent R occurs at GP Fig. 3--The Rent Bid Curve i Then the extended area of cultivation resulting from the i road is I (5.20) 4PQQ' = AOPQ1 - AOPQ = [(R„/ca )(V C f) ' = lRm<Cf-Ca>/Ca°Cl/2 I j If we denote (C--C ) by AC, equation (5.14) becomes i x a . (5.21) A PQQ' = [R^4C/CaC^]/2 i ; (2) The increased amount of benefit.--The increase I in benefit is represented by the increased rents. The change in the rents is shown by the rent bid curve. The j rent bid curve for a product r before the road is CD and after the road is CD'. From Figures 1 and 2, the amount of rent can be estimated by the rent pyramids. And we can 147 compare the benefits pyramid before and after the road. | The benefit pyramid before the road is (5.22) r3/6c| The benefit pyramid after the road is (5.23) p2/60f0a Then the increased amount of benefit is (5.24) R3/ScfCa - R3/5c| = R3(cf - ca)/5cfca (3) The increased production.--The increased pro duction can be estimated by equation (5.21) if output per unit of land is uniform throughout the supply area. (4) The length of the development axis.--The length of the axis before and after the road are respectively (5-25) V ° f (5.26) V ca Since Cf > Ca, the development axis after the road is of length Rm/Ca and is longer than that before the road when it was Rm/Cf. (5.27) V ca> V r If we drop the assumption that the production activity 148 AOPQ = AOP'Q Fig. 4--Extended Area of Development takes place only in quadrandt one, and if we assume that it also takes place in quadrandt two, then the figure 2 becomes figure 4. And if we assume that the increase in the market price or the decrease in the production cost result in the ceiling rent at the market place, then the rent bid curve after the road is shown as C'D' in figure 3, and the locus of zero rents after the roads are shown as P"^' and P' 'Q1 in figure 4. Recently Niedercorn (301, 303) demonstrated that urban rents follow a negative exponential distribution instead of a negative linear distribution if transporta- 149 tion costs can be represented as a concave exponential function. He formulates a rent function as follows: _ a y (5.28) R(x) = R(0)e which shows that the rent R per unit of land at distance x from the center of the pole, R(x), is the rent at the center of the pole R(0) multiplied by the base of natural logarithm raised to (-ax), where a is a constant. The total benefits of rents R accruing over the first and I second quadrandts can be estimated by the following i I equation: i (5.29) R(x) = J^KxR(x)dx = J* R(o)xe axdx. We can then trace the economic benefits resulting from the construction of transport routes by changing the distance variable x as the upper limit of integration in the above equation. Development Axis Model of Two Growth Poles In this model two development axes originating from two growth poles (GP! and GPg) are connected with each other. Thus, we have a development axis connecting two growth poles. The example of this model is the Seoul- Pusan development axis connecting the two growth poles of Seoul metropolitan area and Pusan city. Analysis of this model is similar to the develop- 150 Y Y' Fig. 5--Extended Area of Cultivation Before Connecting the Two GP's. I ment axis model of one growth pole. The extended area I of cultivation can be found from Figure 2 and equations i | (5.20) and (5.21). The increased amount of benefit can [ be found by Figure 3 and equation (5.24). The increased production and output can also be estimated by equation i ! (5.21). To illustrate the idea, we draw Figure 5 from j Figure 4. I If the existing two development axes of GP1 and 1 GP2 are connected as a consequence of elongated develop- j ment axes due to the decrease in the transportation costs, i I the increase in the area of cultivation will result as shown in Figure 6. In Figure 6, the extended area of development resulting from disconnected development axis j is shown as A P^P^Q^ - AP^^Q^. This can be calculated j from equation (5-21) for GP^. If the existing two development axes of GP-^ and GP2 are connected as a consequence of elongated develop ment axes due to the decrease in the transportation costs, the increase in the area of cultivation will result as shown in Figure 6. In Figure 6, the extended area of development resulting from disconnected development axis is shown as APiP^O^ - AP^P’^Q^. This can be calculated from equation (5.21) for GP-^. Y Fig. 6--Extended Area of Development After Connecting Two GP's. (5.30) A P ^ ' - ^ - AP.jP^Q-l = R2AC/CaC^ And the extended area of development resulting from the connected development axis is shown as AP-^P^Q^ “ AP-j_P£Qj_. This can be estimated from equation (5.20) for GP^ 152 (5.31) A P ^ -AP^jQ- = R2(Ca - Caa)/Ca02a, where Caa Is the cost of transport by automobile after the development axis Is connected and Is smaller than Cai since we assume that the increased traffic volume after the development axis Is connected results in the lower cost of transport. The extended area of cultivation resulting from the connected development axis can be calculated for GP2 as well in the same way given below. From the above analysis, we conclude that the magnitude of development resulting from the construction of a development axis depends on the following factors: a) The maximum possible level of rent, Rm = P - C . The maximum level of rents depends on two things: the price of the output P and its production cost C . Thus, t r the higher the market price of output or the lower the production cost, the higher the rent. The higher the rent the larger the development area will be and the higher will be the benefits and the level of the produc tion. b) The level of cost of transport by automobile before and after the development axis is connected, Ca and Caa. Thus, the development resulting from the develop ment axis can be shown as a function of maximum rent and transportation cost. 153 (5.32) D = f(Rm, Ct) where D denotes development, Rm maximum rent, and the costs of transport. Thus, D is an increasing function of and is a decreasing function of C^. If we assume that P and Cp are given and thus Rm is given, then economic development is a function of C^-. (5.33) D = f(Ct). Then, the maximum economic development is achieved at the minimum transport costs. General Model This model relies heavily on Niedercorn (299> 301, 303). From the above discussion, we find that economic I development is a function of economic rent and the trans portation cost as indicated by equation (5.3 2). Here economic development is defined as an increase in the area under cultivation and an increase in production. | Rent is defined already by equation (5.14). If we assume | that market prices P and production costs C are given and constant, then rent R is also given. Then development is a function only of transportation cost as shown by equation (5*3 3). From Figure 6 and equation (5.31)* we know that develop ment is inversely related to transportation cost and is a 154 decreasing function of it. Thus, maximum development or output is associated with minimum transportation cost. Then the problem is to minimize the transportation cost both by the government providing good roads and individual farmers shipping to market at lowest possible cost. We assume transportation consists of two modes: foot and motor truck. Then we have two transportation cost functions; the transportation cost functions of transport i by foot Cf and by truck Ca. j From Figure 1, Figure 7 results. I j As in Figure 1, A is a production point and 0 is a I j market place or a growth pole. In equation (5.16), we j assumed that the transport by foot takes place between I A and B. But it is more realistic to assume that transport by foot actually takes place along some routes such as AB'. And thus the transport by motor vehicles takes place between 0 and B'. Then the transportation cost function of transport by foot Cf can be shown as i (5.34) Cf = '1+1*/y2 + (XQ - z f where Y means fixed cost, i transportation cost per mile, and 'JY2 + (XQ - Z)2 the distance in miles. The trans portation cost function of transport by motor vehicles C„ can be shown as a 155 Fig. 7— Transport Route by Foot and by Motor Vehicle I (5.35) Ca = where fi is the cost per mile, and Z the distance in miles. Since we assume that each producer (farmer) pays only shipping costs, equation (5*3 5) does not contain fixed cost coefficient. Total transportation cost is sum of the cost of transport by foot Cf and the cost of transport by motor vehicles Ca. j (5.36) Ct = Ca + Cf. Thus, equation (5 .3 6) can be shown as the following: (5.37) f(XQ, Y, Z) = /JZ + / +SfJY2 + (Xo - Zf. From equations (5.16) and (5.17), the following equation results: 156 (5.3 8) fi z + or +8*1 Y2 + (xQ - Z)2i Rm And the maximum amount of allowable transportation cost is (5-39) A Z + r + J V y 2 + (xo - Z)2 = R ' o m From Figure 7* the distance Y = AB can be shown as (5.40) Y = (X - Z) tan 6 In order to find the extent of cultivation we must find the locus of all points such that transport costs are minimized at the level Rm. Therefore, the problem is to minimize equation (5*37) subject to equa tions (5.37) and (5.40). This problem is equivalent to minimizing the Lagrangian function F defined as (5.41) F = JB Z + Y + S^Y2 + (XQ - Z f - [a z + or +8 Vy^ + (x - z)2 - Rm] - X 2 ( (XG - Z) tan e - Y) where X q and %2 are Lagrangian multipliers. Taking partial derivatives of equation (5.41) with respect to Z, tan 0, and Y, and setting them equal to zero, we have (5.42) »F =£- S (X. - z)[y2 + (X - Z)2)'i - Q 2 \ Ai [j3- 8 (X0 - z) (y2 + (xD - z)2 J -ij + X o tan 0 = 0 157 (5.43) J F = <JY { Y2 + (XQ - Z)2 ] - X± <5y [y2 + 3Y <x0 - Z f ) -* + x 2 = 0 (5.44) »p = -X 2(x - z) = o 3tan0 i Solving the system of above equations for Y, we have (5.45) T = -p V S 2 - I2 X W S 2 - fi'f (Rm -T) V - D * *2 - fi2 We can prove the following relation holds (5.46) S 2 - p 2 > 0 If &2 - @ 2 <■ 0, this implies & 2< . But we know that 0 , the unit transport cost by automobile, is lower than 8 , the unit transport cost by foot. Then the relation S 2 - 0 2 < 0 does not hold. Thus, equation (5*39) implies that Y is a negative linear function of X. And from the above discussion and the equations (5.15) to (5»l8)j we know that the length of the road X is inversely related to the transport cost C and thus a decreasing function of C. This relation can be found by setting Y = 0 in equation (5.45)a and solving for XQ. This is the maximum value of XQ and in consequences represents the maximum extent of cultivated land along the development axis. (5.47) Xq = (Rm - r )/P 158 and the maximum value of YQ can be found in the same way (5.48) Y = (Rm -r )/S So far we have assumed that a producer can and will try to minimize transportation costs by shipping his pro ducts via both head-loading and trucks; that is, head- loading from production point to the nearest highway and then via automobile from there to the growth pole. How ever, a producer located in a certain area (area OAB in ! Figure 8) can actually minimize the transportation costs i by shipping his products not via both head-loading and trucks but via head-loading only. This is shown in Figure 8 and will be explained later. From equations (5.34) and (5.15) we find transport cost by foot as follows (5.49) r + S(X2 + Y2)i = Rm, and X2 + y2 = (Rm -Y)2/,*2, and Y = ( ( R m ~r)2 /S2 ~ X2 ] i Equation (5*43) shows a circle with a radius of (Rm -y)/s, which was shown as the maximum value of Y in equation (5.42). The relevant portion of this circle is shown in Figure 8 as area OAB in which producers transport their products to the market 0 via head-loading only, (head-loading transportation zone.) The area shown by a triangle OBC is the region where producers ship their 159 ^X2 + Y2 = (Rjh -r)2/ 62, where 0 5 Y 1 (R^ t -rvs , and o < x < xe. Fig. 8.--Locus of Minimum Transportation Costs products via both head-loading and trucks as discussed |already. This triangle or the headloading-transportation j area can be found by specifying the point B in Figure 8. Point B (Xe,Y) can be found by specifying the value of either Y or X0. These values can be found by setting equation (5.^-5) equal to equation (5.^9). (5.50) Y = { ( \ ~ r f / S2 - Xc2] i = -/S(62-fi2 ) h o/(S2-/32 ) + (S2- fi2)i (Hm-r )/( S 2 - /32). 160 Solving for XQ and Y, we have (5.51) xe = ~V)/ 6 2, and (5.5 2) y = ( \ -y) ( s 2 / S 2- 2 9 As the relation S - > 0 has been proved, we have two positive values of Xe and Y, thus the point B, and thereby the triangle OBC and the area of head-loading transporta tion are determined. | From the above discussion and the figure (5.8), we found that the area of cultivation before the road is a quarter circle, area OABD, in Figure 8 and after the road is the whole area indicated as OABC. The difference between these two areas is an extended area of cultivation ! and may be called a development effect resulting from the development axis. This effect can be measured as follows. The locus of all points such that transport costs are minimized at the level before the road is indicated I !by equation (5.43) and in Figure 8 as a line ABD and, !after the road, is indicated in Figure 8 as line ABC. The extent of cultivation is then shown, before the road, as a quarter circle OABD and, after the road, as whole area OABC. The area before the road is (5-53) Area OABD: Jti* ~Y )2 / 4 S2 and after the road is area OABC l6l (5.5*0 (Rm -r)2[M9°° " tan_1( S2 - fi2 )^ P'1) + 180° ( S2 - p2)?} / 360°. Then the extended area of cultivation is the difference between equations (5*5*0 and (5-53) and is indicated as area BCD. (5.55) (Km -r f (l80°( SZ - /J2)* - ?r/Jtan-1(( S2- f f / 3 6 0 ° f i S 2 i Model of Seoul-Pusan Development Axis ! As mentioned in section one of Chapter III, the i development area along the planned Seoul-Pusan development axis includes 6 5 .6 percent of Korean GNP, 63 percent of the national population, and 8 0 .5 percent of national industrial production (232). Thus, it can be stated that development along the planned Seoul-Pusan development axis implies the development of the whole Korean economy. Thus, the analysis of the Seoul-Pusan development axis jimplies the analysis of the development of the Korean economy. From equations (5*32) and (5*33), we know that development D is a function of transport cost C^. (5.33) D = f(Ct) In equation (5*33), D is a decreasing function of ( 5 . In order to make it an increasing function, we introduce 162 the accessibility variable which is defined as the inverse of economic distance. The economic distance is the transportation cost per mile Ct. Thus, we have (5-56) Xi = 1 Ct Then equation (5.33) can be shown as an increasing func tion of X^. (5.57) D=f(Xx). j We introduce one more variable, Xg, the change in the accessibility variable, into equation (5-57)• The change in the accessibility variable is the difference between the values of the accessibility variable at two different periods of time multiplied by the fraction of the period that the terminal value of the accessibility variable is in effect. Then, (5.58) X£ = k(Xlt - Xlt+n) where subscript t denotes time and k denotes the fraction of the analysis period that the terminal value is in effect, and n represents the length of the analysis period. Then equation (5*57) becomes (5.59) D = f(X1, X2) Equation (5.59) may be either linear in the following 163 form (5.60) D = t Q + *1 xi + *2 X2. or non-linear in the following form (5-61) D = If we take the logarithm of both sides of equation (5.61), it becomes linear in logs. j ! (5.62) log D = log fiQ + log X1 + /32log X2. i i Thus, the model becomes a regression model with two j j independent variables. With this model, we try to analyze the rate of growth of agricultural and industrial produc tion and GNP of Korea during the period 1 9 6 0-6 7. The 1 analysis will be presented in Chapter VI. Conclusion 1 j Our model started from an analysis of a simple | i economic activity which consists of a production activity i j and a transportation activity. We assumed that the pro duction activity does not involve transportation cost and the transportation activity involves only transportation costs. The transportation activity in our model involves the transportation of agricultural products from the production points to the market by foot or motor vehicles. We further assumed that the market price and the produc 164 tion costs are constant. Thus, the maximum economic rent which is defined as the difference between the market price and the production cost is assumed to be given. Then the problem embodied in our model was to minimize the costs of transportation and to investigate the impacts of various transportation costs on the area of cultivation and the level of outputs. The idea of our simple model which consists of minimization of the costs of transportation can also be applied to the analysis of the production activity which involves transportation costs and also to other non- agricultural activities as well. If the production activity involves transportation costs in transporting factors of production, it affects production costs, and thereby affects the level of economic rents as already discussed above and indicated by equation (5.14). If the improved transportation results in the decrease in the level of transportation costs involved in the production : process, it reduces the production costs and increases the level of economic rents and thus results in the increase in the area of cultivation and the level of outputs. Thus, our model can be used for analysis of agricultural as well as non-agricultural activities. Empirical analysis of our model will be presented in Chapter VI. CHAPTER VI EMPIRICAL TESTS OF THE MODEL AND EMPIRICAL ANALYSIS OF GROWTH POLES AND DEVELOPMENT AXIS: GROWTH POLES OF SEOUL, PUSAN AND THE POTENTIAL SEOUL-PUSAN DEVELOPMENT AXIS Introduction In section two of this chapter a hierarchy.of polarized regions or programming regions determined by the proposed national regional plan of the Korean govern ment will be presented. In section three of this chapter the theoretical models discussed in Chapter V and described by equations (5*5 6) to (5.6 0) will be tested in the empirical analysis of the two growth poles of Seoul and Pusan, and the potential Seoul-Pusan development axis. These models will be tested to explain the following: (1) the differential rates of growth of agricultural production in terms of the accessibility variable and the change in the same variable, (2) the differential rates of growth of gross domestic products (GDP) created by 165 166 highway and railway sector in terms of the accessibility variable, (3) the comparative advantage of highway and railway transportation, (4) the effects of the Seoul- Pusan highway, (5) the general test of the model: GNP. In sections four and five, the growth poles of Seoul, Pusan and the potential Seoul-Pusan development axis will be briefly discussed. A Hierarchy of Polarized Regions A brief review of a hierarchy of Korean regions as i shown by Figure 9» table 4 , and map I will explain the importance of the two growth poles of Seoul and Pusan. The comprehensive National Construction Plan of the Korean Ministry of National Construction (233) formu lates the national development plan which divides the country into a hierarchy of Boudeville's programming regions or Friedmann's interdependent regions which are delimited on the basis of both administrative-integration and the polarization-integration criteria. Thus the boundaries of the programming regions coincide with the boundaries of administrative regions and in any case con sists of boundaries of one or more administrative regions. The boundaries of provincial programming regions are those of provincial administrative regions and the boundaries of the central programming region are the boundaries of an area formed by five administrative regions of Korean pro- 167 vinces or states. In any case the programming regions !or any subset of programming regions are not allowed to j be delimited crossing the boundaries of administrative i regions of any rank. The boundaries of programming regions are formed on the basis of not only the adminis trative criterion but also the polarization criterion. A region of any rank formed on the basis of administra tive criteria comprises a pole (growth) of the corres ponding rank, and therefore can be regarded as a polarized iregion. i I Based on both the criteria of the administrative- integration and the polarization, the comprehensive plan (2 3 2) distinguishes four ranks of a hierarchy of program ming or polarized regions of Korea; two main economic regions, four supraprovincial regions, eight provincial regions, and many local regions. Recently Norton (307} 3^5, suggested an eighteen local region system. The two main economic regions are the central economic f I region and the southern economic region. The central economic region is formed around the growth pole of Seoul and the southern economic region is formed around the growth pole of Pusan. The four supraprovincial regions are delimited on the basis of the distribution of water sheds; the Han river basin, the Kum river basin, the Naktong river basin, and the Youngsan river basin. The Han river basin region is formed around the growth pole Supra- Main Regions provincial 168 Provincial Local Seoul Suwon (Kyunki) Inchon Seoul WonJu /(H-Region) " Choonchon Choongju (Kangwon) \\ Kangnung /' \ Mukho Seoul / Samchok (Central) Sokcho \ „ Daejon \ ^ " --Chongju Cheonan Daejon (Chungbuk^ Nonsan (K-Region) (Chungnam) Chong ju Jeonju c Iri (Jeonbuk) Kunsan I \ Beein Janghang Pusan Ulsan „ " (Kyungnam) Mas an Pusan \ Chinhae /(N-Region) Kimhae // Taegu Andong Pusan '__ (Kyungbuk) Pohang (Southern) Kimchon \ \ Yongchon \ Woegwan \ Je j u ---------- Je ju \ (Jeju) \ Jangsung \ _ _ -Kwangju - Hwasun ! Kwangju (Jeonnam) 'S^Mokpo (Y-Region) \ Sunchon Yusoo Fig. 9--A Hierarchy of Poles. 169 TABLE 4 AREA, POPULATION AND LEVEL OF INCOME OF VARIOUS REGIONS, 1967 (t=8) Area Population (in 1000) in 1000 (Chongbo) (km2) Per Capita In come (National Average = 100) H-Region (Han River Basin Region) Seoul 62 3,805 Kyungki 1,105 3,107 Kangwon 1,6 8 5 1 ,832 Subtotal (2,8 5 8)(2 8,2 8 3) (8,744) 188.7 92.1 83.4 K-Region (Kum River Basin Region) Chungnam 877 2,913 Chungbuk 750 1,551 Jeonbuk 812 2,524 Subtotal (2,439)(24,187) (6,9 8 8) 8 2 .0 88.1 8 1 .5 Seoul Polarized Region (s) - Central Economic Region S = H + K 5,291 (52,470) 15,732 N-Region (Naktong River Basin Region) Pusan 38 1,430 Kyungnam 1,205 3,178 Kyungbuk 1,996 4,479 Subtotal (3,239)(32,119) (9.087) 1 5 2 .8 8 2 .9 8 3 .8 Y-Region (Youngsan River Basin Region) Jeonnam 1,216 4,052 Jeju 185 337 Subtotal (1,400) (13,889)(4,389) C M CM • • mco l > — ON Pusan Polarized Region (P) - Southern Economic Region P = N + Y 4 ,6 3 9 46,008 1 3 ,4 7 6 National: S + P 9 ,9 2 9 9 8 ,4 7 7 2 9 ,2 0 8 100.0 Source: Bank of Kprea, Economic Statistics Yearbook 1968 (2 8, 27, 2 9). (1 km = 1 0 0 .8 2 9 9 9 'chongbo) MAP I.— Polarized Regions of Korea Inchon Gunsan Kwangju Truce Line Sokcho Mukho ®C hunc he o ©I f t P j p j u l gjCheopgju jJRiSrorfeJon Andon6 i l i i Teg •mM) y v , J in j u i!i!!!i»-=rPusan Samchonpo Pohang Je ju Jeju Island National city-growth pole Provincial city Local city Potential metropolis Potential megalopolis Seoul-Pusan highway Highway Demilitarized zone Regional boundaries 171 of Seoul, the Kum river basin region is formed around the provincial capital of Daejon, the Naktong river basin region is formed around the growth pole of Pusan, and the Youngsan River basin region is formed around the provincial capital of Kwangju. The eight provincial regions are eight provincial administrative regions. They are Kyungki, Kangwon, Chungbuk-Chungnam, Jeonbuk, Jeonnam, Kyungbuk, Kyungnam, Jeju. Chungbuk and Chungnam are two separate provinces. But as the size of both regions is small they are considered as one provincial programming region. In terms of Friedmann's (1^-3) hierarchical rank of poles, the growth poles of Seoul and Pusan are national metropolises, supraprovincial poles are regional capitals, and cities are local service centers. As mentioned already a hierarchy of programming or interdependent regions is a hierarchy of polarized regions formed around a hierarchy of poles as shown by Figure 9> and by Map I. The relevant regions for the analysis of the potential Seoul-Pusan development axis are the two main polarized regions; the central and the southern regions. The central polarized region will be formed around the growth pole of Seoul and the southern polarized region will be formed around the growth pole Pusan as mentioned already. Thus our models will be tested for the analysis of the two polarized regions of Seoul and Pusan. Empirical Tests of the Model 172 Analysis of Agricultural Production In equation (5.60) D is the rate of growth of a certain type of agricultural product, is as defined by equation (5*56). However, to measure the accessibility to the nearest growth pole, we multiply the transporta tion cost per mile, C-^, by the number of miles to the pole, m. Then X^ is defined as (6.1) X-, = _1__ mCt and X2 is as already defined by equation (5*58). Then equation (5.6 0) can be used for the analysis of the agricultural production. The rate of growth of agricul tural production in Korea for the period 1 961-67 is shown in Table 5 . The rates of growth of agricultural produc tion for the period 1 9 6 1 -6 7 are characterized by extreme fluctuations and by low levels. Severe fluctuations of agricultural production are mainly caused by unfavorable weather conditions, e.g., severe drought, flood, etc., and by plant diseases. The low level of productivity can be attributable to several restraining factors such as the traditional methods of cultivation, poor irrigation facilities, and the poor land fertility, etc. For these reasons the values of D(t) in our model, that is, the rates of growth of agricultural production, have also 173 TABLE 5 PERCENTAGE RATES OF GROWTH OF AGRICULTURAL PRODUCTS: RICE, Dr(t), SUMMER GRAINS, Ds(t), TOTAL FOOD CROPS, Df(t), AND TOTAL AGRICULTURAL PRODUCTION, Da(t) Year t Dr(t) Ds(t) Df(t) Da(t) 1962 3 3,015 , (743)1 1 ,6 8 8 (-507) 5,423 (319) (-6 .0) 1963 4 3,758 (196) 1 ,1 8 1 (678) 5,742 (1,324) ( 5.7) 1964 5 3,954 (-453) 1,859 (277) 7 ,0 6 6 (-60) (17.0) 1965 6 3,501 (418) 2,136 (239) 7 ,0 0 6 (562) (-1.2) 1966 7 3,919 (-316) 2,375 (-122) 7,568 (-732) (10.7) 1967 8 3 ,6 8 3 2,253 6 ,8 3 6 (-7.8) Source: Bank of Korea, Economic Statistics Year book, 1 9 6 8; Ministry of National Construction, Construc tion Yearbook, 1 9 6 8. ^The numbers in the parentheses are the changes. 174 undergone extreme fluctuations and have been extremely unstable during the period of our analysis, 1961-19 6 7* as shown in Table 5. The highest rate of growth In the peak year is 17$ in 1964 and the lowest rate of growth in the slump year is -7.8$ in 1 9 6 7. The highly fluctuating rates of growth of agricultural production which are attributable mainly to unfavorable weather conditions such as severe drought and flood damage, etc., may not be satisfactorily explained by the accessibility variable alone. I Analysis of Gross Domestic Products, GDP, Originating in Highway and Hallway Sectors The values of GDP, D(t); GDP originating in railways Dr(t); and GDP originating in highway, Dh(t), are shown in Table 6 . The ratio of GDP originating in the highway sector to the total GDP has increased from 1.019$ in 1962 to 1.829$ in 1 9 6 7. Also, the ratio of GDP originating in the railway sector to the total GDP also has increased from 0.905$ in 1962 to 1 .071$ in 1967 as shown in Table 7. The actual amount of GDP originating in the highway sector Gh is larger than that originating in the railway sector Gr throughout the period of analysis. Gft in 1962 was about 6.4 billion won while Gr in the same year was about 5 -7 billion won. G^ in 1967 is about 17.8 billion won and Gr in 1967 is 10.4 billion won. 175 TABLE 6 COMPARISON OP CONTRIBUTION BY HIGHWAY TRANSPORT AND RAILWAY TRANSPORT TO GNP GNP Created GNP Created by a freight by passenger ton-km km Highway (H) 5.7984 1.3028 Railway (R) 1.5117 0.3228 H - R 4.2867 O.98OO *Unit; in won (3 won = 1 U.S. cent) G^ has almost tripled in six years while Gr has about doubled. Thus from this study we can conclude that the highway sector has contributed more to the GDP than the railway sector during the period of our analysis, 1962- 1 9 6 7s and shows an increasing trend of contributions to GDP. This trend will further be analyzed in the following section by studying the amount of GDP created by a freight ton-kilometer and a passenger-kilometer in both highway and railway sectors. The Comparative Advantage of Highway and Railway Transportation The comparative growth of highway and railway sectors has already been discussed briefly in the above section. In this section the increments of GDP created 176 by a freight ton-kilometer and a passenger-kilometer in both highway and railway sectors will be discussed and analyzed. The equations relating the total freight ton- kilometers X-^(t) and the total passenger-kilometers X2(t) to the GNP originating in railways Dr(t) and high ways Dft(t) are (6.2) D_(t) = -1,813.19 + 1.512 X,(t) + 0.323 XP(t) r (322.97^) (0.4 8 8 6 7 (0.315) R2 = 0 .9 8 5 2 and (6.3) Dh(t) = -2,325.13 + 5.798 X,(t) + I .303 X„(t) h (1,111.8) (3.958)1 (0.277) R2 = 0.9827 According to equation (6.2) a ton-kilometer of freight transportation by railway contributes 1 .5 1 2 won to the Korean GNP and a passenger-kilometer of passenger transportation by railway contributes 0 .3 2 3 won to the Korean GNP. However, according to equation (6.3), a ton- kilometer of freight transportation by highway contributes 5 .7 8 9 won and a passenger-kilometer of passenger trans portation by highway contributes I .303 won to the Korean GNP. The significance test of both equations shows that the significant correlation exists between independent variables and dependent variables of these equations. 177 The computed value of F-statlstic of equation (6.2) is 133*5^6 and is, compared with table value F = 6.9^ and F^oi = 18.00, significant both at 95$ and 99$. The computed value of F-statistic of equation (6.3) is 71.3997 and is, compared with table value F = 6.9^- and F>01 = 18.00 significant also both at 95$ and 99$. In any case the amount of Korean GNP created by a freight ton-kilometer or a passenger-kilometer of highway transportation is much higher than that created by railway i as is shown by Table 6. And as shown in Table 6, for the period 1962-1968 GNP created by a unit of highway trans portation is quadruple of that created by a unit of rail way transportation. And also as shown by Table 6, the rate of growth of GNP originating in highway transporta tion is greater than the rate of growth of GNP originating in railway transportation and greatly exceeds the rate of growth of GNP. Thus, it can be said that the highway sector is the rapidly expanding and growing sector of the ! economy. Thus the potential Korean development axis based on the construction of highways can be justified for this reason. So far we have considered only parts of the favorable effects generated by the construction of highways and thereby the potential Seoul-Pusan development axis, that is, we have analyzed only the cost effects, and the GNP-creating effects of highways, leaving out other 178 favorable economic effects such as price effects, market and demand effects, rent effects, etc., as explained by Locklin (2 5 8), and non-economlc effects such as social, cultural, political, and military effects, etc. We have found that for the reasons of cost effects and GNP-creating alone, the construction of highways can be justified. The Effects of the Seoul-Pusan Highway The highway effects will be presented in section four of this chapter. General Test of the Model: GNP In this section we attempt to test our model for the analysis of Korean GNP. Now the dependent variable in equation (5.33) is GNP and the independent variable is freight ton-kilometers. The estimated equation relating the total GNP D(t) to total highway freight ton-kilometers X(t) for the period 1 9 6 2 -1 9 6 7 is (6.4) D(t) - 432.47510 + 0.70177 X(t) R2 = 0.8426. (0. 13560) The computed value of the F-statistic is 2 6 .7 6 6 7 and, com pared with F#q5 = 6.6l and F^qi = 1 6.2 6, is statistically significant both at the 95 and 99 percent levels. The re lationship between the dependent and independent variable is significant. According to equation (6.4) the increase in one highway freight ton-kilometer results in an increase in GNP of 0.70177 times 1,000 won, that is, 701.77 Korean 179 won. The equation relating GNP D(t) to total railway- freight ton-kilometers X(t) is (6.5) D(t) = 68.07349 + 0.15579 X(t) R2 = O .9856 (0.00841) The computed value of the F-statistic, 342.9512, exceeds F 05 = 6.6l and F^oi = 16.26 and is significant both at the 95 and 99 percent levels. This tells us that the increase in one railway freight ton-kilometer results in an increase in GNP of 0.15579 times 1,000 won, that is, 155.79 won. The amount of GNP created by a highway freight ton- kilometer is 7 0 1 .7 7 won and greatly exceeds the highway freight ton-kilometer cost, that is, 11 won as shown in Table 7. In addition, the amount of GNP created by a rail way freight ton-kilometer is 155*79 won and also greatly exceeds the unit railway freight ton-kilometer cost of 1.4741 won. Judging from both equations (6.4) and (6 .5), we can say that both highway and railway freight transportation have multiplier effects on GNP and that the multiplier ef fect of highways is much greater than that of the railways. Thus, our theoretical models are supported by the empirical tests. Growth Poles of Seoul and Pusan Adelman (4:7) observes that the Korean economy, growing at a phenomenal rate— 9i percent per year between 1963 and 1 9 6 6, and with a projected 10 percent growth rate 180 between 19^7 and 1 9 7 1* is giving rise to an increasing spa tial dualism characterized by rapidly expanding centers and slowly growing or stagnating rural peripheries. These ra pidly expanding centers are the two growth poles of Seoul and Pusan. The Peripheries are the rest of the country. The levels of per capita income in Seoul (188.7) and Pusan (1 5 2.8) are much higher than national averages (1 0 0) in 1967 as shown in Table 4. Compared with lagging regions (Jeonnam 75«5)* the per capita incomes of both growth poles are twice as much as that of lagging regions. Increasing concentration of new business investment continues both in Seoul and Pusan. In I960, 77.8$ of total national business investment was made in Seoul and 1 5.6$ in Pusan. In 1967 88$ of total business investment was made in Seoul and 8.8$ in Pusan. Thus in i960 about 93$ and in 1967 almost 97$ of new business investments were made in two principal growth poles of Korea (28). The developing aspects of both growth poles of Seoul and Pusan will be separately presented in this section. Seoul Growth Pole As Norton in Adelman (4:185) explains, the city of Seoul which possessed 1$ of the nation's land and 13$ of national population and created 24$ of Korean GDP and 34$ of nation's manufacturing income in 1966 is a Korean growth pole as defined in Chapter IV - a growing area with a set of highly interdependent expanding firms or industries and_____ GNP, GNP CREATED BY HIGHWAY, OF HIGHWAY AND RAILWAY (GNP TON-KM AND TABLE 7 RAILWAY, AND FREIGHT TON-KM, PASSENGER-KM IN MILLION AT 1965 CONSTANT MARKET PRICE, PASSENGER-KM IN MILLION) t xx(t) x2(t) Dr(t) Dh(t), D(t) 3-9 Railway 1 5,869 5,691 643,970 Xi(t): Freight 3,742 ton-km (0.779) X2(t): Passenger 4,067 (0.8379) -km 6,576 6,499 693,030 D(t) : GNP created4,296 (0.9649) 7,353 7,420 750,310 by railway,4,8l6 (1.1 2 3 4) 6,917 7 ,6 2 8 8 0 5 ,8 5 0 Dr(t) 5,158 (1.1443) 8 ,6 6 5 8 ,2 6 1 9 1 3 ,8 2 0 5,960 (1 .2 3 3 4) 9,577 10,437 995,430 Highway X!(t): X2(t): D(t): 6,865 Passenger 5,461 -km Freight 6,571 ton-km GNP creat- 6,460 ed by high- 7 ,9 7 5 way, Dh(t) 11,464 11,699 13,931 (I.4 7 4 1) 10,590 388 (6 .2 0) 429 (6 .2 0) 511 (6 .2 0) 503 (6 .2 0) 558 (6 .2 0) 660 (1 1.0 0) 1 ,0 6 5 (1 1.0 0) 1 2 ,0 7 0 6,4o8 7,966 9,529 12,207 14,902 17,819 21,556 1,125,400 M 00 H TABLE 7— continued t xx(t) x2(t) Dr(t), Dh(t), D(t) 3-7 Xi(t): X2(t): D(t) : Rate of growth of Dh(t), % Rate of growth of Dr(t), % Rate of growth of GNP, % 1 5 .3 0 0 0 0 0 24.300000 1 9 .6 0 0 0 0 0 2 8 .1 0 0 0 0 0 2 2 .6 0 0 0 0 0 4.400000 1 9 .2 0 0 0 0 0 9 .2 0 0 0 0 0 6 .5 0 0 0 0 0 10.1 0 0 0 0 0 4.100000 9 .3 0 0 0 0 0 8 .9 0 0 0 0 0 8 .1 0 0 0 0 0 1 1 .9 0 0 0 0 0 Source: Bank of Korea, Economic Statistics Yearbook 1 9 6 8, Seoul, Korea, 1 9 6 8. Korean Reconstruction Bank, Industrial Statistics, 1988, Seoul, Korea, 1 9 6 8. ^Numbers in the parentheses are the freight transportation costs per ton-km in won. 00 ro 183 having a high potential for further growth (373* 37^). Seoul City Is, as the national capital, the center of com mercial, Industrial, social, cultural, military, economic, and political activities of Korea. It is not only a center of the nation but also a center of the potential Han river basin economic region and a capital city of Kyungki pro vince and also a center of the Seoul-Inchon special region. The Seoul-Inchon special region was chosen as one of six special development regions having a high potential for growth by the Korean Ministry of National Construction (233), The development plan of the Seoul-Inchon special region starts from the development and modernization of Inchon harbor which together with Pusan harbor constitute the two main Korean harbors, and projects the development of an in dustrial complex along the Seoul-Inchon development axis based on the newly constructed Seoul-Inchon highway. The plan also outlines the development of the Han river basin for the provision of water transportation between the two cities and for the supply of sufficient industrial water and general water. Thanks to the development plan of the Seoul- Inchon special region along the potential Seoul-Inchon deve lopment axis as well as the development plan for the heart land of Korea along the potential Seoul-Pusan development axis, the Seoul growth pole will become also the spatial cen ter of the country and will increasingly amass a momentum for further expansion and for further transmission of growth 184 effects towards peripheries and other poles. Thus the Seoul growth pole satisfies Friedmann's (143) criteria of core region: a high promise for economic development and a high potentiality for further expansion. Thus it can be con sidered as the first order core region or growth pole of Korea. If related to the theories of urban and regional ec onomic growth presented in Chapter II and to the theories and analysis of growth poles discussed in Chapters III and IV, the Seoul metropolitan area possesses almost all the at tributes of a growth pole. It is a high ranking central place, possesses rapidly expanding and growing industries, including export industries. It produces not only primary products but also high proportion of secondary and tertiary activities. It has continuously improving transportation services and possesses high degree of information transferal The size of Seoul growth pole may be greater than the mini mum economic size, so that it can create scale economies in the private sectors as well as in the public sector and oth er agglomeration economies. In addition to all these attri butes of a growth pole, the Seoul growth pole is a part of a rapidly growing region. Pusan Growth Pole Pusan is one of the two first order growth poles and one of the two main harbor cities of Korea. It is the center of Kyungnam province and also the center of the po- tential Naktong river basin economic region as well as the 185 center of Pusan-Masan special region. The development plan iof Pusan-Masan special region projects the provision of in dustrial and general water supply for the southern coastal area and provides for the development of tourism along the sea coast. The development plan of the Pusan metropolitan area includes also the development plan of Pusan harbor. Thus the Pusan growth pole will expand not only as a center of economic development regions but also as a major harbor of the country. The Pusan growth pole like the Seoul growth !pole satisfies all the requirements for a growth pole which ;have already been discussed in the above section. Therefore j the discussion will not be repeated in this section. I I Potential Seoul-Pusan Development Axis i The potential Seoul-Pusan development axis along the planned Seoul-Pusan highway will connect the two main har bors at the extremities of Korea as shown in Map I and will connect the three river basin economic regions; the Han river basin region, the Kum river basin region, and the Nak- tong river basin region. It will also connect three supra provincial poles (Seoul, Daejon, and Pusan), and almost all the provincial capitals will be linked to the axis directly or indirectly. The axis will also connect the two most im portant special regions; Seoul-Inchon special region and the Pusan-Masan special region. Thus the axis will connect the Seoul-Inchon development axis and later will also con nect the Seoul-Kangneung east-west development axis and_____ I 186 Pusan-Yosu southern coastal development axis. In 1967 the I development area along the axis includes about 8 0.5$ of to tal industrial production, 63$ of national population, and 6 5.6$ of Korean GNP as mentioned already in Chapter III, and will increasingly attract more people, industry, and ec onomic activities toward the axis. Thus the axis will serve not merely as a regional development axis but as a national development axis profoundly transforming the Korean economy as a whole. The development axis will have three dimension al impacts on the economy; (1) the time dimension, (2) the uncertainty dimension, and (3) the space dimension. The im proved transportation will result in the shortening of tran sportation time, and will increase the safety level and thereby reduce the level of uncertainty involved in trans porting goods and services, and also will result in the shortening of distance and in increased accessibility. These three dimensional impacts of the development axis will have consequences that can be classified as economic effects and non-economic effects. Economic Effects (1) GNP creating effects; as shown by equation (6 .2) to (6.5 ) the highway transportation activity itself is a GNP creating activity. (2) Cost and supply effects. By realizing scale economics in the transportation sector itself, the develop- ment axis reduces unit transportation costs and thereby de- 187 creases the transfer costs or transportation costs of other Industries as well. Thus the decreased transporta tion costs will cause an increase in the activity of other industries and will result in increased outputs. (3) Demand increasing effects. Improved transporta tion will enlarge the market and will reduce the transporta tion costs as mentioned above. Thus an enlarged market and decreased costs will cause an increase in demand for trans portation services as well as for other goods and services. I | (4) Price and income equalization effects. Im- I j proved transportation will result in the equalization of | |the prices and incomes of similar goods and persons over space. Thus it will result in reducing regional income and price inequalities. I (5) Resource effects. Improved transportation will result in the development of untapped resources and in the more efficient utilization of existing resources, that | is, effective utilization of land resources, etc. j j (6) Linkage and agglomeration effects. Improvement j in the transportation sector will induce and facilitate the growth and development of other industries. (7) Technology, information and communication effects. Improved transportation activity will increase the rate of diffusion and transferal of technology and information through improved communication activities. (8) Other effects. These effects are the improve- 188 ments in safety factor* dependability factor* and uncer tainty factor involved in transporting goods and services. Non-Economic Effects (1) An improved transportation sector may help bring about cultural social and political integrity and unity. (2) Changes in the attitudes* motivations* and incentives of the people in a way favorable to economic I development as explained by Leibenstein (247). I j (3) Meeting of military needs; this aspect is j represented by the construction plan of four or five | emergency airports along the Seoul-Pusan highway. | ! (4) Other social* cultural and political effects. | Conclusion Our model developed in Chapter V* even though it may not be applicable to agricultural production which is subject to extreme fluctuations due to severe drought and ;frequent flood damage and plant disease, etc.* provides us |with the justification of the potential Seoul-Pusan devel opment axis. The basic idea of the model in Chapter V, that the level of output is a function of transportation cost has been substantiated by the equations (6.1) to (6.5). Thus the potential Seoul-Pusan development axis can be justified on the basis of economic reasons alone. The axis* started to remove the transport bottleneck* is 189 expected to alter the spatial structure of the Korean economy as a whole. The results of equations (6.2) and (6 .3) are also the basis for the analysis of the comparative: advantage of railway transportation and highway transporta tion. According to the results the productivity of highway transportation is much greater than that of railway trans- i portation. Thus expansion of highway transportation must be given priority in developing the transportation sector of the economy.- The economic as well as non-economic ! | effects of the development axis have been discussed in j j section five of the chapter. Based on the tests of the model and on the study of effects along the axis, we can conclude that the two growth poles of Seoul, Pusan and i the potential Seoul-Pusan development axis will determine I I the spatial as well as economic structure of the country. I CHAPTER VII EMPIRICAL STUDIES OF GROWTH POLES AND DEVELOPMENT AXES OF VARIOUS COUNTRIES Introduction J - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ! The purpose of this chapter is to supplement our ; empirical studies of Korean growth poles and axis presented I i in Chapter VI by investigating the empirical studies by i j different economists of growth poles and development axes jof various countries, and also to provide the empirical |basis for the discussion of growth pole policy to be presented in this chapter. Boudeville (6 7) states that growth pole ideas have been adopted, tested and improved by various countries 1 as a deliberate policy of development incitation intended ;to stimulate economic activities in certain areas. For instance, Great Britain adopted this idea as a policy of creation of new towns, Netherlands as a policy of develop ment centers, Germany as a policy of central industrial areas, Italy as a development policy of nodes and zones, 190 191 France as a policy of equilibrium metropolises, |Venezuela as a policy of activating new core regions, Greece as a policy of the zone pilots (pilot zone or trial and demonstration area), the United States as a develop ment policy for lagging regions. However, these policies jof various countries can be classified into four types as i J follows: i | 1. Creation or implantation of new growth poles | in a new region or in a resource frontier region where I 'economic development has never taken place. The Guayana [program of Venezuela belongs to this type. The program i ]tries to create a new growth pole, Santo Tome de Guayana, in Guayana, a resource frontier region of Venezuela, in order to develop the Guayana region. 2. Creation or development of growth poles in a lagging region or in a depressed region which is character ized as slow-growing or stagnant economy. The United i i States1 development policy for the Appalachian region, the [Ozarks region, the New England region, the Upper Great Lakes region, etc., the Italian development policy for the Mazzogiorno (Southern Italy), the Brazilian development policy for the northeast, and the Greek policy for the zone pilote or for a control area belong to this case. 3. Creation or development of poles around rapidly expanding growth poles to curb the overcongestion of the primary growth pole. The British new town policy of 192 creating a number of new towns around the London metro politan area and the French policy of equilibrium poles intended to curb the overcongestion of the Parisian pole belong to this type. 4. Development of the existing growth poles in order to facilitate the present rate of growth of the pole. The German policy of central industrial areas, and the development center policy of Netherlands belong to this | group. In addition, the Korean case may belong to this | type. Out of these studies, one representative example of each type will be chosen and discussed in the following sections. That is, Venezuela (type 1), France (type 3), and the United States (type 2). However, as the policy of type 4 which tries to develop existing growth poles as in the Korean case has already been covered in the previous chapters, it will not be repeated in this chapter. Hansen (180) considers the development axis as a development strategy intended to attract economic activit ies, that is, Hirschman's (194) DPA, directly productive activities, by providing EOC, economic overhead capital such as transportation facilities or Hirschman's SOC, social overhead capital, along the axis. This policy is represented by French efforts of creating the huge European development zone around the potential Rhine-Rhone axis, and also by the efforts of developing countries such 193 as Bloivia, El Salvador, Guatemala, Nicaragua, Peru, ! Venezuela, Korea, etc., which try to create development zones along the development axis by building major trans port routes. Out of these cases, the following two studies i which can be considered as typical development axes have been chosen and will be briefly discussed. 1. The Valencia-Maracay-Caracas Development Axis I of Venezuela by Friedmann. 2. The potential Great Central European Develop- i I j ment Axis of France by Hansen. j i Growth Poles Studies I | Venezuela by Friedmann (1) Growth Poles of Venezuela. Friedmann's (1^3) study of Venezuelan growth poles is based on his concepts and system of core regions. His identification of Venezuelan core regions is based on two criteria; the po tentiality for carrying out further economic expansion and the potentiality for exercising powerful spatial influences on the development of other regions. Those regions satis fying his two criteria of core regions are classified according to his scheme of a hierarchy of core regions. First order core regions (national metropolises) are the Caracas metropolitan region, the Valencia-Maracay metro politan region, and the Santo Tome de Guayana region. 194 Second order core regions (regional capitals) are the Maracaibo metropolitan region and the Barcelona-Puerto la Cruz metropolitan region. Third order core regions (subregional centers) are the Barquisimeto region, the San Cristobal region, and the Maturin region. Fourth order core regions (local service centers) are El Tigre, Carupano, Cismano, Porlamar, etc. These core regions are also classified into prin cipal poles and subsidiary poles based on his types of | development zones. He divides the Venezuelan development I jarea into three possible development zones; the Guayana i | development zone, the Central Development zone, and the i Coastal Development Zone. The Guayana development zone will act as a producer of hydroelectric power, metalic minerals, i steel and steel products. The principal pole of this zone is the Santo Tome de Guayana metropolitan region, a major center of heavy manufacturing industries in Venezuela. I Subsidiary poles of this zone are Ciudad Bolivar, an . administrative and trade center, and Tucupita, also an administrative and trade center. The Central Development zone will be used to act as a supplier of crude oil, natural gas, and agricul tural and forest products. The principal pole is Maturin, a state capitol and also an agricultural, trade and service center. Subsidiary poles are El Tigre, an administrative trade center and also a center for the oil and natural gas Industry of the zone. The Coastal Develop ment zone will act as a producer of marine products, non-metallic minerals, consumer products and tourist services. The principal pole is the Barcelona-Puerto la Cruz metropolitan region, the main trade, financial, service, and administrative center for the eastern provin ces. Subsidiary poles are Cumana, a university city, and Porlamar, a tourism and trade center. Friedmann expects that a development axis for i I Venezuela will integrate the spatial economy of the I country and the three development zones of Venezuela and connect the Santo Tome de Guayana growth pole with the Barcelona-Puerto la Cruz growth pole. Out of these development zones and poles, the development zones and growth poles of Guayana based on the Guayana program of the Venezuelan government have been chosen for our discussion. S (2) Guayana program. According to Friedmann (143), Venezuela, whose economic history roughly follows W. W. Rostow's (3 6 2) stage theory, faces a critical problem of regional economic policy at the present phase of national development--the transitional stage corresponding to Rostow's take-off stage as it undertakes an extensive national regional development plan of transforming a traditional resource frontier region of Guayana into a new 196 Guayana of industrial and settlement center. The programming region of Guayana characterized as the Pittsburgh on the Orinoco (1 8 9), is not the entire expanse of the traditional Guayana region which includes all the area of Venezuela south of the Orinoco River, but only a part of it, a narrow development zone formed around the new growth pole of Santo Tome de Guayana by the decree establishing the GDC, Guayana Development Corporation. The -GDC, together with CORDIPLAN, a national planning agency created in 1958, and CVG, the Corporacion Venezolana de Guayana, created in i960 and modeled after the Tennessee Valley Authority and the Venezuelan Develop ment Corporation, is the organization responsible for the implementation of the program. The main purpose of the program is the comprehen sive development of resources and regions of Guayana for industrialization and settlement. Resources to be developed are the low-cost electric power, the rich high- 1 quality iron ore, the vast amount of natural gas and petroleum and forest products, etc. The expected effects of the development of Guayana may be classified as the cost effect, demand effects, migration effects, and spatial effects. The cost effect is the decrease in the production cost of the firms or industries using resources developed in the Guayana region. The demand effect is the increase in the demand or the 197 creation of new demand for consumer goods, producer goods, and public goods. The migration effect is the increased migration into a new growth pole attracted by the increased economic opportunity. The spatial effect is the change in the spatial structure and the distribution of towns and poles caused by polarization and trickling down effects. As the intensive development of Santo Tome de Guayana continues, economic activities of small towns will be ex tensively influenced by the development of the center. I Thus, the economic fluctuations of subsidiary poles will I be changed. From the above discussion, we can conclude that the Guayana program is a crucial factor of spatial as well as economic transformation of Venezuela and is a crucial determinant probably the most important factor influencing the economic future of Venezuela. France by Hansen i As Hansen explains (l8o), French growth pole policy (type 3) is a policy of decongestion of the Parisian pole and has been represented by a series of development plans for the Paris region (the polarized region of Paris and three departments; Seine, Seine et Oise, Seine et Marne). The plans of 1939 and 1956 were formulated to decongest, to develop, and to modernize the Paris region. The plan of I960, PADOG, Le Plan d'amenagement et d'organisation generale de la region parislenne. comprised a plan of_______ 198 creating four or five subsidiary poles around Paris within a distance of 20 kilometers. The strategic plan of 1965 laid down the principle of decongesting the Paris region by creating new towns along the potential axes consisting of the principal Seine axis (downstream) and the secondary Seine axis (upstream). In addition to a series of develop ment plans for the Paris region, various French regional policy measures have been undertaken to check further growth of the Paris region (negative measures) and to pro- i mote the growth of the less developed regions (positive i I | measures). The negative measures include the Decrees of j1955 and 1958, and the Law of i9 6 0 intended to check the further expansion of existing private industries in the 1 Paris region. The positive measures include SDR, Societes I I de Developpement Regional, intended to finance industries in lagging regions, FDES, Fond de developpement economique et social, intended to finance regional expansion of lagging: jregions, and lastly a decree of 1964 intended to decentral- :ize and to transfer government-controlled activities from |the Paris region to the underdeveloped regions. However, these measures failed in satisfactorily controlling the expansion of the Paris region and in pro moting the growth of underdeveloped regions. Thus, as ultimate solutions Hansen (180), following the British experience which failed in creating and developing new towns around the London pole and eventually resorted to 199 a policy of developing existing remote towns as a measure of controlling overcongestion in London metropolitan area, suggests that France also adopts, like Great Britain, a policy of developing existing remote towns such as Amiens, Reims, Troyes, Orleans, Rouen, etc., and also like i Boudeville (6 7)* suggests a policy of developing poles of equilibrium, that is, eight regional metropolises. They are Lille-Roubaix-Tourcoing in North region, Nancy-Metz in Lorraine region, Strasbourg in the Alsace region, Lyon- |St. Etienne in the Rhone-Alpes region, Aix-Marseilles in ! the Province region, Toulouse and Bordeaux in two south western regions, Nantes-St. Nazaire in the northwest region. I In any case, a policy of decongestion of the Parisian pole, as a French growth pole and a European growth pole or an international growth pole, involves economic as well as non-economic considerations. I The United States by Hansen, Blome | As Hansen (l8l, 182, 180) explains the United j States' regional economic policy (type 2) as a policy of developing lagging regions such as the Appalachian region, the Ozarks region, the New England region, and the Upper Great Lakes region as designated by the Economic Develop ment Administration of the United States Department of Commerce (422) as development areas, or is a policy of 200 creating or implanting a new growth pole in a declining region. This policy is represented by the ARD Act, the Appalachian Regional Development Act of 1965a intended to transform the welfare economy of the stagnant Appalachian region into a self-sustaining expanding economy. The characteristics of the Appalachian region are: (1) large size--greater than the total area of Italy, Austria and Switzerland, (2) large population— 19 million equal to the population of Canada, (3) low per capita j income--lower than some of the developing countries. The i I per capita income of Leslie County, Kentucky is lower i than that of Jamaica (422), (4) favorable location-- between the Atlantic megalopolis and the industrial Mid west, (5) rich resources--mineral, forestry, water re sources, etc., (6) type of people--technically illiterate (5 3), isolation-oriented people of Scotch-Irish origin (422), (7) a stream oriented space economy characterized by a small size stream valley town (5 3)* (8) a stagnant i or declining economy based on three types of declining (industries; coal-mining industries, forest products indus tries, and subsistence agricultural sectors. The development measures of the ARD Act are (1) the attraction of new industries, (2) the deliberate decentralization of government controlled activities or government agencies, (3) training and education of the people in the area. For these measures development and 201 modernization of existing towns or cities are necessary. Blome (53) attempts to determine the size, number and location of urban centers in the region by relating the order and number of streams to the size and order of towns. He found that the following relationships exist between the stream numbers and stream order of the South Fork of the Kentucky River. (7.1) log Y = 3.68 - 0.62X j I where X is stream order, and Y is the number of streams. i l The Economic Development Administration of the Department of Commerce (422:VII-13) states that the future of Appalachia depends on the success of the development and the modernization of the towns, cities, and growth centers in the Appalachian region. Other Countries Other countries that adopted the growth pole idea are Italy, Brazil, Greece (type 2), and Great Britain I (type 3) as mentioned previously. Higgins (188) explains that Brazil and Italy are the two typical countries characterized by the classic case of North-South regional dualism. In the case of Italy, the North is the developed region and the Mezzo- giorno (southern Italy, including Abruzzi, Molise, Campania, Basilicata, and Calabria) is the lagging region 202 which according to Chenery (8 7) resembles a typical | developing country. But, in the case of Brazil, the south is the developed region and the north (Amazonia), the northeast compared to New England (189:736), and Minas Gerais and Espirito Santo (6l) are the poor, lagging regions. The Italian efforts at developing the Mezzo- giorno are represented by the Vanoni plan of 1954 intended to reduce regional income inequalities and to achieve self- sustaining growth of the Mezzogiorno, by SVIMEZ, the ! Association for the Industrial Development of Southern t I Italy, and by the Southern Development Agency, the Cassa jper il Mezzogiorno of 1950, etc. The Brazilian develop ment of the lagging north and northeastern regions is entrusted to SUDENE, the Development Agency of the North- | east. In the case of Greece the developed region is the central area with Athens as its center and the rest of the country is the lagging region, as explained by Higgins I (1 8 9). The Greek policy of developing the lagging region is represented by the policy of "a zone pilote," a trial and demonstration area. The Greek government selected the poor and lagging province of Epirus as a zone pilote in 1 9 5 8 and the neighboring region of Pogoni as a control area. But, according to Higgins (1 8 9), these policies have not been successful in Greece. The British growth pole policy (422) is represented 203 by the New Towns Act of 1946 intended to stimulate the building of new towns around the excessively congested growth poles to check overcongestion, e.g., the new towns built around Greater London, and by the Town Development Act of 1952 intended to develop the existing remote towns, "expanded towns" (422:87), to check overcongestion in the London metropolitan area by attracting people and indus tries of Greater London toward these expanded towns. 1 Development Axes Studies I Out of the studies of various development axes as I | presented in Chapter III, two typical cases have been chosen and will be briefly discussed in this section. They are the potential great central European axis, that i is, the potential Rhine-Rhone axis, and the Valencia- Maracay-Caracas development axis of Venezuela. The Valencia-Maracay-Caracas Development Axis of Venezuela by Friedmann 1 This axis is based on the new super highway com pleted in 1 9 5 8 which connects, as Friedmann (143) explains, Valencia-Maracay, the first order core region and the capital city of Venezuela. These Valencia-Maracay and Caracas regional economies based on the development corri dor are so closely integrated that Friedmann (143) con siders this region as a bipolar urban region. This development axis was originally undertaken 204 to remove the bottleneck that emerged in the transporta tion sector of the Venezuelan economy in the early fif ties , but it resulted in the creation of the bipolar urban region as mentioned above. The effects of the axis are (1) the cost effects-reduced transportation and production costs, (2) time effects-savings in transportation time, (3) rent effects-caused by the change in land use, (4) supply effects-increases in cultivated area and outputs, |(5) demand effects-increase in market size and in demand, ;(6) decongestion effects-decongestion of Caracas, (7) !other effects such as trickling-down effects from Caracas, etc. However, Wilson (436) considers the trickling-down effects as the most important aspect of this axis. The Potential Great Central European Axis of France by Hansen As Hansen (l8l) explains, France is attempting to create a vast central European development zone in the |European Economic Community along the great central European development axis formed along the unconnected waterway, linking the Mediterranean harbor city of Marseille and French inland pole of Lyon and the harbor city of the North Sea of Rotterdam via three rivers, the Rhone, the Saone, and the Rhine, connected by a system of canals. This development axis is also called the ^astern France and the Rhine-Rhone axis, the major North Sea- 205 Mediterranean development axis, the North-South Eurafrican axis, and the integrated axis, etc. Since this development zone includes a number of countries of the Common Market such as Germany, Netherlands, etc., France has undertaken only the French portion of the potential axis so far. Those French efforts are re presented by the CNR, the Compagnie Nationale du Rhone founded in 1932, intended to develop the Rhone Valley. The projects of the CNR include a number of multipurpose river development projects, and the construction of a jcanal linking Marseille to Lyon. The Lower Rhone-Languedoc j Company was formed to stabilize agricultural production in the area by providing irrigation facilities. The French efforts also include the projects widening the Moselle River waterway. The favorable effects expected from this develop ment axis are (1 ) the provision of water transportation, (2) the development of industries along the axis, (3) the I |maintenance and enhancement of the French competitive position in the Common Market, (4) the development of regional growth poles and the facilitation of industrial decongestion in the Parisian pole, (5) provision of indus trial water, and (6) other non-economic benefits, etc. 206 Conclusion From our empirical studies of growth poles and axes of Korea and other countries presented in Chapters VI and VII, five different strategies of growth pole policy emerge. They are; I 1. A strategy of developing a resource frontier region or a new region which has never been developed. Friedmann's study of the Guayana program of Venezuela is ;the case in point. i 2. A strategy of developing a lagging, depressed, i ior stagnant region. Hansen's study of the Appalachian iregion, Chenery's study of the Mezzogiorno, etc. are the examples of this strategy. 3. A strategy of decongesting overconcentrated growth poles. Hansen's study of the Parisian pole and the study by the International Information Center of the Greater London metropolitan region illustrate this case. 4. A strategy of developing existing growth poles. .The German policy of developing central industrial areas jand the development center policy of the Netherlands repre sent this strategy. 5. A strategy of developing the whole economy or the whole country. The Korean policy of developing growth poles and axis is a proper example of this strategy. Also our empirical studies show that the growth pole strategy can be applied to both developed and 207 developing countries, and also to the advanced regions as well as the lagging regions of the same country. We can conclude from the empirical studies first that the growth pole policy alone may be considered as an effective strategy for initating development. However, if the growth pole policy is combined with development axis policy as in the case of Venezuelan policy of developing growth poles up to the level of first order growth poles (national metropolises) and then connecting these growth ! poles with a development axis, it is a more effective I i I strategy. Also, the Korean policy of first developing growth poles and later connecting these poles via a development axis reinforces this latter point. In general, it can be concluded that the growth poles strategy must be combined with the development axis strategy whenever possible for maximum development to be attained. CHAPTER VIII SUMMARY AND CONCLUSIONS The purpose of this final chapter is to restate the major ideas of the present study and to briefly review and summarize the major findings followed from the treat ment of various topics in the preceding chapters. This chapter also attempts to indicate the direction in which further studies will be continued. Introduction The process of economic growth over time and over space, which tends economically (industrially) as well as geonomically (spatially or geographically) (1) to concen trate on a "growth pole" (spatially polarized economic growth) or (2 ) to follow a linear spatial path or a "development axis" along the major transportation route (spatially linear economic growth), has been discussed throughout the thesis. Perroux (326) attempted first to explain and to solve the problems involved in the process of spatially polarized growth and Pottier (3^-0) endeavored to explain and to solve the problems involved in the 208 209 process of spatially polarized growth and Pottier (340) endeavored to explain and to solve the problems involved in the process of spatially linear economic growth. Econom ists following Perroux and Pottier have attempted to improve and to extend Perroux's theory of growth pole and Pottier's theory of development axes. Their efforts and their contributions to the growth pole theory and to the development axes theory are represented by various con cepts and ideas of numerous economists, such as Hicks' | "industrial conurbation" or a "particular center" (1 8 8:1 6 3), Friedmann's "core regions," "development corridors or axes," or "development axis" (340), Hirschmann's "growing points" or "regional centers of economic strength" (1 9 5), Isard's "industrial complex" (210), Higgins' focul points of growth (2 1 0), Myrdal's "rich-poor regions," (2 9 3, 294), Paelinck's "lateral pole and derived pole" (312), Parr's "natural pole" and "planned pole" (315), Darwent's "spatial growth pole" (growth centers), and "non-spatial growth pole" (growth pole) (106), Lebret's "development pole" (243), Korner's "industrial development pole" (233), the "zone pilote" of Greek government (1 8 9), and Friedmann's "general theory of polarized development" (146), etc. Perroux's original theory of growth pole was formulated in terms of purely abstract economic space and thus is deficient in explaining the spatial or locational 210 aspects of growth. Extensions of Perroux’s theory of growth pole by various economists include the further de velopment of his original version of theory and the intro duction of non-economic factors such as locational factors, communication factors, accessibility variables, and social and institutional factors, etc., into the growth pole theory. For instance, Aydalot emphasizes the importance of external economies, Lebret the role of agglomeration effects, Siebert the existence of immobile growth deter minants, and Myrdal the relationships between the growth pole and the lagging regions, and Nichols the role of growth pole as a tool of regional development, etc., as discussed in the preceding chapters. Extensions of the Pottier's development axis idea are similar to those of growth pole theory and also are only partial extensions. As stated already, none of the extensions of and the existing theories of growth poles and development axes can satisfactorily explain and solve the problems involved in the process of regional or spatial economic growth, j Thus this dissertation, in attempting to extend and develop a theory of spatial or regional growth, tries (1) to examine the original as well as the major extensions of Perroux’s and Pottier's theories of growth poles and development axes in the light of and in relation to the existing theories of regional economic growth, (2) to investigate the relationships between growth poles and the 211 lagging regions, (3) to clarify the relationships between growth poles and development axes, (4) to study the growth pole idea as a policy tool of regional economic develop ment. In discussing these subjects we have formulated and tested our theoretical models using Korean data for the analysis of Korean growth poles and development axes. Also we have discussed, as already mentioned, two most important topics, that is growth versus development and balanced versus unbalanced growth which are closely related ! to the present study. j | I Summary j In Chapter I, we discussed briefly the existing theories of economic growth such as the ordinary theories j of economic growth, e.g., Harrod-Domar1s theory, etc., the special theories of economic growth, e.g., Nurkse's, Hirschmann's theory, etc., the classical location theory, the spatial organization theory, the theories of urban ! economic growth, the theories of regional economic growth. We also discussed two important topics, that is, growth vs. development, balanced vs. unbalanced growth in this chapter. In Chapter II, the existing theories of urban economic growth such as the central place theory, the urban economic base theory, the communication theory, and the city size theory have been discussed. The theories 212 of regional economic growth such as the export-base theory, the sector theory, the development stage theory, the growth industry theory have also been discussed. Siebert's theoretical models representing his approach to the regional growth theory have been presented in this chapter. |The models are one explication model and one decision model. We found that these models are useful in determin ing the output of each sector, the change in regional income, the linkage effects, the impacts of governments I expenditure on the output of the different sectors, etc. In Chapter III, we examined the theories of growth poles and development axes. Perroux's theory of growth pole and the extensions of his theory have been discussed. The extensions of Perroux's theory are classified as the theories of non-spatial growth poles and the theories of spatial growth poles. The non-spatial growth pole theorists such as Paelinck, Davin, Aydalot, etc., extended Perroux's theory without reference to the locational fac- I tors while the spatial growth pole theorists such as Boudeville, Hirschman, Myrdal, Isard, Friedmann, Korner, Siebert, Hansen, etc., attempted to introduce the loca tional factors as well as non-economic factors into the growth pole theory. The theories of development axes were also discussed in this chapter. We discussed Pottier's theory of communication axes or development axes and Friedman's theory of development axes or development 213 corridors. We found that a number of developing countries jattempt to forulate the development zone along the major transport routes (development axes). We also attempted to examine the combined theory of growth poles and development axes. But we found that such a theory does not yet exist. i ! Finally we investigated the relationships between the growth pole theory and the other regional growth theories. In Chapter IV, we attempted a detailed analysis of | growth poles. We first analyzed Perroux's original growth I pole theory and then a detailed analysis of growth pole theory. As Perroux's own growth pole is defined in terms of purely economic space and region, concepts of space, region, poles and centers were examined. The three attri butes of Perroux's growth poles, that is, large scale, I strong interconnections or linkages, and powerful domin ance effects have been discussed in detail. Not only have we discussed Perroux's own explanation of the attributes of growth poles but also we have extended his original three attributes. In discussing and analyzing his theory we found that not only Perroux's three attributes but also other factors of forces such as accessibility variable, communication and information aspects, location factors, innovation aspects, urban structures are equally important. Thus, our discussion covered these topics as well. Agglomeration economies and factors causing agglomeration economies such as scale economies, transfer economies, etc., 214 have been examined in this chapter. Final topic of chapter IC is center-periphery model, Friedmann's center- periphery model, Hirschman's and Myrdal's center-periphery relationships have been discussed in this chapter. We found that the center-periphery relationships hold for spatial systems of any level, that is, local level, sub- region, region, nation, systems of nations, and lastly world level. Finally we examined briefly the relationships between the existing theories of urban and regiopal growth, * \ I agglomeration forces and the growth pole theory. And we | j found that all these factors are closely related to each other. In Chapter V, we attempted to formulate our own models for our purpose. Theoretical models presented in this chapter are one growth pole model, one development axis model with one growth pole, one development axis model with two growth poles, and one general model, and a model of Seoul-Pusan development axis. From the discussion 1 of growth pole model we found that a combination of a regional growth model, which explains an economic expan sion, and a growth pole model, which explains the economic flows between the poles and the movements of boundaries of the pole, is necessary. Our models of development axis have been developed with special reference to Korean growth poles and development axis. We found that the Korean growth poles and development axes fit our theoreti- 215 cal models. Our general model developed in this chapter i started from a simple economic activity which consists of |a production activity and a transportation activity. The simple activity is an activity of producing an agricultural crop and of transporting it to the market in the growth pole. We found that this model can also be applicable to other non-agricultural activities. The model of Seoul- Pusan development axis was derived from our general model ;and was shown as linear and non-linear regression models i to be empirically tested in Chapter VI. i In Chapter VI, we attempted to test our theoretical |models discussed in Chapter V for the analysis of Korean I ;growth poles and development axes. Also we discussed and ! I |analyzed the spatial system of Korean regional plan based on the polarized region system. Theoretical discussion of Seoul growth pole and Pusan growth pole and the potential Seoul-Pusan development axis also have been discussed. ! Thus, in this chapter not only the empirical tests of the model, but also the discussion of spatial aspects of |Korean economic growth were presented. As mentioned already, the Korean economy is now facing a critical prob lem of spatial economic planning issue at the present stage of national development. Thus, our discussion in this chapter may provide a policy proposal and also may i indicate the direction in which further national regional economic plan for Korea could be oriented. 216 In Chapter VII we attempted to examine the I |empirical studies by various economists of different countries. The purpose of our discussion in this chapter is, as stated already, to supplement our empirical studies of Korean growth poles and development axes, and also to i investigate the appropriateness of growth pole idea as a policy took by discussing the growth pole policies of different countries. The results of our study in this chapter show that five different cases of growth pole ■ strategy are possible, and that the growth pole strategy 'can be applicable to both the developed and the developing :countries as well as to the leading regions and the lagging j regions of the same country. We found that a strategy of |combined growth poles and development axes might be much i stronger than a strategy of adopting single strategy of using either growth poles or development axes alone. So far we have reviewed and summarized our studies I ipresented in the preceding chapters. In the next section we will attempt to review and summarize our conclusions I followed from the treatment of each topic as presented in the preceding chapters. Conclusions and Comments (1) From our study in Chapter I we can state, although disputed by many economists, that the trend of economic growth of growth pole follows, if not accompanied 217 by a change in the spatial structure of the system, roughly the logistic trend which has an upper limit deter mined and restrained by the growth capacity of the exist ing spatial system of the pole, and the exponential trend, if accompanied by a change in the spatial structure of the system, that is, by an expansion of the growth capacity of the existing spatial system of the pole. We defined economic growth as an expansion of the system in economic | dimension without a change in the spatial structure of the ! system and economic development as an expansion of the i j system in economic dimension with a change in the spatial i structure of the system. Thus when we use the term "growth" instead of the term "development," that is, "growth" pole instead of "development" pole, we focus only on the economic expansion of the pole. And when we discuss "development" pole we emphasize not only the economic expansion of the pole but also the structural change in the spatial system of the pole. | | (2) As discussed above the distinction between the |"growth" pole and the "development" pole simplifies the j arguments involved in the applicability of a growth pole. As explained above, the "growth" pole analysis assumes the given structure of the system and concerns only with an expansion of the economic dimension, and the "development" pole concerns both an economic expansion and the structural change of the system. Thus we can state that when the pole 218 involves only an economic expansion it implies a growth i Ipole, and that when the pole involves an economic expansion j as well as the change in the spatial structure it is a "development" pole. Thus the "development" pole is related to the development of lagging regions or to that of developing countries which requires an economic growth as well as a change in the structure whereas the "growth" pole is associated with the growth of existing growth |poles or with the growth of leading regions of the devel oping countries where the growth capacity of the system is ! |assumed to be enough and allows further economic expansion. So far we assumed that the growth capacity of the spatial system exists in the developed countries and in the leading |regions and needs not to be changed and expanded. However, !in the long-run, the structure of leading regions as well as of developed countries need to be changed. This is because the growth capacity of existing spatial system is I not infinitive. Thus the "growth" pole analysis is suit able for the short-run analysis and the "development" pole |for the long-run analysis. Also we can state the "planned growth pole" is likely to be a "development pole and the j natural growth pole" is perhaps a "growth" pole in this sense. (3) From our discussion of balanced growth and |unbalanced growth in Chapter I we found that the process { !of spatial economic growth is inherently uneven and 219 unbalanced, and that the optimal balanced growth path j represented by von Newmann ray may be applicable to the sectors but not to the regions. Also locational factors and geographical characteristics of the region may not allow all regions to grow simultaneously. Thus the growth pole policy which is an advance over Hirschmann's policy of "optimum imbalance" and Rodwin's policy of "concentrated decentralization" may be the best policy of regional development. (4) Our examination of the existing theories of urban economic growth and regional economic growth in Chapter III shows that these theories emphasize only par ticular aspects of the process of spatial economic growth, such as, the role of urban economic base or export-base, the optimum city size, information transferral, growth industry, development stage, a ranking of central place, etc. Thus, these theories explain only parts of the |growth process and none of these can be considered as a !complete theory of regional economic growth. (5) From the discussion of Perroux's original theory as well as of the extensions of his theory, we can state that most of the extensions are the extensions of only particular aspects of original theory and the intro duction of only particular factors into growth pole theory. Thus, most of the extensions are partial and none of them can be considered either general or complete theory. We 220 found that most successful extensions are Isard's indus trial complex analysis and the Friedmann’s general theory of polarized development. From the study of development axis we found that the development axis theory is the relatively less developed theory than the theory of growth [pole. However, the idea of development axis has been adopted by various countries as a strategy of economic development. (6) We found from the study in Chapter III that : an implantation of a single, big industry does not con- ! stitute the growth pole, and that the mere construction f I j of transportation routes cannot become the development | axis. Other factors of growth poles and development axes | must also be induced or develop*ed along with the implanta- I tion of a big industry or the construction of a transporta- j tion route. These cases are, as discussed already, repre- i ! sented by the case of Lacq region, Mezzogiorno, etc. ! (8) The growth pole theory which explains the ; spatially as well as economically polarized growth and the development axis theory which explains the spatially linear economic growth appear to be two different theories instead of being the same theory. The theory combining both theories of growth pole and development axis seems to be important but has not been developed and formulated. (9) From relating the growth pole theory to other existing theories of regional economic growth, we found 221 that the growth pole theory explains almost all the aspects of the process of spatial economic growth and that the |growth pole theory might comprise nearly all the existing itheories of urban and regional economic growth. i (10) From the analysis of concepts of space, region, pole, center, and other factors affecting the growth pole, j we defined growth pole as a growing area with a set of highly interdependent expanding firms or industries and having a high potential of further growth. Important fac- itors to be considered in the growth pole theory appear to ibe (1) concepts of space, (2 ) concepts of poles, (3) i scale economies in the private as well as public sector, | (4) externalities, (5) linkage effects, (6) concepts of dominance, (7 ) propulsive industries, (8) polarization i effects, (9) accessibility and transfer economies, (1 1) uncertainty and decision making aspects, (1 2) market struc ture and urban size, (1 3) innovation diffusion aspects, (14) location factors, (15) and other agglomeration and t deglomeration factors. | (11) From the analysis of growth poles in Chapter IV, we can state that a growth pole is likely to be a high ranking central place, to possess propulsive industries as urban economic base or as export base, to be greater than the minimum size or the threshold size of the city or region and less than the maximum size to produce more secondary and tertiary products than the primary products. 222 JIt also is likely to create more agglomeration economies |than the deglomeration economies, to provide a high degree of information transferal, to possess favorable locational factors, a large market, and efficient public sectors, etc. And it grows rapidly if the country where it belongs to grows rapidly. (12) Our general model which was formulated in terms of accessibility variable and which can be considered as a combination of growth pole idea and the development axis idea may be applicable to the agricultural as well as to the non-agricultural activities which consists of the production activity and the transportation activity, that is, the activity which produces agricultural or non- agricultural products in the development zone along the development axis and transport them to the market along the transport route (development axis). Thus we can state, under several assumptions such as constant market prices iand production costs, etc., that the level of outputs is a i | function of accessibility variable which is defined in j terms of economic distance. Also we can state that our development axis model with one growth pole or with two growth poles can be applied to the analysis of growth poles with more than two development axes or to the analysis of development axis with more than two growth poles, etc. Also our growth pole model, formulated to explain the Korean growth poles of Seoul and Pusan whose locations are 223 |near coastal sea or the truce line, can also be applied to |the analysis of growth poles which are not located close j to sea coast or the truce line. (13) From the empirical studies of Korean growth poles and development axis presented in Chapter VI, we can state that both Seoul growth pole and Pusan growth pole satisfy the conditions of growth poles and possess almost all the attributes of growth poles. The potential Seoul- Pusan development axis along the Seoul-Pusan super highway is expected to profoundly transform the Korean economy and | can be considered as Korean economic development axis. We |can also state that the proposed Korean national regional plan is basically the polarized growth plan and that the |direction of the future national regional plan could be oriented toward the proposed system of regions and models presented in Chapter VI. (14) From the empirical tests of the theoretical models we found that the highway transportation has the | comparative advantage and Seoul-Pusan development axis can be justified on the basis of economic reasons alone. We also found from the regression analysis that the level of output of primary industries such as rice, food crops, etc., is a function of accessibility variable. Thus we can state that our general model holds. (15) From our discussion of growth pole policies in Chapter VII we found that the growth pole idea has been 224 adopted by many countries for different purposes which can | be classified into five categories. (1) A strategy of I developing a new region like the Guayana program of i Venezuela. (2) A strategy of developing a problem area j such as U.S. policy of developing the Appalachian region, ! Italy's policy of developing the Mezzogiorno, etc. (3) A strategy of decongesting overconcentrated growth poles such as the French policy of developing equilibrium poles to decongest the Parisian Pole and the British policy of decongesting the Greater London area, etc. (4) A strategy i of developing existing growth poles such as the German policy of developing central industrial areas, etc. (5) A strategy of developing the whole economy or the whole country like the Korean policy of developing poles and axes as discussed in Chapter VT. (16) In developing the whole country or the whole |economy, Korea may have several alternatives other than the i !proposed growth pole policy suggested in this thesis. Other possible alternatives may be (1 ) to develop megalopolis |along the development axis so that all economic activities can be concentrated in this megalopolis, or (2) to develop whole country as a giant city or one huge metropolitan area by extensively developing transportation networks, |or (3) to develop the country based on the existing bi polar regional system, or (4) to develop tripolar regional I |system, which include one more growth pole in the south- 225 western region of the country. (17) From the empirical study of growth poles and |development axes in Chapter VII we found that, in general, the growth poles strategy must be combined with the devel opment axis strategy whenever possible for maximum develop ment to be achieved. In conclusion we can state the growth pole theory and the development axis theory appear to be the most prospective theories of spatial economic growth which can |be applicable to both developed countries and developing I i countries as well as to both developed regions and the I |lagging regions of the same country. i Suggestions for Further Studies i I As stated above the idea and the theory of growth 1 poles and development axes have a history of only slightly over two decades since Perroux (324, 3 2 6) introduced the "pole de croissance" idea into economic literature in 19^9• Both theories of growth poles and development axes seem to be most prospective theories of spatial or regional economic growth but are presently still at the developing stage. As indicated already, a combined theory of growth pole and development axis does not exist and will have to be developed. 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A Theory Of Regional Economic Growth: Growth Poles And Development Axes
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