Development poles – What is it, definition and concept

The development poles are small geographical areas in which the location of industrial activities is promoted to stimulate the development of the region. The location of industrial activities gives strength and growth to economic activity.

In other words, the development poles are specific areas where industrial production is promoted.

Generally, these poles seek to implement within a backward or underdeveloped region. The decision may be made by a public or private sector authority.

This industrial production unit is capable of producing for the domestic market. But, also, for foreign markets around where it is located. Similarly, this production unit internally demands factors of production, such as inputs and labor. For that reason, it resorts to the internal demand for factors, which benefits the inhabitants of the region.

Therefore, this unit of production generates development. This, in the region where it is located and also in those areas around it.

Development Pole 1
What is a development pole?

The theory of poles of development

The theory of development poles was initially proposed by the French economist Francois Perroux in 1955. Later, between 1961 and 1968, Jacques Boudeville adapted it as the theory of economic spaces.

The main idea of ​​this theory is that if a new industry is located in a region, this industry generates positive and negative effects. The effects occur both in the region where it is located and in places that are outside the limits of the region.

Likewise, by making a cost-benefit relationship between the positive and negative effects, the final result is positive. For that reason, the location of the new production unit is established as a development pole. Although, it is worth clarifying, for development to be generated, the chosen region must be homogeneous in terms of its potential and resources.

Development Pole 2
development poles
Effects produced by a development pole

Effects produced by a development pole

Among the main effects produced by a development pole we find:

1. The poles of development and production

First, a production platform is established that helps produce goods for other markets. That is, export items are produced. The new industry achieves the transformation of local resources into goods with added value that are used to meet internal and external demand.

2. In the labor market

Second, the new industries are labor-intensive firms. For this reason, they generate employment opportunities for workers in the region. The greater demand for labor favors the increase in wages (The greater the demand for the product, which is the labor force, the higher the price, which is the salary).

3. Polarization and development

Third, it causes polarization and development effects in the region where it is located. Among these effects are:

  • Direct and indirect effects on domestic demand.
  • Acceleration of the growth of the economy due to the high rates of investment and reinvestment that are directed to the company’s own activity and towards complementary activities.
  • Generation of infrastructure and social capital.
  • The innovation applied by the new production unit favors development.

What is the objective of creating a development pole?

The main objective of creating a development pole is to achieve economic growth in a given region. But this, it is worth clarifying, does not solve all development problems, it only provides a relative and not a complete solution.

What is the importance of a development pole?

Above all, the importance of a development pole lies in the fact that the investment made in the region considered the central axis generates benefits in peripheral regions, since companies generate investments and innovation benefits. The new investments favor the increase in production, the level of income, the generation of jobs, the increase in the use of technology and the general improvement of the well-being of the population.

What are development pole policies?

A policy focused on development poles aims to identify, promote, organize and evaluate geographic areas that can function as development poles. These poles must have the most appropriate conditions to locate production axes that stimulate the economy of the region and adjacent areas.

This type of policy promotes the economic development of a region through the location of industrial production units in a specific geographical point. This, leaving the isolation and separation of economic activities, through the integration generated by the development poles.

These development poles have an impact on the investment process, employment and living conditions of the population.

An example could be the case of a free zone, which refers to a physical space, designed and planned for the production and marketing of export products. They are free zones because they are subject to a special customs regime and are exempt from paying income tax and VAT. This, with the purpose of attracting investments that generate employment, production and development in general.

In conclusion, we can say that the development poles expect to achieve economic growth in a region, since the investment made in the region considered the central axis generates benefits in nearby regions. These development poles have an impact on the investment process, employment and living conditions of the population.

See also  Inflation with no prospect of improvement: what you can do now

Leave a Comment