Current chic or museum exhibit? Growth poles and industrial districts in development policy

Abstract

In contemporary development policy, we witness a growing interest in instruments which may transcend neo-liberalism by combining the principles of competitiveness with social justice. Policies encouraging territorially balanced, sustainable development have traditionally been based on a certain amount of resource concentration, an emphasis on specific industries or growth centres. However, globalization processes have questioned the validity of previously successful development models. The rescaling of territorial competition, as well as transnational corporations whose competitive strategies can undertake worldwide cost differentiation, can exert tremendous pressure even on previously “developed”, successful national and regional economies. Adaptation to this new reality must either involve the partial abandonment of the benefits of the welfare state and the acceptance of “the disappearing middle” or industrial upgrading towards higher value-added, quality-based production which can remain competitive at a higher level of social cohesion.

This paper inspects the viability of two common spatial development concepts, growth poles and industrial districts under the competitive pressures of our time. Growth poles, originally understood as sectoral and cross-sectoral policies, have become instruments of spatial development policy to change the spatial structure of a region or nation by creating critical mass outside the most developed urban centres. Among the benefits of the policy regional multiplier and spillover effects have been identified. Growth pole strategies can remain viable under globalization by focusing on modern industries with outstanding development potential, undertaking “concentrated decentralization” in selected centres.

Industrial districts (a concept closely linked to clusters) represent a potential way to understand industrial spatial networks, and may be seen as the finer texture of growth poles. The classical (Marshallian) industrial district concept, built on local externalities and agglomeration processes, has been broadened both to identify new district types and to re-conceptualise space from atomistic competition to an “organised space” of mutual dependencies. New district theories integrating ideas from knowledge-based growth and innovation networks have been developed. However, the contemporary understanding of districts should also reflect their restructuring or dissolution under competitive pressures, both from external and internal competitors. In development policy, districts are best viewed as dynamic entities serving as foci (or nexuses) for constant industrial restructuring and institutional development, whose lifecycles can encourage the continuous adaptation of local and regional production systems.

Altogether, the concepts of concentrated development have stayed relevant under new competitive circumstances but they must undergo adaptation to be successfully implemented in development policy. This should involve both an understanding of the changes brought about by global competition, and often the different economic and institutional milieus of peripheral regions. Policies, tailored for specific spatial structures, should equally consider production systems, infrastructure and institutions. Growth poles and industrial districts in Hungary should be understood to be in their germinal or early development stages. Therefore, the realistic goal of policy intervention should be the development of production networks in organised space and the gradual strengthening of social capital. These interventions should contribute to industrial upgrading on the basis of quality-based competitiveness factors in a sustainable, resilient way.