Firm Location Decisions and Impact on Local Economies

The growth centres programme was announced by the government in 1988 to promote the industrialisation of backward areas. The growth centres provide basic industrial infrastructure like power, water, telecom and banking to enable the states to attract industries. This paper attempts to assess qualitatively the performance of the growth centres on the basis of primary data collected from field visits to several centres, discussion with state governments and visits to several firms located in the growth centres. It is found that without the infrastructure provided by the growth centre, many firms (even some representing local entrepreneurship) would not have located where they are. The firms have a favourable impact on the local labour markets. A few of the firms export and some contribute socially to the local communities. The paper concludes with recommendations for policy at the firm-level and the growth centre-level.