This paper uses spatial economic data from four small English towns to measure the strength of economic integration between town
and hinterland and to estimate the magnitude of town–hinterland spill-over effects. Following estimation of local integration indicators
and inter-locale flows, sub-regional social accounting matrices (SAMs) are developed to estimate the strength of local employment and
output multipliers for various economic sectors. The potential value of a town as a ‘sub-pole’ in local economic development is shown to
be dependent on structural differences in the local economy, such as the particular mix of firms within towns. Although the multipliers
are generally small, indicating a low level of local linkages, some sectors, particularly financial services and banking, show consistently
higher multipliers for both output and employment.
It has long been assumed that small towns are important
to rural economies and societies in Europe. Their functions,
both for inhabitants and the surrounding countryside
have, however, evolved over time. While changes in
the agri-food sector have tended to undermine their traditional
economic role in relation to farming, technological
developments have combined with changes in the relative
ease and costs of travel to encourage a diverse range of
firms and individuals to re-locate to these rural settlements
(Marsden et al., 1993; Errington, 2000). Although there is
now more functional diversity in small towns, reflecting
greater heterogeneity of rural economies as a whole, the
direction of this evolution is not identical in all cases.
Agricultural restructuring, the effects of common agricultural
policy (CAP) reform and changing patterns of
agricultural trade are affecting the entire EU (European
Commission, 2003). Two trends within the evolving CAP
have emphasised the potential role small towns may play
in creating more diverse rural economies. First, a need
for alternative off-farm employment for farmers as subsidies
have been reduced and recognition that this is likely
to be in small towns. Second, a need to improve the competitiveness
of rural areas (CEC, 1997), and, in England,
‘thriving’ market towns are considered able to contribute
significantly to prosperity in the rural areas around them
(Defra, 2004). Indeed, the interest in market towns by policy makers is long-standing, with these settlements considered
‘a focus for growth in areas which need regeneration
and, more generally, as service centres and hubs for
surrounding hinterland, exploiting their potential as attractive
places to live, work and spend leisure time’ (DETR,
2000).
Errington and Courtney (2000) argued that the interest
of English policy makers in small towns (Cabinet Office,
1999, pp. 116–119; DETR, 2000, pp. 73–88) stems from
more than the problems they face such as retail closures
and that small towns may be attractive as a potential focus
for initiatives to create more diversified rural economies.
There are three reasons for this. First, they may enable beneficial
economic development while conserving the environmental
assets of open countryside, confining new
development to existing urban areas and reducing the need
for commuting. Second, they may already contain the concentrations
of community and institutional capacity necessary
to manage regional, national or European initiatives
in a reliable and accountable manner. Third, concentrating
rural development initiatives in small towns may take
advantage of economies of agglomeration while allowing
benefits to spread out to the surrounding countryside. Such
thinking echoes the European Commission’s earlier analysis
of rural issues. Referring to rural development as part of
regional policy, they concluded that, rather than ‘concentrate
development effort on a few major central poles of
economic activity . . . a larger number of intermediate centres
– ‘sub-poles’ – should be assisted in their development,
scattered over a wide area’ (European Commission, 1988,
p. 10).
The notion that market towns could act as ‘hubs’ for the
surrounding rural hinterland and ‘essential drivers of economic
prosperity’ was emphasised by DETR (2000) in
the Rural White Paper. This recognition subsequently led
to the creation of the Market Towns Initiative in England
with Government commitment to contribute £37 million
over 3 years to market town regeneration. This was a bottom-
up partnership approach, targeting towns on their
potential to act as a focus for growth and service provision
and the ability of local partners to provide matched funding.
More than 235 towns have taken part since the programme’s
inception, undergoing first a ‘health check’
designed to highlight local strengths and weaknesses, and
then the development of a Town Action Plan to address
specific issues.
This initiative continues under the revised name of the
Market and Coastal Towns Initiative, with funds allocated
to the Countryside Agency (now part of Natural England)
and delivered through the Regional Development Agencies.
However, it is now seen as part of a more complex,
integrated approach to economic development. This complexity
in part reflects the move towards polycentricity in
European spatial development, within which the structure
of intra-regional flows and rural–urban linkages are of
increasing relevance. At the regional and local scale, small
and medium-sized towns (and the enforcement of networking
and cooperation between them) are seen as engines for
economic development in rural regions (Shucksmith et al.,
2005), again emphasising the role of these settlements as
potential growth poles in wider rural economies.
For towns to act as sub-poles in rural development,
one must ask how strong the links between such towns
and their hinterlands are, and how these have been
affected by recent socio-economic changes. In addition,
have these links been felt uniformly over different types
of town? Such questions may be overlooked by policy
makers attracted by the potential role of small towns in
fostering diverse and prosperous rural economies. With
continuing globalisation, increased personal mobility
and the advent of new information and communication
technologies, it cannot be assumed that benefits of economic
development initiatives in small towns will necessarily
flow out into the surrounding countryside.
Indeed, if town–hinterland links prove weak, then expansion
of economic activity within a town might simply lead
to an increase in imports and commuter flows from other
regions or neighbouring cities with relatively few benefits
to the surrounding rural area.
If the prime concern is rural development, the spatial
distribution of income and employment multipliers is just
as important as their size. It is, therefore, necessary to
understand and evaluate the nature of contemporary economic
linkages between small towns and their surrounding
areas before assessing their potential role as ‘growth poles’
in rural development. Following on, there are two research
questions addressed here. First, do small and medium-sized
towns act as ‘sub-poles’ in rural economies? Second, which
economic sectors help facilitate local economic growth in,
and around, small towns?
Here, we present findings from a study which sought to
answer these questions empirically using a tested methodology
to measure the strength of local economic linkages and
identify the geographical and structural factors that might
influence the validity of a small town growth pole strategy.
Section 2 sets out the theoretical framework, embedded in
growth pole theory, while Section 3 outlines our methodology
for studying the economic role of small towns and
introduces the concept of a town’s ‘economic footprint’.
Following an overview of spatial economic data obtained
through the primary surveys, SAMs illustrate the nature
and extent of town–hinterland spill-overs in four case study
areas. Finally, we review our findings in the light of growth
pole theory and evolving rural policy, draw some conclusions
and suggest key directions for future research.
With respect to the flows of goods and services between
town and hinterland, and the spill-overs that they generate,
small and medium-sized towns do not appear to act as
‘sub-poles’ within English rural economies. These towns
do, however, provide an important employment function
to local residents, although our findings indicate that jobs
for local residents tend to be relatively poorly paid compared
to those for in-commuters and those commuting
out to larger centres. More positively, there are certain sectors
that exhibit strong levels of local economic integration,
which has potentially important implications for policies
aimed at fostering self-containment and local economic
growth. In particular, Banking and financial services,
chemicals, plastics, rubber and glass and machinery and
computing. This is interesting given the potential of this
type of industry to provide quality well-paid employment.
With its relatively large multipliers, agriculture does appear
to retain links with small and medium-sized towns and
much of its impact continues to be felt in the town itself.
Thus, agricultural policy may still have an important
impact on rural communities.
This paper has concentrated on the spatial orientation
and structural effects of production linkages, and we can
identify two main areas that would benefit from further
research. First, given the potential, and limitations, of the
employment function of small towns, understanding the
dynamics of these local labour markets may, in turn, help
secure their role in rural economies, and help improve their
competitiveness in the wider arena. Second, the paper has
not considered any cultural effects associated with the
observed patterns of economic activity. For example, the
personal characteristics of local business people and residents,
and their desire to buy and sell locally – either to
support the local economy or to exploit or reinforce social
networks (see, for example, Granovetter, 1985; Henry and
Pinch, 2000; Murdoch, 2000) – require further exploration
in this context. While we have examined the economic linkages
in, and around, case study towns, and have thus contributed
to the debate on the way these towns are currently
functioning with regard to their hinterlands, there would be
further benefits from research into the factors which influence
both the nature and strength of economic linkages,
and the future development of small towns.
