We observe, more often than not, large differences between the incomes of different regions within the same country. The same is observed even between towns within a state, districts within a city, areas within district and so on and so forth. While reasons for such differences are more obvious at national and sub national levels, they become more complex as and when we get to smaller and smaller zones. This has caught the attention of many in the past and has generated enormous amounts of literature. Most theories have sought the help of ‘economic geography’ and its diversity to explain such incomes differences. We shall try and look at some of these explanations in the context of regional development.
An attempt to explain regional differences takes us back to the early 1900’s when sub-national and regional issues began to assume greater importance . Historically, the state had been instrumental in shaping up the geography of regions in the developing world. The era of the late 1900’s saw a paradigm shift when the state settled down to play less of an interventionist role, with more freedom handed over to the free market forces in the economy. Chakravorty (2000) employs this paradigm shift in explaining the regional development theory in the pre-reform and the post-reform era.
1) Cumulative Causation by Myrdal (1957) and Kaldor (1960)
The concept of cumulative causation simply means whatever happens in the past, continues into the future. In other words, a few historical events set a momentum for a certain phenomenon to continue into the future. For instance, the location of a new factory in the region will attract more investment and more employment in that factory and in ancillary and service industries in ...
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...nomic Geography and Urban Studies, Temple University, Philadelphia, USA
Datt, Gaurav and Ravallion, Martin (2002), “Is India’s Economic Growth Leaving the Poor Behind?”, The Journal of Economic Perspectives, Vl. 16, No. 3 (Summer, 2002), pp. 89-108
Krugman. Paul (1991), “Increasing Returns and Economic Geography”, The Journal of Political Economy, Vol. 99, No. 3. (Jun., 1991), pp. 483-499.
Krugman, Paul (1994), “Complex Landscapes in Economic Geography”, The American Economic Review, Vol. 84, No. 2, Papers and Proceedings of the Hundred and Sixth Annual Meeting of the American Economic Association (May, 1994), pp. 412-416
Srinivas MN (1966), “Social Change in Modern India”, Economic and Political Weekly, Vol 1, No. 3 (Sep. 3, 1966), pp. 119-120
Taylor, Cook et al. (2003), “Financial Services Clustering and Its Significance for London”, Corporation of London
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