View
219
Download
0
Tags:
Embed Size (px)
Citation preview
Chapter 3 Global Economic Development
• Introduction– Nature of Technology, Global Distribution of
Technology, Elements in Economic Development
• World Levels of Development– Regional Growth
• Problems of Development– Regional Economic Change, Growth Pole
Theory, Circular and Cumulative Causation, The Bell Shaped Development Model
• Concluding Thoughts and Summary
Introduction• The Nature of Technology
“technology … refers to the application of scientific knowledge and methods to economic activity, resulting in changes in productivity” p. 35
• The basic problem in engineering economics and management science - defining products/services, and optimal combinations of factor inputs to produce them
• Component technologies: (1) transport & communications, (2) manufacturing, (3) agriculture, (4) urban-service
• Energy consumption as an indicator of the stock of technology (Table 3.1); vehicles per capita (Figure 3.2)
Elements in Economic Development
Economic Development
Population Characteristics Cultural Attributes
TechnologyEnergy andResource Base
World Levels of Development
• Figure 3.4
• Regional Growth: Rostow’s stages of growth model (1) traditional societies,
(2) preconditions for takeoff, (3) takeoff,
(4) drive to maturity, (5) high mass consumption
• The process of diffusion of development
• ? Inevitability of Rostow’s sequence?
Changing Composition of Employment in the U.S.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1899
1909
1919
1929
1939
1947
1958
1967
1972
1977
1982
1987
1989
1995
2001
Services
Manufacturing
Construction
Mining
Farm
Development of the U.S. Service Sector
0%10%20%
30%40%50%60%70%
80%90%
100%
1940 1970 2002
State & Local Government
Federal Government
Services
Finance, Insurance, RealEstate
Retail
W holesale
Transportation,Communications & Utilities
Decomposition of Services
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1940 1970 2002
Consumer Services
Health Services
Producer Services
Development: The Circular Model of Capital Flow
Stock of ProductiveCapacity
IndustrialOutput
BusinessIncome(Value Added)
Payments toHouseholds
Final ConsumerDemand
“Savings”
Investment
“Savings” - retained earnings, household savings, institutionalinvestors, international capital sources
•Interest rates•Tax policy & public investment
Regional Economic Change: Initial Triggers to Development
Vance’s model
- contrast of “old model” of endogenic
development (internal growth theory)
- versus “new model” of exogenic growth
Local examples: fur trade
Hudson’s Bay Co trading posts
Oregon Trail settlers
Puget Sound timber trade
Jacksonville OR gold mining
Internal Development after Initial Triggers to Development
Retail and other service functions
? Location relative to export activity?
Crossing thresholds with growth,
substituting local production
for imports, exploiting scale economies
Static versus dynamic relations
Impact of Scale Economies on Market Division
A B
distance
a a
I II
tPP
Market Division Market Division
I II
P
P
a a
tt
Process of Regional Specialization
0
2
4
6
8
10
12
14
16
18
Bread Lumber Iron Cameras
0
2
4
6
8
10
12
14
16
18
Bread Lumber Iron Cameras
Region ARegion B
Initial Condition: No Interregional TradeLocal Production Equals Location Consumption
Process of Regional Specialization, Continued
0
5
10
15
20
25
30
Bread Lumber Iron Cameras
Imports from B
ExportsTo B
0
5
10
15
20
25
30
35
Bread Lumber Iron Cameras
Region A Region B
Exports to A
Imports from A
Process of Regional Specialization, Continued
0
5
10
15
20
25
30
35
40
45
Bread Lumber Iron Cameras
0
10
20
30
40
50
60
Bread Lumber Iron Cameras
Interregional Exports
Production forLocal Use
Production forLocal Use
Interregional Imports
Perroux’s Growth Pole Model“Growth does not appear everywhere at the same time; it becomes manifest at points or poles of growth, with variable intensity; it spreads through different channels with variable terminal effects on the whole economy.”
Growth Poles versus Growth Centers
Propulsive Industries & Lead Firms
- large size; fast growth; strong linkages; innovative
? Geographic clustering of pole components?
? Use of I/o data to identify poles??
Uneven Development: Spatial Outcomes at varying scales
• Role of lead industries, growth poles
• Regional economic base as a platform for development over time
• The outcome of Perroux’s arguments: uneven development, where there is:
(1) a dominant center or core, and
(2) a subdominant periphery
that materializes (a) locally; (b) nationally, (c) globally
Core-Periphery: Shifting Scales
Global: Nation State Level: Developed-Developing
Urban Perspective: Global Cities (New York, London, Tokyo) - peripheral cities - e.g. Seattle
National: The Industrial NE Vs. the agriculture &
resource dependent South and West
Regional: Seattle & Portland as central-place core cities, rural peripheries
Local: Seattle CBD Vs. lower order urban centers
The classic core-periphery model: Myrdal & Friedmann
Center Periphery
ScarceLabor
AbundantCapital
AbundantLabor
ScarceCapital
Supply of materials and products
Demands from center for goods/servicesyields payments to periphery
Shortage of labor in center createsstimulus for labor migration from periphery
Supply of labor from periphery will create laborshortage in periphery and raise wages and incomes
AdequateCapital
AdequateLabor
Capital flows to periphery
Core-periphery Model: Spread Effects
Demands by Center for goods & services; labor movements; capital flows to meet investment needs: ? “Trickle-Down” leading to equilibrium?
BUT:
(1) Distance attenuating effects - related to transportation & communications
(2) Hierarchical impacts with stronger access to resources in higher order places
Core-Periphery Model: Backwash/ Polarizing Effects Overtake Spread Effects
1. Goods/Service purchase in periphery
(a) inelastic demand for peripheral goods
(historically owned by core industrialists)
(b) Offset by peripheral demand for goods and services produced in the core
2. Migration: historically selective
3. Capital: net flows often favor the core
Result: Convergence, Divergence, Persistent Imbalance
Backwash Circuits
Capital attracted to center
Capital Investment
Young workersmigrate to center
Migration and Employment
Lack ofinvestment in periphery
Retarded growth inperiphery
WiderGapC-P
Aging labor force
in periphery
Decreasedattraction for new activity
Wider GapC-P
Services and InfrastructureReduced Investment
and new jobsin periphery
Smaller localmarket, pur-
chasing powerDecline inlocal services
Widened gapbetween C-P
Pred’s Model of Circular and Cumulative Growth
Entry of new industry or expansion
of existing industryInitial
MultiplierEffect
Enhanced chance of invention
and innovation
Attraction oflinked industries:forward linkages
backward linkages
Invention orInnovation
Secondarymultiplier effects
New local orregional threshold
NewConstructionActivity
ExpandedTertiarySector
ExpandedPublicUtilities