The document discusses Gunnar Myrdal's theory of cumulative causation, which proposes that economic development leads to uneven growth between developed "core" regions and less developed "periphery" regions. It describes the concepts of the "backwash effect," where core growth drains resources from the periphery, and the "spread effect," where core development begins to benefit the periphery. As an example, it outlines how Japanese factories began relocating to Thailand in the 1990s due to rising costs, creating jobs and technology transfers in a demonstration of the spread effect. The theory of cumulative causation suggests that government intervention is needed to promote the spread effect and reduce inequality between regions.
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Regional Planning Theories
1. Regional & Metropolitan Planning
Dr. Mohammed Firoz . C
Architect and Urbanist
Department of Architecture and Planning
National Institute of Technology Calicut, India
4. • Theory of Cumulative causation, proposed by Professor Gunnar Myrdal who has
received more than thirty awards in his lifetime including the Nobel Prize in
1974 for his ‘pioneering work in the ‘theory of money and economic fluctuations
and penetrating analysis’ of the interdependence of economic, social and
institutional phenomena.
• Prof. Gunnar Myrdal maintains that economic development results in a circular
causation process leading to rapid development of developed countries while
the weaker countries tend to remain behind and poor
• The concept of Core and Periphery- Development and underdevelopment
Cumulative causation
Region A
Adv:
Region B
Dis Adv:
Give and Take
5. Cumulative causation
• Developed Countries /Region are known as the core, and Low Developed
Countries/Region are referred to as the periphery
Core countries/Regions
Periphery
countries/Regions
6. Cumulative causation
• Developed Countries /Region develop at the cost of Low Developed
Countries/Region–Case example of Angola and Portugal- In return Angola also
benefits- Concept of Colonialisation in India before 1947 ( A simplistic example)
7. Cumulative causation
Un even development-Concept of Backwash effect and Spread effect
What is the backwash effect?
• Pulling off all dynamic elements to
the growth center from the
surrounding location is called the
backwash effect.
• Core grows –Attracts
labour and brain drain
from the periphery
• Profit controlled by core-
very little reaches the
Periphery
• Flow of raw materials and
labour leaves the
periphery at
disadvantages
8. What is the spread effect?
During the time, the growth center or the big
cities/core regions began to decrease due to
pollution and congestion or other reasons. It
leads to pulling out the resources from big
cities/core and there is a spread of
development of the periphery region around
this growth center. This effect is called the
spread effect.
Cumulative causation
• Spread of wealth and
Knowledge from core
to periphery
• Benefits of core starts
to redistribute amongst
the periphery
• Narrows disparities.
• Called as Centrifugal
growth
9. Case study of Spread effect- Thailand –Japan Car industry
Cumulative causation
• In 1990’s due to
extreme cost of car
manufacture in
Japan, many
industries started to
look for cheap labor
and cost effective
destinations
• Factories started to
relocate to Thailand
• Jobs and investment
flow for Thailand
• Transfer of
technologies to
Thailand Illustration of Spread effect-Centrifugal Growth
• Concept of Make in India
• Industrial locations of IT/ITES/ Manufacturing hubs of Automobiles / smartphone in India
and China –Gujarat-TN-Hariyana egs of such regions
• Many US/Japan/EU companies started functioning their industries in India and China
10. Detailed demonstration :
• On a regional scale, the introduction of a new industry/economic activity or the
expansion of an existing industry /economic activity in an area also encourages
growth in other industrial/economic sectors also.
• This is known as the multiplier effect which in its simplest form is how many times
money spent circulates through a country's economy.
• Money invested in an industry helps to create jobs directly in the industry and
locality , but it also creates jobs indirectly elsewhere in the economy.
• New industrial development, for example, requires construction workers who
themselves require housing, and services such as schools and shops. An increased
demand for food will benefit local farmers who may increase their spending on
fertiliser.
• Workers employed directly in the new industry increase the local supply of skilled
labour, attracting other companies who benefit from sharing this labour pool. Other
companies who supply components or use the new industry's products are attracted
to the area to benefit from reduced transport costs.
• Spin-off effects include new inventions or innovations that may lead to further
industrial development and new linkages.
• Through this multiplier effect, an area can develop as a growth pole
Cumulative causation
14. • The cumulative causation effect is mostly circular in nature. Hence it is also
called as the circular cumulative causation effect.
• Back wash effect and spread effect has far reaching application in international
trade, regional development and much more
• The main cause of Underdevelopment and backward effect is backwash effect
and poor spread effect
• Developed countries/Regions Vs Underdeveloped regions
Cumulative causation
Balancing the SPE & BWE is the challange
15. • Cumulative causation theory proves that ???
• Market mechanism will not provide equality, but will increase inequality
• Government intervention and polices should address the same
• Spread effect to be promoted by providing import surplus industries there by
making the spread effect
• Institutional reforms are mandatory for such changes.
• Proper regional planning can increase the spread effect and reduce the Back
wash effect.
Cumulative causation