The document discusses sources of income inequality and regional disparities. It introduces the Gini coefficient method for measuring income inequality within and between countries. The Lorenz curve is also presented as a graphical technique to show income distribution. Theories of cumulative causation by Myrdal and Hirschman are summarized, explaining how economic growth can reinforce further growth in dominant regions and potentially spread to other areas. Factors like ethnicity, education, land ownership and indigenous populations are noted as influencing disparities within countries.

1. Regional
Development
Mr.Yonas Gemeda
March2020
Addis Ababa,Ethiopia

2. Income disparities within
countries
• The scale of income disparities within
countries is often as much an issue as the
considerable variations between countries.
• Gini coefficient is a technique frequently
used to show the extent of income
inequality.

3. Gini coefficient
• It allows:
• Analysis of changes in income inequality
over time in individual countries
• Comparison between countries

4. Gini coefficient
• It is defined as a ratio with values between 0
and 1.0
• A low value indicate more equal income
distribution while a high value shows more
un equal income distribution.

5. Lorenz curve
• The Lorenz curve is a graphical technique
that shows the degree of inequality that
exists between two variables.
• It is often used to show the extent of income
inequality in a population.

6. Lorenz curve
• A diagonal line represents perfect equality
in income distribution.
• The further the curve is away from the
diagonal line the greater the degree of
income inequality.

7. Theory of regional
disparities
• Cumulative causation
• Cumulative causation is the process where
by a significant increase in economic growth
can lead to even more growth as more
money circulates in the economy.

8. Cumulative causation
• The Swedish economist Gunnar Myrdal
Produced his Cumulative Causation theory
in 1957.
• It was set in the context of developing
countries, but the theory can also be applied
reasonably to more advanced nations as
well.

9. Cumulative causation
• A three stage sequence can be recognized:
The pre industrial stage
The period of rapid economic growth /regional
economic Divergence
A stage of economic convergence

10. Myrdal’s model
• In Myrdal's model, economic growth begins
with the location of new manufacturing
industry in a region.
• Once growth has been initiated in a dominant
region spatial flow of labor, capital and raw
materials develop to support it and the growth
region undergoes further expansion by the
cumulative causation process.

11. Myrdal’s model
• Increasing demand for raw materials from
resource rich parts of the hinterland may
stimulate growth in other sector of the
economies od such regions.

12. Myrdal’s model
• If the impact is strong enough to overcome
local backwash effects a process of cumulative
causation may begin, leading to the
development of new centers of self sustained
economic growth. Such spread effects are
spatially selective

13. Hirschman’s Conclusion
• The American economist Hirschman (1958)
produced similar conclusion to Myrdal
although he adopted a different
terminology.

14. Hirschman’s Conclusion
• Hirschman labeled the growth of the economic
core region (heartland) as polarization, which
benefited from various circles or upward
spirals of development , whereas the periphery
(the hinterland ) was impeded by vicious circles
or downward spirals.
• The term trickle down was used to describe the
spread of growth from core to periphery.

15. Hirschman’s Conclusion
• The economic core region is the most highly
developed region in a country, with
advanced systems of infrastructure and high
levels of investment resulting in high
average income.

16. Hirschman’s Conclusion
• The periphery comprises the parts of a
country outside the economic core region.
The level of economic development in the
periphery is significantly below that of the
core.

17. Ethnicity and Employment
• The development gap has an ethnic and/or
religious dimension where by some ethnic
groups in a population have income levels
significantly below the dominant group in
the same population.

18. Indigenous population
• The indigenous population are those people
descended from the original ethnic group to
populate a country,

19. Ethnicity and Employment
• This is invariably the result of
discrimination which limits the economic,
social and political opportunities available
to the disadvantaged groups.

20. Ethnicity and Employment
• It results:
• Social unrest
• Migration
• New political movements

21. Education
• Education is a key factor in explaining
disparities within countries.
• In developing countries there is a clear link
between education levels and family size.

22. Education
• Such differences serve to widen rather than
narrow disparities.
• Educational provision can vary significantly
not just by social class, but by region

23. Land ownership (tenure)
• The greatest disparities tend to occur
alongside the largest inequalities in land
ownership.
• Ownership of even a very small plot of land
provides a certain level of security that
those in the countryside without land cannot
possibly aspire to.

24. THANK
YOU!!!!!!