1、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 S
2、haped 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 -
3、 defining products/services, and optimal combinations of factor inputs to produce them Component technologies: (1) transport vehicles per capita (Figure 3.2),Elements in Economic Development,Economic Development,Population Characteristics,Cultural Attributes,Technology,Energy and Resource Base,World
4、 Levels of Development,Figure 3.4 Regional Growth: Rostows 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 Rostows sequence?,Changing Composition
5、of Employment in the U.S.,Development of the U.S. Service Sector,Decomposition of Services,Development: The Circular Model of Capital Flow,Stock of Productive Capacity,Industrial Output,Business Income (Value Added),Payments to Households,Final Consumer Demand,“Savings”,Investment,“Savings” - retain
6、ed earnings, household savings, institutionalinvestors, international capital sources,Interest rates Tax policy & publicinvestment,Regional Economic Change: Initial Triggers to Development,Vances model - contrast of “old model” of endogenicdevelopment (internal growth theory) - versus “new model” of
7、 exogenic growth Local examples: fur tradeHudsons Bay Co trading postsOregon Trail settlersPuget Sound timber tradeJacksonville OR gold mining,Vances Exogenic And Endogenic Model,Internal Development after Initial Triggers to Development,Retail and other service functions ? Location relative to expo
8、rt 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,t,P,P,Market Division,Market Division,I,II,P,P,a,a,t,t,Impact of Transport Improvemen
9、t,Market Division,C,P,P,I,II,Process of Regional Specialization,Region A,Region B,Initial Condition: No Interregional Trade Local Production Equals Location Consumption,Process of Regional Specialization, Continued,Imports from B,Exports To B,Region A,Region B,Exports to A,Imports from A,Process of
10、Regional Specialization, Continued,Interregional Exports,Production for Local Use,Production for Local Use,Interregional Imports,Perrouxs 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 throu
11、gh different channels with variable terminal effects on the whole economy.” Growth Poles versus Growth Centers Propulsive Industries innovative ? Geographic clustering of pole components? ? Use of I/o data to identify poles?,Uneven Development: Spatial Outcomes at varying scales,Role of lead industr
12、ies, growth polesRegional economic base as a platform for development over time The outcome of Perrouxs 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 Sc
13、ales,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 per
14、ipheries Local: Seattle CBD Vs. lower order urban centers,The classic core-periphery model: Myrdal & Friedmann,Center,Periphery,Scarce Labor,Abundant Capital,Abundant Labor,Scarce Capital,Supply of materials and products,Demands from center for goods/services yields payments to periphery,Shortage of
15、 labor in center creates stimulus for labor migration from periphery,Supply of labor from periphery will create labor shortage in periphery and raise wages and incomes,Adequate Capital,Adequate Labor,Capital flows to periphery,Core-periphery Model: Spread Effects,Demands by Center for goods capital
16、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 Sp
17、read 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: C
18、onvergence, Divergence, Persistent Imbalance,Backwash Circuits,Capital attractedto center,Capital Investment,Young workers migrate to center,Migration and Employment,Lack of investment in periphery,Retarded growth in periphery,Wider Gap C-P,Aging labor force in periphery,Decreased attraction for new
19、 activity,Wider Gap C-P,Services and Infrastructure,Reduced Investment and new jobs in periphery,Smaller local market, pur- chasing power,Decline in local services,Widened gap between C-P,Preds Model of Circular and Cumulative Growth,Entry of newindustry or expansion of existing industry,Initial Multiplier Effect,Enhanced chance of invention and innovation,Attraction of linked industries: forward linkages backward linkages,Invention or Innovation,Secondary multiplier effects,New local or regional threshold,New Construction Activity,Expanded Tertiary Sector,Expanded Public Utilities,
