• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Analysis of some fundamental arguments claimed by Albert Hirschman and Gunnar Myrdal

Extracts from this document...


Analysis of some fundamental arguments claimed by Albert Hirschman and Gunnar Myrdal The objective of this essay involves a thorough and profound analysis of some fundamental arguments claimed by Albert Hirschman and Gunnar Myrdal. Myrdal claims that "the play of forces in the market normally tends to add rather than reduce regional inequality" and Hirschman that "non-market forces may be just as automatic as market forces". In order to analyse those two statements so as to reach useful inferences some of the most essential issues, developed by Myrdal such as the principle of circular and cumulative linkages and spread and backwash effects, as well as Hirschman's trickle-down and polarisation effects, will be investigated. Regional inequality is a disparity between the standards of living applying within a nation. It is difficult to quantify the prosperity or poverty of a region, but there are two basic indicators. The first is unemployment, which has been used in Britain as a symptom since the 1920s. Most UK regional policy has concerned the alleviation of unemployment. The second indicator is per capita income, which in Britain generally falls to the north and west. ...read more.


Hirschman believed that the polarisation effects, inability to compete, loss of resources to the core, would be more than compensated for by the trickle-down effects, the natural spread of growth and investment, and the development of complementary industries. If disparities continued over an extended period of time government economic policy would be used to develop convergence. Furthermore, Myrdal's statement was that without government intervention, intra-regional disparities in income can actually increase with integration. The result depends on the spread and backwash effects from more developed areas to less developed areas. The spread effect refers to the increased demand for products from less developed regions and the transmission of technological knowledge from more developed areas to less developed areas as a result of integration. The backwash effect refers to the movement of capital and skilled labour from the less developed areas to the more developed areas, and to changes in the location pattern of industries to the detriment of the less developed areas as a result of integration. The backwash theme involves labour, capital and trade as indicators of increase regional inequality and thus, cumulative process operates advantageously for some regions and disadvantageously for others. ...read more.


These built-in stabilisers rarely have sufficient force to render positive corrective policies unnecessary. In conclusion, it can be understood that both Myrdal and Hirschman offer profound standpoints on the conflicting forces supporting both regional balance and imbalance. It is obvious that a balanced regional development may be generated with a lot of effort and those regional imbalances 'surrender' to the natural amendment of labour and capital. Particular attention is brought to the individual flexibility in response to price signals. Automatic stabilisers are used as adjustments to fiscal policy that occur automatically during business cycles and smooth the path of economic growth. For example, in a recession the government will pump money into the economy by paying more in unemployment benefit without a change in policy. Automatic stabilizers counterbalance the feedback effect of changes in economic activity, although in practice their effectiveness is limited. Lastly, regional transitions, such as capital reallocation may enhance the educational and even the health system of a country or a region, as well as improve resource qualifications in less developed regions. 1 Lecture notes p. 42 2 Hirschman, A. O., (1958), p.63 ?? ?? ?? ?? Vasileios Angelopoulos ASB 3305 :: Page 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. PEST and competitive analysis facing by confectionery organisations

    * Loyalty to and identification with the Company. Nestle Objective's are as follow: - Nestl´┐Ż's business objective, and that of management and employees at all levels, is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, business partners and the

  2. The structure of the airline industry.

    With the recent drought in airline commissions from Delta and other major carriers, AirTran's good standing with travel agencies should stand them in good stead for more bookings if they can keep up the good relationship. Travel agents are a very valuable resource to AirTran.

  1. Is the Welfare State Desirable?

    The sentence puts curiosity into his mind from the outset; after this Macbeth had started to contemplate that he would in fact become King, thus, the idea in his mind becoming stronger. In addition it is also important to acknowledge how the witches had "hailed" Macbeth when he came; as though he were fitting for a King.

  2. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    and consumption have, if anything, increased over the past twenty-five years; and drug prices have fallen substantially over the same period" (Prohibition 3). From the evidence presented, it seems the government's attempt to control the drug market through a broad-based policy program has been ineffective.

  1. Global Imbalances

    The need to believe is that we do need a mechanism to adjust market imbalances. If we took long it would affect the economy through a straight negative drop in demand and prices which results in declining in economic output as well.

  2. The natural resource base of a country is fundamental to any explanation of its ...

    3Table 1 Japan's Exports by Commodity, 2004 (US$ million) Foodstuffs Textile goods Nonmetallic mineral products Chemical goods Metal goods Machinery Others Total 2,150 7,423 4,456 33,426 25,821 300,450 43,289 538.8 4Japan relies heavily on other countries for resources. Japan's main agricultural product is rice, and most rice eaten in Japan is home-grown.

  1. What are the Academic arguments for and against public body regulation

    They would see that the "safety net" the government provides is no longer there so they would have to in order to stay in business. The investors would know that their money was not "risk free" so therefore would put pressure on the banks to regulate themselves to protect their money.

  2. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    In emerging markets some of the key factors outlined above can affect this. For US corporations, credit risk is affected by the actual or perceived deterioration of the financial health of the issuing company, rather than the US economy as a whole.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work