During stage 2 the concentration of economic growth leads to downward spirals occurring in the periphery as people continue to leave the area due to greater opportunities in the core. A continual supply of labour for the core ensures that growth is sustained. Industrial development in the periphery is reduced further due to loss of valuable labour and resources.
In stage 3 the core areas flood the periphery with cheap products, eliminating the need to develop industry there. Resulting in the core expanding industrially, but with industry in the periphery either declining or becoming stagnant.
Once cumulative causation begins it becomes self-sustaining and the core will continue to grow. This process though can work in reverse though, if a factory that other industries rely on closes, the other industries would therefore also close. A downward spiral in the core then takes place, leading to a regional depression, which may only be reversed by government intervention.
Friedmann’s model of regional development is a more complex theory, which was developed by a regional planner, John Friedmann in 1963. This is a spatial model that shows how spatial inequalities change with time. This model looks at four areas or regions involved in economic development.
The core regions are metropolitan economies where there is a high potential for economic growth and innovation. National and international markets centre around these areas, leading to large-scale industry, commercial services and high levels of technology. Growth in this region is usually at the expense of the periphery, because of this the core can be described as parasitic in relation to the rest of the country.
Upward transitional areas are regions of growth within the periphery that are relatively close to the core. The availability of natural resources leads to intensified use of these. These areas are characterised by high immigration rates and industrial and economic growth. High levels of investment in industry and agriculture greatly benefit these areas.
On the other hand downward transitional areas are characterised by declining or stagnant economies with low agricultural productivity or the loss of a resource base due to a lessened demand for minerals. These areas may have old industries and a negative image as well as having a poor location in relation to the core. These areas also suffer from lack of innovation and productivity. An ageing population due to young migrants result in an inability to adapt to new economic situations. The core drains labour and resources from this area.
Resource Frontiers are areas that are outside the core regions where new development is taking place. This can be due to newly discovered resources, these areas can also develop in mountains, deserts and island areas that can be used for recreational purposes. These areas assist in spreading economic growth throughout the country.
In 1960 the economic historian WW Rostow suggested that countries pass through five stages of economic development. These are outlined in his model of the stages of economic development.
During stage 1 the economy is dominated by subsistence activity where output is consumed by the producers rather than traded. Any trade that is carried out is where goods are exchanged directly for other goods. Agriculture is the most important industry and production is labour intensive using only limited quantities of capital. Resource allocation is determined very much by traditional methods of production.
Stage 2 is where the preconditions for takeoff begin to evolve. Increased specialisation generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. As incomes, savings and investment grow entrepreneurs emerge. External trade also occurs concentrating on primary products. Here investment injections can lead to a more rapid rate of development.
After this takeoff then occurs in stage 3, industrialisation increases, with workers changing from the agricultural jobs to those in manufacturing. Growth is concentrated in a few regions of the country and in one or two manufacturing industries. The economic transitions take place along with the development of new political and social institutions that support the industrialisation. A growth pole is then created allowing self-sustaining expansion to take place.
During stage 4 the economy is diversifying into new areas. Technological innovation is providing a varied range of investment opportunities. The economy is producing a wide range of goods and services and there is less dependence on imports.
Once stage 5 begins the economy is geared towards mass consumption. The consumer durable industries prosper. The service sector becomes increasingly dominant.
