Mydral’s model of cumulative causation provides evidence that development of the core can be at the expense of the periphery. His theory stated that if a large firm or a specialised type of industry is successful in an area, it may generate what I known as a multiplier effect. Its success will attract other forms of economic development creating jobs, services and wealth. Gunnar Mydral’s theory attempts to explain why inequalities were likely to develop between regions and countries. Mydral suggested that a new or expanding industry in an area would create more jobs so increase the spending power of the local population. Economic activity in the core will then continue to grow as it attracts new industries and services (Banking, Insurance, Government offices). As a result, levels of capital and technology will increase which will have a positive effect as the area will be able to afford schools, hospitals, shopping centres, good housing and a modern transport system. Regional prosperity will draw new industry to the area, creating new jobs which increase demand and therefore produces agglomeration and specialisation together with the attraction of more industries. As a result, these higher labour costs will be offset by higher productivity leading to a higher investment rate, higher output giving increasing returns on investment. These pull factors encourage rural in migration. Usually, levels of wealth, economic activity and development decrease with distance form the core so that places form the periphery become increasingly poorer. This development is centred around growth poles, generally with physical advantages such as raw materials. The positive effects of these growth poles mean that greater inequalities grew. Mydral’s multiplier model can be used to explain a number of patterns such as the growth of the 19th century industrial regions e.g. South Wales and the Ruhr and also districts cutlery in Sheffield and clothing in Nottingham. The development of growth poles in developing counties such as Sao Paulo in Brazil and Damodar Valley in India where increased economic activity led, in turn, to multiplier effects and an upward spiral resulting in core regions. At the same time cumulative causation worked against regions of the periphery to produce backwash effects which included a lack of investment and job opportunities. The theory also explains the creation of modern government regional policies which encourage the sitting of new, large, key industries in either the peripheral less developed or high unemployment areas in the hope of stimulating economic growth. This policy is more likely to succeed if the industries are labour intensive. The concept of cumulative causation is negative in its effect. The wealthy core draws the investment and employment away from the peripheral areas increasing the divide and promoting a divergent economic development. The periphery suffers from the backwash effect such as growth in the core.
The second theory that relates to the development of core and peripheral areas is Hirshmans theory. He believed that growth in the core through growth poles was positive but that in time, enrichment would take place in the periphery due to the reaction of diseconomies at the core resulting in high costs, land labour housing, congestion, pollution and long commutes which would make the centre less attractive. This is true of many core regions, especially London. As London has developed so intensely, both in economic and physical terms, the cost of living is becoming extortionate and schemes such as the congestion charge have been implemented to tackle congestion problems within all areas of London.
As a country develops economically, it is likely that industry and wealth will spread out more evenly which explains the development of a secondary core. This will then lead to the creation of several secondary cores. This can however result in the decline of the dominance of the original core but there will still be peripheral areas that are less well off. This process ahs occurred in many of the more economically developed countries like that of the USA. The North East of America during the late 19th century was one of the main industrial areas of North America due to the local availability of natural resources such as coal, iron ore and limestone. This area became known as the ‘manufacturing belt’. This area was the focus for economic development and contained the capital city Washington D.C as well as the largest cities and ports, including New York. As it was the core region at the time, it was the centre of trade, investment, commerce and retailing. Due to technological advances in the 20th century, California began to emerge a second core region within the country as it attracted the aerospace industry together with electronic and hi-tech industries. This area was referred to as the ‘sunbelt’ mainly due to the climatic characteristics. As this area developed economically, the original core began to loose much of its dominance especially as older industries declined. This is an example of how an area can prosper in the core regions without the expense of the periphery. As it happens, America has not experienced any negative effects from this process. An important note to emphasise throughout the development of core and peripheral areas, is that the periphery grows at a much slower rate than the core due to the decreased demand for skilled workers and there are fewer levels of economic activity. The likelihood is that without a core, overall national economic development would be much lower.
In light of the issues discussed in this essay, we have seen that development of the core is not always at the expense of the periphery. Formally a peripheral area, the stretch of land from California to Florida is an example of how the development of new industries together with economic investment can lead to the creation of new growth poles and fundamentally, new core regions. Furthermore, without a core, the overall growth rate within a country would be much lower in comparison to the development of the periphery. We have seen that cores and peripheries can grow or decline overtime and peripheries can become cores so therefore being a periphery is not a terminal condition.
