In search of the disparity in regional economic development the Swedish economist, Gunnar Myrdal in the year 1956 developed the cumulative causation theory. The economic development change in one form of an institution will lead to successive changes in other institutions in a circular and cumulative manner. So, sometimes the theory is known as Circular cumulative causation theory.
- There was no regional economic disparity before the pre- Industrial periods as the development was very poor at that time.
- In the stage of primary economic development, the regions with some natural and fuel resources were in advantageous positions of development. Professor Myrdal said the regions are as the supply regions.
- In the next stage, some regions with advanced technology, capital, proper planning, and administrative efficiency, attract the natural and human resource from the supply regions to achieve their own economic development. Professor Myrdal said the regions are as the demand regions.
- Professor Myrdal did not consider any environmental controlling factors for the development.
- He considers the demand region as an open market.
The Main Theme:
The natural and human resources flow from supply regions to demand regions. As a result the supply region gradually submerged under the economic backwardness and resourceless condition. Whereas the demand regions gradually improve their economic prosperity. The processes increase the regional disparity with time.
To explain the theory Professor Myrdal considers two effects.
1. Backwash Effect:
It is the centripetal or endogenous force of demand regions. The demand regions gradually reach economic progress. The supply regions gradually sink in economic darkness as they gradually bounded in resource lass condition with time. The Brain drains from these regions to developed demand regions. Negative impact reflects in all the spheres in economic fields.
2. Spread Effect:
It is the centrifugal or exogenous force of demand regions after the economic growth of the region. The effect of economic growth extends towards the periphery region of its. The wave of development reaches supply regions gradually. The developed economic region capture the market of supply region and extend their capital investment to the supply region. So, the Positive economic impact accelerates in all the spheres in economic fields in the supply region also. That is why the regional disparity was gradually minimized.
Professor Myrdal explains the developed and developing countries in his theory. He considers the developed countries as demand region where economic development gradually flourished with the help of technology, capital investment, and the resource from developing countries.
He also considers the developing countries as a supply region. The countries supply agricultural and mineral-based raw materials to the developed countries. Due to the lack of proper investment and distribution of export-based foreign money the regional economic development is still uncatchable.
Significance and conclusion:
The theory is well accepted by all the concerned personalities due to its easy and practical ability in nature, in spite of its different criticism. The main theme of the theory can be explained from a different angle of viewpoint. South wells, West Yorkshire in the great Britten and Rhine river region was the growth pole region just after the industrial revolution. The southern and periphery region of its gradually economically developed till the starting of the last century. It can be explained by the theory. The economic condition of developed and developing countries can also be explained by the theory. So this is the complete theory about the Cumulative Causation Theory. For any doubts do comment down in the comment box.
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