Typology of Theoretical and Empirical Approaches on Regional Disparities

Document Type : Original Article

Authors

1 Professor, Department of Urban Planning, School of Fine Arts, University of Tehran, Tehran, Iran.

2 M.A. in Regional Planning, Department of Urban Planning, School of Fine Arts, University of Tehran, Tehran, Iran.

Abstract

Regional income inequality has been the subject of academic debates since 1950s. However, theoretical bases on regional disparities provide conflicting views on relations between inequality and national growth. Some researchers believe that in the first stage of national economic growth, regional inequality is a natural phenomenon that stems from lack of coordination between the spatial system (regional economic growth) and the national system (national economic growth). Over a period of time, however, with increasing movements of production factors (labor and capital) among regions, regional inequality will be minimized or possibly eliminated. While, some other researchers like Myrdal and Hirschman claim that spatial movement of production factors increases regional inequality. They believe that only government intervention can reduce gaps among regions in the process of development. Amos Terrassi and Lessman believe that regional inequality follows a pattern of increase-decrease-increase. The cause may be a fundamental and systematic change in economic activities, such as increasing in suburbanization or moving to a service-based economy. Also there is a group of thinkers who claim that scale economies increase regional disparities. Thus, there is a positive correlation between regional inequality and economic growth. Therefore, literature review on regional disparities shows that theories and empirical studies have an unclear message about the evolution of regional disparities over time. The purpose of this paper is presenting a typology of theoretical and empirical studies on regional disparities. According to investigations, theoretical and experimental approaches toward regional disparities refer to two economic theories: “neoclassical economic growth” and “new economic geography”. Neoclassical economic growth theory believes that regional disparities will decrease over time, while Krugman belonging to new economic geography theory claims that regional inequality will increase. We have classified regional inequality approaches into three categories based on two economic theories: 1) spatial equilibrium 2) spatial disequilibrium and 3) in-between approaches. Spatial equilibrium theorists refer to neoclassical theory. These theorists show that regional disparities will reduce over time and there is a negative correlation between national income growth and regional disparities. Spatial disequilibrium theorists refer to new economic geography theory. These theorists are divided into three groups. The first group who presented their studies before Krugman's theory believe that capital and labor move from less desirable area into growing areas. The second group believes that regional inequality will increase after completing Inverted-U model (which proposed by Williamson). The third group claims that there is a positive correlation between economic growth and regional inequality because of scale economies. Recent studies in the field of regional disparities provide a view that has been proposed as an “in-between approach”. This approach believes that relation between regional disparities and economic growth depends on development level or scale of regions. In some areas the relation between growth and inequality is positive, while it is negative in other areas. This typology shows that we are not sure about pattern of regional disparities evolution. However, it seems that these days, in-between approach is more reliable. 

Keywords

References

-  Amos, O. (1988). Unbalanced regional growth and regional income inequality in the latter stages of development. Regional Science and Urban Economics, 18(4), 549-566.
-  Artelaris, P., & Petrakos, G. (2014). Intraregional Spatial Inequalities and Regional Income Level in the European Union: Beyond the Inverted-U Hypothesis. International Regional Science Review, International Regional Science Review, 39(3), 291-317.
-  Barrios, S., & Strobl, E. (2005). The dynamics of regional inequalities. Regional Science and Urban Economics, 39(5), 575 -591.
-  Barro, R. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 407-443.
-  Barro, R., & Sala-i-Martin, X. (1991). Convergence Across States and Regions. Brookings Papers on Economic Activity, 107-182.
-  Barro, R., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100, 223-251.
-  Besley, T., & Burgess, R. (2004). Can Labor Regulation Hinder Economic Performance? Evidence from India. The Quarterly Journal of Economics, 119(1), 91-134.
-  Charron, N. (2013). Diverging Cohesion? Globalisation, state capacity and regional inequalities within and across European Countries. European Urban and Regional Studies, 23(3), 355 – 373.
-  Cikurel, D. (2002). Why Mexico’s regional convergence broke down. processed University of California, San Diego and at http://www.wider.unu.edu/conference/conference-2002-5/conference2002-5.htm.
-  Davis, J. (1980). Some Implications of Recent Trends in the Provincial Distribution of Income and Industrial Products in Canada. The Canadian Geographer, 24, 221-236.
-  Demurger, S., J., Sachs, W., Woo, S., Bao, G., Change, & Mellinger, A. (n.d.). Geography, Economic Policy and regional development in China. processed University of California, Davis and at http://www.wider.unu.edu/conference/conference-2002-2/conference2002-.
-  Eastwood, R., & Lipton, M. (2000). Rural-Urban Dimensions of Inequality Change. Working Papers No. 2003. Helsinki: UNU World Institute for Development Economics Research.
-  Economic Council of Canada. (1977). Living Together: Study of Regional Disparities. Ottawa: Economic Council of Canada.
-  Ezcurra , R., & Rapún, M. (2006). Regional Disparities and National Development Revisited: The Case of Western Europe. European Urban and Regional Studies, 13(4), 355-369.
-  Fan, C., & Casetti, E. (1994). The spatial and temporal dynamics of US regional income inequality, 1950-1989. The Annals of Regional Science, 28(2), 96-177.
-  Fan, S., Kanbur, R., & Zhang, X. (2010). China's regional disparities: Experience and policy. Review of Development Finance, 1(1), 47-56.
-  Friedman, J. (1973). Urbanization, Planning and National Development. Beverly Hills: Sage.
-  Fujita, M., & Krugman, P. (2004). The new economic geography: Past present andthe future. Papers in Regional Science, 83(1), 139-164.
-  Hirschman, A. (1958). The Strategy of Economic Development. New Haven: Yale University Press.
-  Ioannides, Y., & Petrakos, G. (2000). Regional disparities in Greece: The performance of Crete, Peloponnese and Thessaly. EIB Papers, ISSN 0257-7755, 5(1), 30-58.
-  Janikas, M., & Rey, S. (2005). Spatial Clustering, Inequality and Income Convergence in the U.S.: 1969-2001. Re´gion et De´veloppement, 21, 45-64.
-  Janikas, M., & Rey, S. (2008). On The Relationships betwwen Spatial Clustering, Inequality and Economic Growth in the United States: 1969-2000. Région et Développement, 27, 13-34.
-  Kaldor, N. (1970). The Case for Regional Policies. Scottish Journal of Political Economy, 17, 337-348.
-  Kanbur, R., & Venables, A. (2005). Rising Spatial Inequality and Development. Helsinki: Number 3 United Nation University Policy brief.
-  Krugman, P. (1991). Geography and Trade. Cambridge: MIT Press.
-  Kuznets, S. (1955). Economic growth and income Inequality. American Economic Review, 45, 1-28.
-  Lessmann, C. (2011). Spatial inequality and development: Is there an inverted-U relationship? CESifo working paper: Fiscal Policy, Macroeconomics and Growth, No. 3622.
-  Lipshitz, G. (1995). Regional Disparities: The Canadian Case in the Theoretical Context. The Canadian Journal of Regional Science, 18(3), 357-378.
-  Mera, K. (1979). Basic Human Needs versus Economic Growth Approach for Coping with Urban-Rural Imbalances: An Evaluation Based on Relative Welfare. Environment and Planning, 11, 1129-1145.
-  Mora, T. (2008). Explaining Within-country Regional Inequality in the European Union. Scienze Regionali, 7, 51-69.
-  Myrdal, G. (1957). Economic Theory and Underdeveloped Regions. London: Duckworth.
-  Nijkamp, P., & Poot, J. (1998). Spatial Perspectives on New Theories of Economic Growth. Annals of Regional Science, 32, 407-437.
-  Paas, T., & Schlitte, F. (2008). Regional income inequality and convergence process in the EU-25. Scienze Regionali Italian Journal of Regional Science, 7(2), 29-49.
-  Petrakos, G. (2009). Regional growth and inequalities in the European Union. Discussion Paper Series, 15(2), 23-44.
-  Petrakos, G., Rodriguez-Pose, A. & Rovolis, A. (2005). Growth, Integration and Regional Disparities in the European Union. Environment and Planning A, 37, 1837–55.
-  Puga, D. (2002). European regional policies in light of recent location theories. Journal of Economic Geography, 2(4), 373–406.
-  Reddy , A., & Bantilan, M. (2012). Regional disparities in Andhra Pradesh, India. Local Economy, 28(1), 123-135.
-  Richardson, H. (1973). Regional Growth Theory. London: Macmillan.
-  Romer , P. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1), 3-22.
-  Shorrocks, A., & Wan, G. (2005). Spatial Decomposition of Inequality. Journal of Economic Geography, 5(1), 59-81.
-  Solow, R. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70, 65-94.
-  Swan , T. (1956). Economic growth and capital accumulation. Economic Record, 32(44), 334-361.
-  Tafenau, E., & Paas, T. (2009). Regional disparities and sustainable economic growth. Sustainable Growth of Business: Modern Management Research Conference (pp. 1-8). Vilnius, Lithunia.
-  Termote, M. (1979). Summary: Changes in the Pattern of Interprovincial Migration. Ottawa: Canada Mortgage and Housing Corporation.
-  Terrasi, M. (1999). Convergence and divergence across Italian regions. The Annals of Regional Science, 33(4), 491-510.
-  Venables, A. (2003). Spatial Disparities in Developing Countries: Cities, Regions and International Trade. London School of Economics and Political Science: Centre for Economic Performance.
-  Webster, D. (1985). Canadian Regional Decentralization in the New Global Context: Myth or Reality? Canadian Journal of Regional Science, 8, 377-394.
-  WIDER. (2002-2003). Retrieved July 1, 2013, from www.WIDER.UNU.edu              
-  Williamson, J. G. (1965, July). Regional Inequality and the Process Of National Development (A description of patterns). Economic development and cultural change, 13(4), 1-84.
-  Wrage, P. (1981). The Effect of Internal Migration on Regional Wage and Unemployment Disparities in Canada. Journal of Regional Science, 21, 51-63.
-  Wu, Y. (2002). Regional disparities in China: an alternative view. International Journal of Social Economics, 29(7), 575 - 589.
-  Zaman, K., & Akita, T. (2012). Spatial Dimensions of Income Inequality and Poverty in Bangladesh: An Analysis of the 2005 and 2010 Household Income and Expenditure Survey Data. Bangladesh Development Studies, 35(3), 19-50.
Journal of Architecture and Urban Planning
Volume 10, Issue 19
December 2017
Pages 153-169

Files

Share

How to cite

Statistics