= noeeweneeee usu GALES nal elements of regional growth. In addition to gaining an understanding of the Process and determinants of regional growth which explain regional variations it is also useful to know whether the various tegional imbalances are self-righting. The question of whether regional growth is convergent or divergent is debatable, and an outline and dis- cussion of certain relevant concepts, such as ‘cumulative causa- tion’ and the centre-periphery concept conclude the chapter. 1 Aggregate growth models GROWTH FROM INSIDE One of the simplest theories of regional growth is the so-called sector theory. The theory arises from empirical observations by Clark and Fisher? that a rise in per capita income in different areas at different times is generally accompanied by a resource reallocation, with a decline in the proportion of labour force employed in primary (agriculture) activities, and a rise first in secondary (manufacturing) and then in tertiary (service) activities. The rate of occurrence of such sector shifts, and the resultant internal evolution of specialisation and division of labour, is seen as providing the main dynamic of regional growth. The rate of shift in the relative importance of different sectors is explained by the income elasticity of demand for their products 85 Scanned with CamScanneri ductivity. As i t rates of change in labour pros ed by the the demand fot commodities supplied by the secon- dary and tertiary sectots rises faster than the demand for primary products and thus these sectors grow faster, But it is also argued ty and tertiary sectors benefit more from pro- Sa ae and are aa eore able to offer higher carnings to factors of production, thus causing a shift from sectors in which rewards ate low to those in which they are high. , An extension of the basic theory is the stages theory which suggests that regional development is primarily an internal evolutionary process with the following stages: @ The first stage is that of the self-sufficient subsistence economy, withlittleinvestment or trade. The basic agricultural population stratum is distributed according to the localisation of natural resources. 4 With the improvements in transport, the region develops trade and specialisation. A second stratum develops carrying on simple villages industries for the farmers. Since the materials, market and labour are all furnished originally by the agricultural population, this new stratum is located in relation to the basic stratum. ¢ With increasing inter-regional trade, the region progresses through a succession of agricultural crops from extensive Brazing to cereals to intensive dairying and fruit growing. @ With increasing population and diminishing agricultural returns, the region is forced to industrialise. Secondary industry develops, at first processing primary products but then becoming more specialised, (A failure to industrialise would lead to popiadion Ser, fall in living standards and general e ie final stage is the development of tertiary industry producing pe reer Such a ce reeped fegion exports capital, skills and eclalised services to less advanced regions, Implicit in this process ; changes in roe Srgatiesdee eee Of imac damental dl ¢ is the di i ; oa eee dese an An the arabes of establishments within a the concentration into ¢ leieataeees small establishments and er of bigger and stronger This organis, ional renal firms, ati . pee faa gi | rationalisation plus the original inte: Scanned with CamScanner