Dr. ANANDRAO SHAMRAO PATIL M. A. ,Mhil., Ph. D. Department of Geography, Chhatrapati Shivaji College, Satara, Gunnar Myrdal’s Theory of Circular Causation Spread effects and Backwash Effects Concepts.

Concept of Spread Effect and Backwash Effect Introduction Prof. Gunnar Myrdal builds this theory of circular causation. This theory of economic under development and development around the ideas of regional inequalities. These inequalities are found on national and international plane.

Notions of the Theory To explain theory Myrdal uses to concepts or notions , Spread effects and Backwash effects. Economic development takes place through circular causation process. Rich are awarded more favours and efforts of those who lag behind thwarted. The backwash effects is predominate and spread effects are dampened. This results cumulatively to give more importance to international inequalities and also leads to regional inequalities with in the underdeveloped countries.

Phenomenon in underdeveloped countries In under developed countries circular and cumulative process known as “vicous circle of poverty”. It operates downwards and being unregulated causes increasing inequalities. Inherited theoretical approach inadequate to solve inequalities problems. According to him the main cause of the economic inequalities are Strong backwash effects and weak spread effects in Under developed countries.

Principle forces responsible for such phenomenon Regional inequalities. Basic sources of regional inequalities with in a country have non economic basis. Its associated with the capitalist system which guided by the profit motive. The profit motive results in the development of those regions where expectation of profit are high while other regions remains underdeveloped. Free play of market forces responsible for increase in inequalities.

Regional inequalities If economic conditions left on Market forces it unhampered by policy interference, industrial production, commerce, banking, insurance, shopping, indeed almost all economic activities. Results in clustering of science, art literature, education, and high culture in certain localities. Results rest of the country more or less backward. Regional inequalities are created when some localities grow at the expense of other regions which stagnate.

Backwash Effects Migration- Localities and regions with expanding economic activities are attracted young and active population from the other parts of the country. Results of migration- favored for economic activities in developed region and disfavored for economic activities in other regions. Labour force concentrated in developed region and scarcity at other parts of the country.

Backwash Effects Capital Movement- Resulted in regional inequalities. In Developed region increased demand will stimulate investment it turns in increased income and demands. It further leads to second round investment. The scope of investment in developed region expansion can create shortage of capitals at backward regions. Banking system if not regulated to act differently, tends to become an instrument for siphoning off savings from the poor to richer, progressive region.

Backwash Effects Trade- trade operates with fundamental bias in favour of the developed regions and disfavoured of the backward regions. Development of industries in developed region results in ruin existing industries of poor, backward region. Region will heavily depend upon agriculture. Freeing and Widening of the markets- increasing returns in developed region while handicrafts and industries existing in poor region are thwarted. Industrialization is dynamic force making mistake that the poor regions remains mainly agriculture with low productivity.

The Spread Effects According to Myrdal,- against the backwash effects there are however also certain centrifugal spread effects of expansionary momentum. It is from centers of economic expansions to other regions. It is natural process. Whole region around a nodal centre of expansion gain from increasing outlets of agricultural products. It is stimulated by technical advances. Spread effects to localities producing raw materials for the growing industries in the centre. Consumer goods industries will get stimulated.

The Spread Effects Overcome the backwash effects from the older centers and encourages self expansions of new centers. Spread effect flowing from centers to other localities. Resulted in increased in demand for there products. They are weave themselves in the cumulative social process by circular causation.

Backwash Effects verses Spread Effects How ever not possible that the backwash effects and spread effects should be equilibrium. Supported example- United Nations Economic Commissions report- In Europe regional inequalities are much more wider than the poorer countries. The regional inequalities are increasing in the poorer countries and diminishing in the richer countries. Co-relation found- higher the level of economic development that country has already attain the stronger spread effects. It is because development accompanied by improve transportation and communication, higher level of education, more dynamic comunions of ideas and values. All strengthen the centrifugal spread of economic expansion.