The classic core-periphery model: Myrdal & Friedmann Center Periphery Scarce Labor Abundant Capital Abundant Labor Scarce Capital Supply of materials and products Demands from center for goods/services yields payments to periphery Shortage of labor in center creates stimulus for labor migration from periphery Supply of labor from periphery will create labor shortage in periphery and raise wages and incomes Adequate Capital Adequate Labor Capital flows to periphery

Backwash Circuits Capital attracted to center Capital Investment Young workers migrate to center Migration and Employment Lack of investment in periphery Retarded growth in periphery Wider Gap C-P Aging labor force in periphery Decreased attraction for new activity Wider Gap C-P Services and Infrastructure Reduced Investment and new jobs in periphery Smaller local market, pur- chasing power Decline in local services Widened gap between C-P

Pred’s Model of Circular and Cumulative Growth Entry of new industry or expansion of existing industry Initial Multiplier Effect Enhanced chance of invention and innovation Attraction of linked industries: forward linkages backward linkages Invention or Innovation Secondary multiplier effects New local or regional threshold New Construction Activity Expanded Tertiary Sector Expanded Public Utilities

The Economic Base Model E T = Total Employment E X = Export Employment E L = Local Employment E T = E X + E L (1) Define a = E L /E T Multiply by E T and substitute into (1): E T = E X + aE T Solve for E T : E T = ( 1/1-a)E X

Example, Economic Base Model If a =.67 Then:( 1/1-.67) =( 1/.33) = 3 If E X = 500, then E T = 3 x 500 or If E X rises to 750, E T becomes 3 x 750 or 2250 and if E X falls back to 400, E T declines to 1200

Regional Input-Output Models Total Sales = Total Purchases Total Sales = Intermediate Sales + Final Sales Total Purchases = Intermediate Purchases + Value Added + Imports Final Demand