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

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