1. Backwash effect: Negative effect of agglomeration
if one area starts to develop, people & capital (infrastructure, finance, etc.) move, leaving other areas worse off
Bvrain drainThis essentially leaves the other areas worse off than before because their best brains and capital leave them to go to the growing centre. It means that growth in one area adversely affects the growth in the other.For instance, in India, let’s say Delhi is the developing centre with all the companies being set up there.
Then people from all over Haryana, Punjab, UP, Bihar etc. have a tendency to move to Delhi because all companies are located there and better employment opportunities exist.
So Delhi will grow but the remaining areas will be worse off. This is Backwash effect.

2. Informal Sector Day workers Street vendors Prostitutes
Business deals not
reported to govt :
Day workers
Street vendors
Prostitutes

3. Special Economic Zones
Created to attract FDI
Tax breaks
Less environmental regulations
Maquiladoras

4. - electronics, - furniture - toys Foreign owned plant in Mexico
Cheap labor
Assemble products to be sold in USA
Originally 35 mi of US border
Transportation – close!
- Clothes,
- electronics,
- furniture
- toys
Clothes, electronics, furniture toys

5. Mexico has emerged as important industrial location:
Cheap labor–
allows USA to compete w/Asia and EU??
Less environmental regulations
Close to US
Stable govt.

7. Deindustrialization
companies move jobs to other regions w/ cheaper labor
that region switches to a service economy & works through high unemployment.
Abandoned street in Liverpool, England, where the population has decreased by 1/3 since deindustrialization

8. “Call centers” like to move into deindustrialized areas:
High unmplymt = low wages
Low rent--- Probable tax incentives

9. Bad for eco development…
“footloose”--can move anywhere
No need for associated services
Low wages offer little to a bad economy
Few benefits, little ed needed