Abstract
Desmet, Gumpert, and Ortίn have analyzed regional development using the Ricardian model, Heckscher-Ohlin theorem or the core peripheral model. However, how the individual assumptions behave with each other (capital transfers to the number of companies or utility values) or in combination (combined wages) has so far been completely ignored. The paper shows a new internal model of rational underdevelopment. Several factors such as labor and capital after Heckscher-Ohlin; and combination wages, substitution elasticity, marginal costs, fixed costs, variable costs, transportation costs, distribution of companies, and company volumes after core peripheral model are considered. The advanced region continues to develop with the ‘extended’ core peripheral model. Without the return transfer, the highest increase in utility would be recorded in the advanced region, because the two factors as well as the ‘extended’ core peripheral model (cost optimization measures) increase the utility. From the findings of the Heckscher-Ohlin theorem, it is known that capital transfers actually help the underdeveloped region in its development and reduce inequality between the two regions. Thus the advanced and underdeveloped region has a model-theoretical incentive for the ’extended’ core peripheral model. The disadvantages of both initial models are overcome and added value is created for both regions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Change history
03 December 2019
This article is an updated version of the article originally published Online First. The updated version was necessary in order to provide, first, a more detailed illustration of the differences to particularly two other papers of the author (‘Regional inequality.
References
Barca F (2009) Agenda für eine reformierte Kohäsionspolitik - Ein raumbezogener Ansatz für die Herausforderungen und Erwartungen der Europäischen Union [Agenda for a re-formed cohesion policy - A spatial approach to the challenges and expectations of the European Union], Independent Report for D. Hübner, Regional Policy Commissioner, European Union, Report for DG REGIO
Boschma R, Frenken K (2017) Evolutionary economic geography, The New Oxford Handbook of Economic Geography. Oxford University Press, Oxford, pp 213–242
Brezis ES, Tsiddon D (1998) Economic growth, leadership and capital flows: the leapfrogging effect. Journal of International Trade and Economic Development 7(3):261–277
Brezis ES, Krugman PR, Tsiddon D (1993) Leapfrogging in international competition: a theory of cycles in national technological leadership. Am Econ Rev 83:1211–1219
Busch U (2004/2005) Zwischen Sonderwirtschaft und Mezzogiorno [Between Special Economy and Mezzogiorno], East-Germany - Alternative development opportunities or mezzogiorno, in: TESCH, J (2005): Contributions of the workshop in Leipzig on 20 November 2004, 7–96
Busch U (2005) Ostdeutschland: Wirtschaftspolitische Optionen für 2005 bis 2019 [East-Germany: Economic policy options for 2005 to 2019}], UTOPIE Creative, vol 172, pp 135–146
Cobb CW, Douglas PH (1928) A theory of production. Am Econ Rev, March 1928 Supplement 18(1):139–165
Daniele V, Malanima P, Ostuni N (2018) Geography, market potential and industrialization in Italy 1871-2001. Pap Reg Sci 97(3):639–662
Demko G (2017) Regional development: problems and policies in Eastern and Western Europe, Routledge Library Editions: Urban and regional Economics
Desmet K (2002) A simple dynamic model of uneven development and overtaking. Econ J 112:894–918
Desmet K, Ortín IO (2007) Rational underdevelopment. Scand J Econ 109:1–24
Ehrenfeld W (2004) The new economic geography, Munich Archive, Universität Regensburg, MPRA Paper No. 12232
EUROSTAT (2015) Regional GDP per capita in the EU28: Seven capital regions among the ten most prosperous, Eurostat press release, 90, 2015
EUROSTAT (2016) Regional GDP per capita in the EU28: Less than half the EU average in 21 regions and more than twice the EU average in five regions, Eurostat press release, 39, 2016
EUROSTAT (2017) Regional GDP per capita in the EU28: More than twice the EU average in four regions and still less than half the EU average in 19 regions, Eurostat press release, 52, 2017
EUROSTAT (2018) Regional GDP per capita in the EU28: Regional GDP per capita ranged from 29% to 611% of the EU average in 2016, Eurostat press release, 33, 2018
Federal Statistical Office (2004) Data Report 2004, Publication Series 450, 2nd edn
Felice E (2018a) The roots of a dual equilibrium: GDP, productivity and structural change in the Italian regions in the long-run (1871-2011), European review of economic history
Felice E (2018b) The socio-institutional divide: explaining Italy’s long-term regional differences. J Interdiscip Hist 49(01):43–70
Fonseca M (2017) Southern Europe at a glance: regional disparities and human capital, Regional Upgrading in Southern Europe. Springer Nature Publishing, Basingstoke, pp 19–54
German Central Bank (2004) Report September 2004, Vol 56, number 9, German Central Bank Publishing, Frankfurt/Main, 1–175
Gumpert M (2013) Rationale Unterentwicklung - ungleiche Entwicklung in offenen Volkswirtschaften im Zusammenhang mit finanziellen transfers, Lernexternalitäten und unterschiedliche Technologien - analytische Betrachtung unter verschiedenen Modellrahmen [Rational underdevelopment—uneven development in open economies in connection with financial transfers, learning externalities and different technologies—analytical analysis under different model frameworks], RUFIS Institute, University publisher Brockmeyer
Gumpert M (2016) Rational underdevelopment: regional economic disparities under the Heckscher-Ohlin Theorem. Int Rev Appl Econ 30(1) Routledge Taylor & Francis Group
Gumpert, M. (2019a) Regional inequality: An analysis under the core-peripheral model, Growth and Change: A Journal of Urban and Regional Policy, Volume 50, Issue 2, June 2019, Wiley Periodicals Inc., pp. 775–802.
Gumpert, M. (2019b) Regional economic disparities under the Solow model, Quality & Quantity: International Journal of Methodology, Volume 53, eFirst, pp. 1–21
IWH (2004) Wirtschaft im Wandel [Economy in transition], Institut für Wirtschaftsforschung Halle [Halle Institute for Economic Research], Vol 6, pp 137–195
Krugman P (1991) Geography and trade. JPE, Cambridge (First MIT Press paperback edition, 1993)
Krugman P, Venables A (1990) Integration and the competitiveness of the peripheral industry. In: Bliss C, Braga de Macedo J (eds) (1990): Unity with diversity in the European economy. Cambridge University Press/CEPR, Cambridge, pp 55–77
Krugman P, Venables A (1995) Globalization and the Inequalities of Nations, Quarterly Journal of Economics, Vol 110, No. 4. Oxford University Press, Oxford, pp 857–880
Ludwig U (2004) Ostdeutsche Wirtschaft kommt schwer in Tritt [East German economy is slow to take off], in: IWH: Economy in Change, 12
Martin R, Sunley P (2017) Paul Krugman’s geographical economics and its implications for regional development theory: a critical assessment. Taylor & Francis Group, Milton Park Chapter 2
Ohlin B (1933) Interregional and international trade. Harvard University Press, Cambridge
Padoa Schiopa FK, Basile R (2002) Unemployment dynamics of the “Mezzogiornos of Europe”: LESSONS for the Mezzogiorno of Italy, CEPR Discussion Paper 3594
Pindyck RS; Rubinfeld DL (2003) Mikroökonomie [Microeconomics], 5th edn, Pearson Studies
Samuelson PA, Nordhaus WD (2005) Volkswirtschaftslehre - Das internationale Standardwerk der Makro- und Mikroökonomie [Macroeconomics—the international standard work of macro- and microeconomics], Redline GmbH
Ströbele W, Wacker H (2000) Außenwirtschaft: Einführung in Theorie und Politik [Foreign trade: introduction to theory and policy}], 2nd edn
Wolff S (2013) Migration und ihre Determinanten im ost-westdeutschen Kontext nach der Wiedervereinigung [Migration and its determinants in the East West German context after reunification], Discussion Paper Series, Issue No. 130, University Göttingen
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
The original version of this article was revised: The updated version was necessary in order to provide a more detailed illustration of the differences to particularly two other papers of the author. Full information regarding the corrections made can be found in the erratum/correction for this article.
Rights and permissions
About this article
Cite this article
Gumpert, M. Regional Inequality: An Analysis under an Extended Core-Peripheral Model. J Ind Compet Trade 20, 157–186 (2020). https://doi.org/10.1007/s10842-019-00296-2
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10842-019-00296-2
Keywords
- Regional economic disparities
- Core-peripheral model
- Interregional transfers
- Regional policy
- Uneven development