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Regional economic policy for developing areas

  • Aspects of Regional Organization
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References

  1. This research has been made possible by the generous support of the M. I. T.-Harvard Joint Center for Urban Studies.

  2. John Friedmann, “Spatial Structure and Economic Growth in Venezuela: Toward a Dynamic Theory of Spatial Structure,” paper read at the First Latin-American Regional Science Congress, Caracas, Venezuela, November 12–14, 1962.

  3. Gerald M. Meier and Robert E. Baldwin,Economic Development. Theory, History, Policy. New York, John Wiley and Sons, 1957, Part II.

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  4. N. S. B. Gras, “The Development of Metropolitan Economy in Europe and America,”The American Historical Review, Vol. XVII, no. 4 (July 1922), pp. 695–708.

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  5. Raul Prebisch,The Economic Development of Latin America. New York: United Nations, 1950. The Prebisch thesis has been heatedly debated. For contrasting views, see Theodore Morgan, “The Long-Run Terms of Trade between Agriculture and Manufacturing,”Economic Development and Cultural Change, Vol. VIII, no. 1 (October 1959), pp. 1–23; and Werner Baer, “The Economics of Prebisch and ECLA,”Economic Development and Cultural Change, Vol. X, no. 2 (January 1962), pp. 169–182.

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  6. T. W. Schultz,The Economic Organization of Agriculture. New York: McGraw-Hill, 1953, p. 147.

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  7. Vernon Ruttan, “The Impact of Urban-Industrial Development on Agriculture in the Tennessee Valley and the Southeast,”Journal of Farm Economics, Vol. XXXVII, no. 1 (February 1955), pp. 38–56; John Friedmann,The Spatial Structure of Economic Development in the Tennessee Valley. Research Paper No. 1, Program for Education and Research in Planning. The University of Chicago, 1955; and William H. Nicholls “Industrialization, Factor Markets, and Agricultural Development,”Journal of Political Economy, Vol. LXIV, no. 4, (August 1961), 319–340.

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  9. Vernon Ruttan, comments on preceding article by D. C. North,op. cit.

  10. Harvey S. Perloff and Lowdon Wingo, Jr., “Natural Resource Endowment and Regional Economic Growth,” in Joseph J. Spengler, ed.,Natural Resources and Economic Growth. Washington, D. C.: Resources for the Future, 1961, pp. 204–205. Two other works should be cited in this connection: Chauncy D. Harris, “The Market Factor in the Localization of Industry in the United States,”Annals of the Association of American Geographers, Vol. XLIV, no. 4 (December 1954), pp. 315–348; and Edward L. Ullman, “Regional Development and the Geography of Concentration,”Papers and Proceedings, Regional Science Association, Vol. IV, 1958, pp. 179–198.

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  11. United Nations,Economic Survey of Europe for 1954. Geneva: Economic Commission for Europe, 1955, p. 138.

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  12. Ibid..

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  13. Gunnar Myrdal,Economic Theory and Underdeveloped Areas. London, 1957; Albert O. Hirschman,The Strategy of Economic Development. New Haven: Yale University, Press, 1958, Chapter X; and François Perroux,L'économie du XXe siècle Paris: Presses Universitaires de Franch, 1961, Part II.

  14. Albert O. Hirschman,op. cit.,, p. 194.

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  15. John Friedmann, “Regional Planning: A Problem in Spatial Integration,”Papers and Proceedings, Regional Science Association, Vol. V (1959), pp. 167–180.

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  16. This tendency is reflected in the dramatic decline of public interest in regional development schemes such as the TVA.

  17. On the problem of cooption, see Political and Economic Planning (PEP),Economic Planning in France. Planning Broadsheet, August 14, 1961. In the United States, groups like the Committee for Economic Development, the National Planning Association, and the National Bureau for Economic Research, although composed entirely of private citizens, function as quasi-public planning agencies. Private enterprise is also deeply involved in administrative processes at the national level (e.g., ICC, FCC, Commerce Department, etc.). And large-scale public participation in major planning studies such as those sponsored by the Massachussetts Mass Transportation Commission is viewed as an essential element in a successful planning process.

  18. Stefan Robock, “Regional Aspects of Economic Development, with Special Reference to Recent Brazilian Experience in the Northeast,”Papers and Proceedings, Regional Science Association, vol. II (1956), pp. 51–69.

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  19. This point is discussed in a challenging way by Albert O. Hirschman and Charles E. Lindblom, “Economic Development, Research and Development, Policy Making: Some Converging Views,”Behavioral Science, Vol. VII, no. 2 (April 1962), 211–222. See also Andrew G. Frank, “Goal Ambiguity and Conflicting Standards: An Approach to the Study of Organization,”Human Organization, Vol. 17 (1959), pp. 8–13.

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  20. Edward C. Banfield,Political Influence. The Free Press of Glencoe, 1961, describes such a stalemate for a series of important public decisions in the city of Chicago.

  21. L. Lefeber,Allocation in Space. Production, Transport, and Industrial Location. Amsterdam: North Holland Publishing Co., 1958.

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  22. For instance, Hollis B. Chenery, “Comparative Advantage and Development Policy,”American Economic Review, Vol. XL, No. 1 (March 1961), pp. 18–51.

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  23. This formulation ignores the strong possibility that well-conceived and technically sound projects may be in short supply relative to the available capital for investment. We shall return to the problem of a project shortage at a later point.

  24. See, for instance, Political and Economic Planning,Regional Development in the European Economic Community. London: Allen and Unwin, 1962. Interest in the United States has been focussed recently on “area redevelopment.” Cf. the “Area Redevelopment Act” of 1961 (P. L. 87-27); Robert J. Lampman,The Low Income Population and Economic Growth, Study Paper No. 12, Joint Economic Committee, Congress of the United States, December 16, 1959; Bureau of Labor Statistics, United States Department of Labor,The Structure of Unemployment in Areas of Substantial Labor Surplus, Study Paper No. 23, Joint Economic Committee, Congress of the United States, January 30, 1960; and Donald R. Gilmore,Developing the Little Economies. A Survey of Area Development in the United States. New York: Committee for Economic Development, 1960. This is only a small sample of the available literature on the subject of depressed regions.

  25. Continued metropolitan growth must be regarded as one of the prime facts of modern civilization. The case of the New York Metropolitan Region may be cited on a typical example. In 1960, the region had already reached a total population of 16 million; projections suggest 26 million by the year 2000. To be sure, the region's share of national population has been gradually declining since 1940, when it accounted for 9.5 percent of the United States population. Sixty years later, however, the New York region is still expected, conservatively, to have between 7 and 8 percent of the U. S. total, and in absolute numbers, metropolitan population will have more than doubled. (Regional Plan Association,Spread City. Projections of Development Trends and the Issues They Pose: the Tri-State new York Metropolitan Region, 1960–1985). It may be true that, as Balassa suggests, “diseconomies arise as the further influx of capital leads to the congestion of urban areas, overcrowding transportation facilities, increased cost of social utilities, and rising factor prices.” (Bela Balassa,The Theory of Economic Integration. Homewood, III.: Richard D. Irwin, Inc., 1961, p. 196). And it probably is also true that such diseconomies “lead to a divergence between social and private productivity. Entrepreneurs base their investment and production decisions on private profitability and take into account the agglomeration economies appropriated by the firm, whereas the external economies and diseconomies created through the activity of the enterprise are not subject to cost calculations.” (Ibid.) Nevertheless, such super-metropolises as Paris, London, Moscow, or Tokyo continue to grow, blandly unmindful of any government efforts to control their expansion. It may well be that a total calculus of social costs and benefits stemming from further agglomeration would show anet-gain to society in terms of productivity, future growth, and cultural attainment. Vaguely aware of this possibility, governments have perhaps been unwilling to exercise their powers to the full in preventing further migration into metropolitan areas. In any event, efforts to define the optimum scale cities have been notoriously unsuccessful (Otis Dudley Duncan, “Optimum Size of Cities,” in Paul K. Hatt and Albert J. Reiss, Jr., eds.,Cities and Society. Glencoe, III.: The Free Press, 1957, pp. 759–772).

  26. This slant in perception is brought out clearly both in Stefan Robock,op. cit., and in Albert O. Hirschman,op. cit. Hirschman writes: “...the external economies due to the poles, though real, are consistently over-estimated by the economic operators.” (p. 185). On some of the considerations which enter location decisions in developing countries, see Albert Lauterbach, “Managerial Attitudes and Economic Development,”Kyklos, Vol. XV, No. 2 (1962), pp. 374–400.

  27. George H. Borts, “The Equalization of Returns and Regional Economic Growth,”American Economics Review, Vol. L, No. 3 (June 1960), pp. 326.

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  28. See especially Rufus B. Hughes, “Inter-regional Income Differences: Self-Perpetuation,”Southern Economics Journal, Vol. XXVIII (1961), pp. 41–45; F. T. Bachmura, “Man-Land Equalization through Migration,”American Economic Review, Vol. XLIX (1959), 1004–1017; B. H. Lubke and John F. Hart, “Migration from a Southern Appalachian Community,”Land Economics, Vol. 34 (1958), pp. 44–53; and Bernard Okun and R. W. Richardson, “Regional Income Inequality and Internal Migration,”Economic Development and Cultural Change, Vol. IX (1961), pp. 128–143.

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  29. Richard A. Easterlin, “Long-Term Regional Income Changes: Some Suggested Factors,”Papers and Proceedings, Regional Science Association, Vol. IV (1958), pp. 313–325.

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  30. Ibid.,, p. 325.

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  31. Ibid.,.

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  32. Op. cit.,, p. 204.

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  33. Albert O. Hirschman,op. cit., passim.,

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  34. Albert O. Hirschman and Charles E. Lindblom,op. cit., “, pp. 210–212.

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  35. Ibid.,, p. 220.

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  36. Lloyd Rodwin, “Metropolitan Policy for Developing Areas,”Daedalus, Winter 1961, pp. 132–146.

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  37. James G. March and Herbert A. Simon,Organizations. New York: John Wiley and Sons, 1958, chapter 7.

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  38. See John Friedmann, “Integration of the Social System: an Approach to the Study of Economic Growth,”Diogenes, No. 33 (Spring 1961), pp. 75–97, for a more complete discussion of the principle of integration. Also Bela Balassa, “Towards a Theory of Economic Integration,”Kyklos, Vol. XIV, No. 1 (1961), pp. 1–14.

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  39. John Friedmann, “Urbanismo como vocação,”Binário, (Lisbon), August 1962, pp. 526–534.

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  40. Hollis B. Chenery, “Development Policies for Southern Italy,Quarterly Journal of Economics, November 1962.

  41. According to Thomas Reiner, a “‘correct’ decision to allocate-i.e., in terms of some specific criterion—is not uniquely determinate with regards to a specific decision to locate investment in a particular region unless and until the criterion embraces a definite regional delimitation. But such a delimitation not only constitutes a determination which is separate from the allocation criterion itself; it embraces a host of value considerations as to what is a ‘correct’ delimitation.” (“Regional Investment Allocation Criteria.” Paper read at the First Latin American Conference on Regional Planning, Caracas, Venezuela, November 12–16, 1962, pp. 13–14). For a full discussion of the problems of statistical analysis with reference to geographic areas-a topic most relevant to quantitative goal statements and allocation rules for regional development-see Otis D. Duncan et al.,Statistical Geography. Glencoe, Ill: The Free Press, 1961.

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  42. Jean Gottmann,Megalopolis. New York: The Twentieth Century Fund, 1961. Gottmann applies the name to denote only the “unique cluster of metropolitan areas of the Northeastern seaboard of the United States.” (p. 4). It is increasingly being used, however, as a generic name as a substitute for the more traditional geographic concept of “conurbation.”

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  43. This statement needs to be modified considerably in countries where federalism is strong and where individual states are each treated separately for purposes of planning. In that case, regional boundaries are not “transitory,” and the area for which economic development is to be meaningfully measured might well be the state unit.

  44. For a comprehensive and critical discussion of relevant techniques for regional planning, see Walter Isard,Methods of Regional Analysis: An Introduction to Regional Science. Cambridge: The Technology Press of M. I. T. and New York, London: John Wiley and Sons, 1960; also Walter Isard and John H. Cumberland, eds.,Regional Economic Planning. Techniques of Analysis. Paris: O. E. E. C., 1961.

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  45. Hollis B. Chenery, “Comparative Advantage and Development Policy,”op. cit. Quarterly Journal of Economics, November 1962. pp. 31–39, states the case for programming as the preferred method for solving the allocation problem. See also United Nations,Programming Techniques for Economic Development. Report by a Group of Experts. Bangkok: ECAFE, 1960, esp. chapter 6. The United Nations has perhaps done the most in stimulating interest in programming techniques applied in developmental planning. See the many publications on this subject which have been issued by the U. N. Economic Commission for Latin America. On project planning, the United NationsManual on Economic Development Project (New York, 1958) is indispensable.

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  1. M. I. T.-Harvard Joint Center for Urban Studies, Massachusetts, USA

    John Friedmann (member)

  2. Massachusetts Institute of Technology, Massachusetts, USA

    John Friedmann (member)

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Friedmann, J. Regional economic policy for developing areas. Papers of the Regional Science Association 11, 41–61 (1963). https://doi.org/10.1007/BF01943194

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