Balanced Regional Development Theory

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					Balanced Regional Development Theory
First, an overview of regional balanced development theory
   Balanced economic development theory that there is a proportion of the major
constraints and to support mutual development. Neo-classical theory of the balanced
development of the region is the regional representative of the equilibrium theory, is
based on self-balancing tendency of neo-classical assumptions based. According to
this theory, the market mechanism is an "invisible hand", it is
generally firmly believe that under the conditions of full market competition, price
mechanisms and competition will lead to optimal allocation of resources.
This theory is built upon a series of stringent assumptions. These assumptions include:
(1) production in two kinds of capital and labor factors, and can replace each other; (2)
the full market competition model; (3) the free movement of factors of production,
and is no cost; (4) region and constant returns to scale certain technical conditions; (5)
capital-intensive and high developed areas, the marginal capital gains rate; developed
regions with high labor-intensive, low wages.
The theory that the regional economic growth depends on capital, labor, and
technology elements into position 3, while the various elements of the compensation
depends on its marginal productivity. In a free market competition mechanism, factors
of production to achieve the highest marginal rate of return and liquidity. In the
market economy, capital, labor and technology, the free movement of factors of
production, will lead to balanced regional development. Thus, despite the existence of
the regional factor endowments and differences in levels of development, as always
from low-wage labor in less developed areas of the developed areas to the high-wage
movement, in order to obtain more remuneration. Similarly, capital from high-wage
developed regions to less developed areas with low wage movement, in order to
obtain more capital gains. The free flow of, and finally will lead to the average of the
various elements of income, so as to achieve balanced regional economic growth
Second, the content of the regional balance of development theory
   1. Laibinsitan proposition of the critical minimum effort. Suggested that developing
countries should strive to achieve a certain level of the economy, breaking the
low-level equilibrium, in order to obtain long-term growth. Developed economy, per
capita income to increase or decrease the power to stimulate co-exist, if economic
development efforts to reach a certain level, increase per capita income less than the
critical size of the stimulus, it can not overcome the obstacles to development, break
through the low-level equilibrium. For a country to achieve long-term sustained
economic growth, it must be greater than a certain critical minimum size during the
growth stimulus.
2. Nulsen low level trap theory: the Malthusian theory, shows low levels of per capita
income in developing countries there is the phenomenon of reincarnation again. The
chronic underdevelopment of economic performance for the real per capita income in
subsistence or near a low level of life-sustaining equilibrium; low savings and
investment income to be greatly limited; if to increase the national income to increase
savings and investment also often leads to population growth, which in turn pushed
back to low per capita income equilibrium, this is an underdeveloped economy
insurmountable trap. In the case of constant external conditions, to get out of the trap,
the per capita income growth rate must exceed population growth.
3. Rosenstein Rodin's big push theory. Investment developing countries
advocated a certain role in the speed and scale in all industries continued to break its
neck. This is more of the market in developing countries because of its three
"indivisibility" of the theory that social sharing of capital
indivisibility, the inseparability of demand, savings, and the inseparability of the
supply of external economies is more convincing evidence.
4. Nurkse vicious cycle of poverty theory and Nurkse's balanced growth
theory. Is the least developed countries lack of capital hampered economic growth and
development of key factors, induced by investment and savings is less caused by
weak capacity, which is also produced two issues of supply and demand of capital in
both the vicious cycle exists: But the vicious cycle of poverty is not static, balanced
growth can escape the vicious circle is to expand market capacity and create a force to
be induced investment approach.
The theory is applied in the regional economy on the theory of the formation of a
regional balanced development, it not only emphasizes the balance between sectors or
industry development, developing, and emphasized the balance within the regional or
regional (simultaneous) development, that the balance of space. That with the
international mobility of factors of production area, the region will converge at the
level of economic development (balanced), so advocates a balanced distribution of
productive forces in the region of space on the balance of investment, balanced
development of the industry, go hand in hand, and ultimately the regional economy
balanced development.
Third, the balanced development of their defects
   A deficiency of the theory of balanced development is to ignore a fundamental fact
that the general region, particularly in less developed regions, can not have all
industries and regions to promote the balanced development of the capital and other
resources, is difficult to do in the early stage of economic development to balanced
development. The second flaw, ignoring the scale and technological progress, it seems
a perfectly competitive market supply and demand will determine the flow of labor
and capital, we can determine the wage level of return and the return on capital.
However, the role of market forces tends to increase rather than reduce regional
differences. Because of better developed regional infrastructure, services and greater
market and the capital and labor have a stronger appeal to the polarization effect,
economies of scale, although the region has developed an extension to the
surrounding area effect However, in complete markets, polarization effects are over
extended, so that differences among regions increased. In addition, the technology
will also return on capital to differ materially different conditions, then capital flows
will cause elements of elements of more developed regions, the scarcity of capital and
economic development more difficult.
c is obviously starting from a rational concept of using static analysis, a simplistic,
with the objective reality of developing countries, distance is too large to explain the
actual process of economic growth and can not find a way for regional development.
In the initial stage of economic development, unbalanced development in developing
countries are more reasonable and practical guide.
Fourth, the development of neo-classical theory of regional balance Commentary
   Neo-classical theory after the regional balanced development, in some less
developed countries and regions, regional development, subject to a certain degree of
attention; one-sided emphasis on the industrialization process of industrialization and
neglected regions and departments coordinated development of the balance between
tend to be affected; stress balanced large-scale investment and the importance of
effective allocation of scarce resources and the limitations of market mechanisms, the
need to implement the macroeconomic program for the less developed countries and
regions, industrialization and regional development provides a theoretical model,
produced some positive effects.
The theory built a large and rigorous logic architecture that the driving force of
economic development comes from the "diminishing returns",
"comparative advantage" and so on, but the theory is based on a
series of assumptions and Xian Shi far cry from the top of the. Not only to
technological progress as exogenous factors, not included in the analysis framework,
but lost the area (space) is an important feature, namely, to overcome distance
transportation costs will occur. All of which are spoken with the neo-classical
precondition for conflict.
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