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Regional inequality: An analysis under the core–peripheral model
Author(s) -
Gumpert Marcus
Publication year - 2019
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/grow.12288
Subject(s) - underdevelopment , economics , convergence (economics) , core (optical fiber) , inequality , comparative statics , dual (grammatical number) , core model , marginal utility , substitution (logic) , extension (predicate logic) , microeconomics , macroeconomics , computer science , economic growth , mathematics , art , telecommunications , mathematical analysis , literature , programming language
Desmet, Gumpert, and Ortίn have analyzed regional development using the Ricardian model or the Heckscher–Ohlin theorem. However, aspects such as consideration of combined wages, substitution elasticities, marginal costs, fixed costs, and number of companies were completely ignored. This study investigates the underdevelopment of regions in light of Krugman`s core–peripheral model. The extension of the model is intended to analyze the aspects that have so far been ignored and their influence on the benefits of the two regions. The following aspects characterize the model. Two regions with two sectors are considered for the model. The regions are characterized by different technological equipment. The first region is industrial. The second region has an agricultural character. When a new technology is available, both regions can benefit under certain conditions. The financial transfers lead to a convergence of wages.