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Regional Inequality: An Analysis under an Extended Core-Peripheral Model

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  • Marcus Gumpert

    (Health Insurance Physicians Unification Saxony)

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.

Suggested Citation

  • Marcus Gumpert, 2020. "Regional Inequality: An Analysis under an Extended Core-Peripheral Model," Journal of Industry, Competition and Trade, Springer, vol. 20(1), pages 157-186, March.
    • Handle: RePEc:kap:jincot:v:20:y:2020:i:1:d:10.1007_s10842-019-00296-2
    DOI: 10.1007/s10842-019-00296-2
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    References listed on IDEAS

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    1. Klaus Desmet, 2002. "A Simple Dynamic Model of Uneven Development and Overtaking," Economic Journal, Royal Economic Society, vol. 112(482), pages 894-918, October.
    2. Padoa Schioppa, Fiorella Kostoris & Basile, Roberto, 2002. "Unemployment Dynamics of the 'Mezzogiornos of Europe': Lessons for the Mezzogiorno of Italy," CEPR Discussion Papers 3594, C.E.P.R. Discussion Papers.
    3. Marcus Gumpert, 2019. "Regional inequality: An analysis under the core–peripheral model," Growth and Change, Wiley Blackwell, vol. 50(2), pages 775-802, June.
    4. Elise Brezis & Daniel Tsiddon, 1998. "Economic growth, leadership and capital flows: the leapfrogging effect," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(3), pages 261-277.
    5. Marcus Gumpert, 2016. "Rational underdevelopment: regional economic disparities under the Heckscher-Ohlin Theorem," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 89-111, January.
    6. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-1219, December.
    7. Madalena Fonseca, 2017. "Southern Europe at a Glance: Regional Disparities and Human Capital," Advances in Spatial Science, in: Madalena Fonseca & Ugo Fratesi (ed.), Regional Upgrading in Southern Europe, chapter 0, pages 19-54, Springer.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Regional economic disparities; Core-peripheral model; Interregional transfers; Regional policy; Uneven development;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F19 - International Economics - - Trade - - - Other

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