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The Crisis of the Core Seen through the Eyes of the Periphery: A Schelling Model of the Global-South Megacity and the European Crisis

Author

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  • Gary A. Dymski

    () (Leeds University Business School, UK University of California Riverside, USA)

Abstract

Adapting Schelling’s checker-board discrimination framework, we develop a disequilibrium model to examine growth in two core-periphery settings: global-South megacities and the Eurozone. Regarding megacities, informal sector growth undercuts the government’s capacity to fund fully adequate public services. Regarding the Eurozone, an increase in the relative size of the periphery will – under the government’s balanced-budget constraint – undercut the provision of public safety-net and infrastructure services. And if low-wage production is initiated in the European periphery, the core is likely to collapse. “Urbanization is decisive because it is so expensive. The difference between the costs of urban development and rural development does not turn on comparing the capital required for factories and that required for farms. Each of these is a small part of total investment, and the difference per head is not always in favor of industry. The difference turns on infrastructure.†W. Arthur Lewis (1977, pp. 39-40). Classification-JEL: C63, C70, E11, E12, O11, O17, P10

Suggested Citation

  • Gary A. Dymski, 2013. "The Crisis of the Core Seen through the Eyes of the Periphery: A Schelling Model of the Global-South Megacity and the European Crisis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(4), pages 433-455, June.
  • Handle: RePEc:voj:journl:v:60:y:2013:i:4:p:433-455
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    References listed on IDEAS

    as
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    Cited by:

    1. Ceyhun Elgin & Oğuz Öztunalı, 2014. "Environmental Kuznets Curve for the Informal Sector of Turkey (1950-2009)," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(4), pages 471-485, September.

    More about this item

    Keywords

    Schelling; Core and periphery; Informal-sector; Hernando De Soto; Global-South megacity; European crisis; Disequilibrium distribution;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P10 - Economic Systems - - Capitalist Systems - - - General

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