Question

Explain Gunnar Myrdal’s Cumulative Causation Theory. How can you explain regional inequalities in developing countries by using this theory?
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Answer 1

Answer:- karl Gunnar Myrdal was a Swedish economist and sociologist introduced cumulative causation theory in 1957. Myrdal theory is based on hypothesis of geographical dualism that is applicable to nations and regions. It shows the persistence of spatial differences in economic development between the countries and regions in the nation's . His theory is based on three facts.

(1) there exist a group of wealthy countries with many poor countries.

(2) wealthy countries continues to develop while poor countries stagnate.

(3) Difference between both poor as well as rich countries are getting bigger.

According to myrdal theory economic development leads to circular causation process result to increase in development of developed countries while the weaker countries remain poorer. If market forces is left free the economic activities that gives higher return in developing nation will cluster in certain localities or region within the nation's.

Rest of the country will remain backwater. Myrdal suggest that market forces results in greater interregional differences. ( richer regions get richer and poor regions gets poorer) . This will result in negative cumlative process such as closeing of production plants and incease of local taxes. Myrdal suggest that rich region should utilize internal and external economies of scale.