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Community Economic Development ECON 3990

Community Economic Development ECON 3990. Economic Theory. Introduction. Survey of existing economic theories Two areas of theory Regional Development Theory Economic Development Theory. Economic Development Theories. Development Stages Theory Staple Theory Big Push Theory

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Community Economic Development ECON 3990

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  1. Community Economic Development ECON 3990 Economic Theory

  2. Introduction • Survey of existing economic theories • Two areas of theory • Regional Development Theory • Economic Development Theory

  3. Economic Development Theories • Development Stages Theory • Staple Theory • Big Push Theory • Convergence Theory

  4. Regional Development Theories • Development Stages Theory • Export Base Theory • Location Theory • Attraction Model Theory

  5. Theories • Post World War II: theories emerged to explain economic development • Two opposing theories of regional growth • Development Stages Theory • Export Base Theory

  6. Development Stages Theory • Sequential path of development • Theory proposes three stages: • Primary Secondary Tertiary

  7. Export Base Theory • Regional growth is dependent on the export base • “Exportable Commodities”

  8. Staple Theory of Economic Growth • Staple theory explains economic growth as a process of diversification around the base • Central concept, examines the spread effects of the export sector

  9. Staple Theory • Impact of export activity on the domestic economy and society • The construction of a staple theory involves classifying the spread effects

  10. Staple Theory: Linkages • Backward Linkages: a measure of the extent that a sector’s output depends on inputs purchased from other sectors in the region. • Forward Linkages: a measure of the extent that a sector’s output is sold as inputs to other sectors of the region

  11. Staple Theory: Linkages • Final Demand Linkage: amount that investment in domestic sectors is producing consumer goods for the export sector • Linkages have a multiplier effect

  12. Staple Theory: Leakages • Leakages measure income flows leaving a region • Examples include migratory labour and servicing capital imports

  13. The Staple Trap • over-concentration of resources devoted to the export sector

  14. Big Push Theory • development requires a series of projects • Complementarity of industries

  15. Location Theory • Regions best suited to industrialization are predisposed to higher rates of growth and development • Location location location!

  16. Attraction Models • Community can alter its position by offering incentives and subsidies

  17. Convergence Theory • Underdevelopment is a consequence of increasing divergence and unresponsiveness of domestic production to respond to the needs of the local population

  18. Two stage strategy of convergence • Convergence of domestic resource use and domestic demand • Convergence of domestic demand and domestic need

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