2/26/13

[Economy 4 Newbies] Backwash and Spread Effect in Economic Development by Puneeth Mrunal

[Economy 4 Newbies] Backwash and Spread Effect in Economic Development by Puneeth

All credit to Puneetg of IOforum for this article. Q. What is Backwash effect? Ans. It is an economic development effect suggested by Swedish economist Gunnar Myrdal. It basically means that if one particular area in a country starts growing or developing, it causes people, human capital as well as physical capital (infrastructure, finance, machines etc.) from other parts of the country to gravitate towards this growing centre. This essentially leaves the other areas worse off than before because their best brains and capital leave them to go to the growing centre. It means that growth in one area adversely affects the growth in the other. For instance, in India, lets say Delhi is the developing centre with all the companies being set up there. Then people from all over Haryana, Punjab, UP, Bihar etc. have a tendency to move to Delhi because all companies are located there and better employment opportunities exist. So Delhi will grow but the remaining areas will be worse off. This is Backwash effect. Counter to the Backwash Effect is the

Spread Effect
also discussed by Myrdal. Here, development in one place, spreads to its suburbs and all the adjoining areas. Again taking the example of Delhi, we could argue that suburbs like Faridabad, Gurgaon, Ghaziabad etc. have benefited from Delhis growth due to the Spread Effect caused by Delhis growth. Previous Posts
[Economy] Rangarajan Gas Pricing, Production Sharing Contract (PSC), APM, NonAPM, issues, recommendations [Economy] EPFO: Compulsory UID, Investment in AAA Corporate bonds, Air India [Economy] Geographical Indication GI-tag: Features, Issues, benefits, Madurai Malli, Meerut scissors [Economy] Banking Ombudsman: Meaning, functions, appointment, reforms explained [Economy] Dedicated Freight Corridors (DFC), High Speed Rail Corridors, Rail Tariff Regulatory Authority, Issues, Reforms in Indian Railways [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres (CSC) [Economy] Sugar Pricing and Decontrol, Rangarajan Committee, FRP vs SAP meaning, issues, explained [Economy] SEBI-Sahara OFCD case: Optionally fully-convertible debentures- Meaning explained [Economy] Corporate Social Responsibility (CSR): Meaning, provision in Companies Bill 2012 [Economy] SARFAESI Act, Asset Reconstruction Company (ARC), Security Receipts (SR), QIB, DRT, Central Registry

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vikas
Reply to this comment the above link doesnt lead to any where

vikas
Reply to this comment [Economy] LIST of All Articles published by me to clear the basic concepts of Economy for any recruitment exam or interview Mrunal is not leading to desired page

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[Economy] LIST of All Articles published by me to clear the basic concepts of Economy for any recruitment exam or interview Mrunal
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