Modelling economic development in the European

Ultra-periphery

Diane PerronsDepartment of Geography and Environment and

Gender Institute LSEd.perrons@lse.ac.uk

Modelling economic development in the European Ultra-periphery

The ultra peripheral regions in the global context

Criteria for a useful ‘scientific’ model

Contributions from ‘economic geography’

Value chain perspective - strengths and limitations

Measures of Regional GDP and Regional well being

Gender mainstreaming and regional analysis

Modelling regional development Convergence – neo-liberalism

Divergence economic geography – clustering perspectives development studies – value chain analysis

Divergence – clustering (1)– quantitative perspective: clusters depend on the balance between centripetal and centrifugal forces (Krugman 1998)

centripetal forces- cumulative growth and clustering

market size – linkages- external economies of scale

thick labour markets low/medium transport

costs pure external economies

(e.g. knowledge spillovers)

centrifugal forces- dispersion

immobile factors (e.g.labour)/land rents

high transport costs

pure external diseconomies (e.g. congestion)

Divergence – clustering (2): clusters depend on the balance between externalities and spatially dependent transaction costs (adapted from Scott 1998)

Externalities Spatially dependent transaction costs Uniformly

low

heterogeneous Uniformly high

Low 1. spatial entropy

2.random dispersal and emerging hierarchical landscapes

3. hierarchical landscape - small market centres – dispersed activity

High 4.small interconnected clusters

5. super clusters 6. small disconnected clusters

Value chains and regional analysis Value chains focus on cross border links and map:

the input output structure, the territorial structure, and the governance structure

of commodities from production to sale.

Analyses the mode of integration of different production units,

and identifies the differential shares of value appropriated at different stages

Provides an analytical link between local regional development and the wider national/ global context

Governance structure and capacity for upgrading (Adapted from Schmitz 2004)

Governance structure Capacity for UpgradingArm’s length market relations Competition in the open market -

Upgrading depends on the firms own capacity, local context and assistance from local authorities

Networks – firms linked by complementary competences

Horizontal or reciprocal relations between firms who coordinate their requirements through sharing information.

Upgrading most likely as local firms already sophisticated.

Quasi hierarchy – asymmetry of power in favour of lead firm

Lead firm exercises control through the supply chain in order to ensure product standards and delivery performance, may give assistance to local firm to meet targets but may impede functional upgrading

Hierarchy – vertical integration

 

Lead firm owns of some operations in the chain.

Upgrading largely determined by preferences of lead firm

Regional development, economic and social well being GDP or regional well being – see (Dunford 1996)

sPop

EmployPop

EmployPop

GDP

sPop

GDP

Re*

Re

Regional productivity and employment (nuts 1) (2003)

Regional productivity and employment (nuts 2) (2003)

Gender mainstreaming in regional theorising? "Equality between men and women is one of the

EU’s fundamental objectives, and we have a responsibility to see that it is taken into account in the area of regional policy, which accounts for one third of the EU budget and is one of the most visible policies for citizens. Gender mainstreaming is also part of the Lisbon strategy, because gender discrimination, both overt and latent, equates to a great waste of human resources. Eliminating discrimination will

lead to gains in both employment and productivity."Danuta Hübner (2005) , European Commissioner for regional policy, http://ec.europa.eu/employment_social/news/2005/may/gender_en.html

circular flow of (a) incomes (b) output of goods and services

Households Government Firms

T G

Consumption C S

H

X I

Incomes (y)

Household Sector

Public Sector

Private Sector

Provisioning values, labour services

Marketed goods and services

PS PS

D

Conclusion

Linking the cluster approach with value chain analysis helps to identify patterns of economic activity that would enhance regional GDP and regional employment.

Research could also be devoted to developing broader models of economic and social well being by adapting some of the measures used by the UNDP in its work on the human development index and by feminist economists with respect to a more holistic understanding of the economy to the regional level.