A Demoeconomic Model of Interregional Growth Rate Differences

Ledent, J. & Gordon, P. (1978). A Demoeconomic Model of Interregional Growth Rate Differences. IIASA Research Memorandum. IIASA, Laxenburg, Austria: RM-78-052

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Abstract

This paper sets forth a demoeconomic approach to interregional development along non-neoclassical lines. This objective is carried out by elaborating on a recently published model of interregional growth rate differences (Dixon and Thirlwall, 1975).

First, a critical review of this model suggests the implausibility of its main result, i.e., the possibility of steady growth by a pair of regions over the long run. It is shown that (a) the omission of migration which would eventually dampen the implied income divergence; and (b) the linear structure of the model cause such a result.

Thus, an extension of this model is proposed which includes migration as well as other demographic aspects of development (labor force participation and unemployment), endogenously and simultaneously determined. Interestingly enough, the nature of these variables provides an impetus for reconsidering linearity| the proper modeling of demoeconomic effects necessarily introduces non- linearities.

Non-static long-term rates of change are shown to emerge from the simulation of this extended model| as a consequence of population shifts due to migration, there appear regional cycles accompanied by cycles of divergence and convergence of income.

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