Comparison of Regional Structures of Production: A Study in Development Strategy

Suresh Deman
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Suresh Deman: Australian National University

The Review of Regional Studies, 1990, vol. 20, issue 2, 60-75

Abstract: Input-output techniques have acquired a pivotal place in the conversion specifications of objective functions and in the planning of structural relations of an economy. The synoptic intent of this work is to review various operational applications of regional intersectoral patterns of linkages and complementarities that may be useful in formulating an appropriate strategy for regional economic development. Input-output techniques are extensively used for this purpose. There does not exist any fool proof strategy for formulating regional development strategy. One view is that the "leading sectors" are identified on the basis of interindustry linkages and essential resources as production proceeds in the use of inputs. This assumes a reasonable expectation that the relevant output can be sold within these sectors. The other view studies structural changes in the process of economic growth on the basis of linkages. This can be accomplished by comparing the scale as well as the ranking of sectors between groups of regions based on interindustry linkages. On this basis one could test Hirschman's unbalanced growth hypothesis that high priority be given to the sectors which have high linkages and low priority to others. However, Yutopoulos and Nugent's (1973) studies do not find much support in favor of Hirschman's perspective. There is an alternative hypothesis which regards regional development as the change induced by natural resource oriented and export-base industries. Such industries are located on the basis of transport, technological and resource cost advantages of a specific region over the others. Therefore, identifying regional trade flows for studying cost disadvantages of natural resource oriented industries is very important Similarly, changes in demand outside the region, natural resource position, changes in technology and relative costs of factor inputs, etc., should be tackled directly for evolving any regional development strategy rather than basing decisions on the size and pattern of linkages.

Date: 1990
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