Cumulative causation

Indian Economy glossary

Topic: Economic Growth Theories and Business Cycles · NCERT: Beyond NCERT

Meaning

Cumulative causation is Gunnar Myrdal's (1957) theory that regional inequality tends to widen by itself. Growing regions pull labour, capital and talent out of lagging regions; these are called backwash effects. Growing regions also pass some benefits outward, such as demand for raw materials and the spread of technology; these are called spread effects. Myrdal argued that backwash is usually stronger than spread, so rich regions keep getting richer. This makes a case for active regional policy.

Example

Young, skilled workers and savings move from Bihar and Uttar Pradesh to fast-growing states such as Maharashtra and Karnataka. The lagging states lose the very resources they need to grow, so the gap between states persists.

Don't confuse with

  • Growth pole theory (Perroux, 1955): it expects dynamic centres to spread development to their surroundings. Myrdal warns that backwash usually wins.

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