Process Of Cumulative Causation Research Articles

Roma Migration and the Cumulative Causation of Diverging Policy Responses in Scandinavia

Since 2007, Scandinavia has emerged as a new destination for Romanian Roma engaging in circular migration for begging and street work. Using policy documents from parliamentary debates in Norway, Sweden, and Denmark, survey data on Romanian migrants in Stockholm, Oslo, and Copenhagen, and qualitative fieldwork in Scandinavia and Romania, this article explores the dynamic relationship between Scandinavian policy responses and migrant selection and adaptations. First, we demonstrate how the Scandinavian countries differ in their approach to migration for begging as a policy problem, resulting in different contexts of reception. Second, we show that these different contexts of reception have given rise to differences in the selection and adaptations of migrant beggars and street workers in each of the three capital cities. Third, we hypothesize that the relationship between policy responses and migrant adaptations should be conceptualized as a process of cumulative causation, where pre-existing policy differences are reinforced through positive feedback.

Cumulative causation in regional industrial path development – A conceptual framework and case study in the videogame industry of Hamburg and Shanghai

While broad evidence has been generated on the forces leading to divergent regional industrial path development, we still do not fully understand how initial structural differences between regions are dynamically attenuated in industrial path development processes. In other words, the cumulative causation processes instigating such differences are not well explored. In this paper, a process model is developed, which conceptualizes industrial path development as an iterative build-up of innovation system resources, which is conditioned by firm- and system-level agency. We argue that the specific configuration of system resource stocks, as well as firm- and system-level agency jointly condition the further evolution of a path each time a regional industry reaches a “critical moment”. Unpacking the cumulative system building process across development phases allows exploring how positive or negative cumulative causation patterns emerge in the path development process and how early interventions in the system building process may have knock-on effects at later stages.

THE PRODUCTIVITY PERFORMANCE OF DIFFERENT TYPES OF UK REGIONS AND THE CHALLENGES OF LEVELLING UP

AbstractThis article examines the key features of the UK’s spatial productivity relationships and discusses some of the key questions currently being articulated or debated as they relate to potential devolution-related discussions. The paper demonstrates that the local productivity challenges facing UK regions are nationwide in nature rather than local, and systemic rather than specific. In particular, the scale-productivity relationships across cities and regions which are evident in almost all other OECD countries are largely absent in the UK. Instead, previous prosperity is the dominant marker of current local prosperity, suggesting that cumulative causation processes define the UK regional and urban economic landscape rather than scale relations. This article explains these features in a manner which is accessible to a wide audience, in order to provide greater clarity regarding the fundamental economic problems to be addressed and also the underlying objectives which the Levelling Up agenda needs to achieve.

Structural change and cumulative causation: A Kaldorian approach

AbstractThis paper presents a multisectoral model based on Kaldor's approach to explain the importance of structural change and cumulative causation. Divergence in countries' growth rates in Kaldorian models are explained either by different degrees of increasing returns among sectors on the supply side or by different income elasticities of exports and imports on the demand‐side, but it is not explained by both factors together. In this vein, a multisector growth model that combines different sectoral income elasticities and different sectoral increasing returns is built to explain how structural changes toward high‐tech industries can trigger a process of cumulative causation and ensure higher growth rates in the long run.

Class inequality and capital accumulation in Brazil, 1992–2013

Abstract This article explores the patterns of class inequality and capital accumulation in Brazil, showing the drivers and limits of the decline in inequality that occurred during the Workers’ Party governments. It proposes that minimum wage hikes and greater social security changed the demand pattern and kick-started a cumulative causation process. Growth and redistribution thus reinforced each other for a period, and then spelled their own limits. As growth accelerated in the 2000s, a Gini decomposition indicates that class inequality decreased, but confined to changes between workers—capitalist income and social stratification were preserved. This also endogenously led to a regressive structural change, as low-productivity, labour-intensive services grew and international trade patterns worsened. This created a medium-term dependence on commodity prices for balance-of-trade solvency, and heightened cost-push inflation, which could not be overcome under the limited policy framework in place. The constrained basis for reducing inequality and the regressive structural change underscore that developmental strategies requires broad, multi-dimensional inequality-reducing measures and an encompassing catching-up project.

The “Forgotten Lands”: An Institutional Analysis of Post-Soviet Transitions

:This article provides an institutional critique of the analysis of the post-Soviet transition. It seeks to demonstrate that (i) an absence of a thorough institutional analysis, (ii) unrealistic marketization programs, (iii) conflicting ideological perceptions for the role of the state, and (iv) persistent systemic problems of state planning have constituted significant constraints to the transition away from the Soviet style planned organization of production and distribution. Preservation of the Soviet mode of production, in turn, inevitably led to a fundamentally flawed policy approach and guided the former Soviet bloc toward an unproductive and damaging path-dependence. This path-dependence contributed to retarding the process of cumulative causation and capped the influx to the joint stock of knowledge, both of which remain crucial for progressive institutional adjustment.

A reconciliation proposal of demand-driven growth models in open economies

PurposeThe purpose of this paper is to contribute to the literature on demand-driven Keynesian growth in open economies by developing a formal model that combines Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model into a more general specification. Then, based on the model developed in this paper, the authors analyse more broadly some important issues concerning the net impact of currency depreciation on the short-run growth.Design/methodology/approachThe authors build upon Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model in order to develop the theoretical framework. The authors also run numerical simulations to illustrate the net impact of devaluation on the short-run growth rate in different scenarios.FindingsThe authors demonstrate that the net impact of currency devaluation on growth can go either way, depending on some structural conditions such as the average share of imported intermediate inputs in prime costs of domestic firms and the institutional capacity of trade unions to set nominal wages through the bargaining process. The model also shows that the effectiveness of a competitive real exchange rate to promote growth is higher in countries where the share of labour in domestic income is also higher.Research limitations/implicationsThis paper provides a coherent formal starting-point for further theoretical developments on the interrelatedness between currency devaluation, income distribution and growth. These findings provide empirically testable hypothesis for future research.Originality/valueThe present study proposes an alternative formal solution for the theoretical problem of imposing a balance-of-payments constraint on the process of cumulative causation often incorporated in Kaldorian growth models. In terms of policy, the framework sheds further light on the relevance of income distribution and the labour market institutional framework for the dynamics of the exchange rate pass-through mechanism and allows us to map out related conditions under which currency devaluation can promote growth.

Structural change and economic growth: Advances and limitations of Kaldorian growth models

Many different approaches have addressed the issue of why were some developing countries able to reduce the income gap with developed economies while others were not. However, few approaches take into account the process of structural change. This paper reviews the theoretical basis of the Kaldorian approach for the relationship between structural change and countries’ long-term economic growth, emphasising its recent developments and its limitations. According to Kaldor, structural change towards specific sectors continuously increases countries’ growth rates through a cumulative causation process. Although he had stressed it exhaustively, only recently Kaldorian models have explicitly incorporated this feature. Nevertheless, these models still face significant limitations to show how a cumulative causation process takes place in an open economy. The paper discusses the most relevant such limitations, and suggests options for future directions. JEL codes: 041, E12, F43

Macroeconomic and Technological Dynamics: a Structuralist-Keynesian Cumulative Growth Model

In the Structuralist-Keynesian approach, economic growth is a cumulative causation process driven by a continuous interaction between macroeconomic and technological dynamics, involving several structural variables. In this context, labour productivity is both an input of the growth process, influencing macroeconomic dynamics, and a consequence of growth, because technological progress is endogenous and depends on macroeconomic dynamics. The aim of this paper is to build a Structuralist-Keynesian cumulative growth model driven by the dynamic interaction between the demand regime and the productivity regime. The model specifies the role of labour productivity and unit labour costs in the macroeconomic and technological dynamics. The results show that the effect of unit labour cost dynamics on economic growth depends on the degree of product market competition, innovation, and the distributional effects on aggregate demand. Finally, the main relationships of the model are empirically investigated for the European countries in the period 1992-2012, using both System GMM and Difference GMM dynamic panel models. JEL code: O41, O33, O47

Property and power: lessons from Piketty and new insights from the HFCS

This paper argues that the cumulative causation processes between wealth and power risk leading to an escalation of wealth inequality. Piketty's historical description of this development from administrative data for individual countries is corroborated with new survey data for the eurozone, the Household Finance and Consumption Survey (HFCS). Wealth is extremely unequally distributed in the eurozone – much more so than income. Furthermore, we provide a multi-faceted picture of wealth distribution in Europe using the socio-economic characteristics available in the HFCS, and we show that inheritances are the single most important factor for wealth inequality. The structural power to shape economic and political institutions is thus ever more concentrated. Finally, we discuss three channels through which the unequal distribution of private assets may affect power relations and economic activity.

Internal migration, regional labor markets and the role of agglomeration economies

We analyze the determinants and regional implications of internal migration flows across Danish municipalities in 2006–2012. Besides assessing the role of labor market and housing market factors in driving a region’s net migration rate, we particularly focus on agglomeration factors identified by “new” migration theories related to regional growth models and the new economic geography. The work contributes to the field in the following way: we extend the scarce literature on the different channels through which agglomeration economies act as an attractor for mobile labor. Moreover, we account for the role of space–time dynamic adjustment processes and simultaneity among migration and labor market variables and finally test for heterogeneity in the migration response to regional labor market disparities among low- and high-skilled migrants. Our results support the view that agglomeration economies are indeed key drivers of internal migration flows in Denmark. That is, while we obtain mixed evidence with regard to the role of traditional labor and housing market variables, most of the included proxies for agglomeration economies such as the region’s population density, patent intensity, endowment with human capital as well as the region’s employment share of knowledge-intensive services are positively correlated with the region’s net in-migration rate. Regarding the regional implications of internal migration flows, the results hint at a process of cumulative causation for the time period of analysis running from agglomeration economies to the inflow of mobile labor and subsequent regional income development.

Cultural impact on regional development: application of a PLS-PM model to Greece

This paper seeks to find evidence for the impact of local culture—living culture and cultural heritage—on regional socio-economic development in Greece. The main aim of the paper is to operationalize the culture-based development hypothesis for the existence of a cumulative causation process of cultural impact on Greek local development. To test this hypothesis empirically, we employ an original and uniquely compiled dataset of over 130 economic and social indicators about Greece on a NUTS3 level, assembled from various international and local sources. Employing a combined nonparametric partial-least squares path modelling approach, we find evidence that—in contrast to results from other European countries and the USA—in Greece, culture influences not only the human capital, but also the overall labour force structure. This appears to affect not only the economic productivity, but also the overall quality of life in the locality concerned. These results, based on nonparametric estimations, were confirmed through triangulation with parametric 3SLS and structural equation model tests. The latter use of parametric and nonparametric techniques in a mutually complementary manner is one of the novelties in this contribution.

Trade Costs and Economic Development

We test the hypothesis of the circular causality between trade costs and degree of economic development using data on Italian provinces. Using different methods to control for multilateral resistance, we apply a gravity equation to estimate sectoral exports to 188 countries over the period 1995-2004. Provincial trade costs are constructed as the sum of five province-specific elasticities, including distance, adjacency, and common money. We find that Italian provinces are heterogeneous with respect to trade costs. These costs are influenced by lagged provincial per capita income and industrial structure. In turn, trade costs influence future provincial per capita income. This two-way relationship between trade costs and income is broadly consistent with the cumulative causation process emphasized by the New Economic Geography.

Is cumulative growth in manufacturing productivity slowing down in the EU12 regions?

The cumulative causation in the relation between labour productivity and output growth, known as Verdoorn's Law, is empirically tested using data from 109 EU12 regions during the period 1977-2005. Several specifications of Verdoorn's Law are put forward in this paper, which attribute the process of cumulative causation to a series of factors, including manufacturing agglomeration, spatial interaction, and responses to the problems of growth. The findings suggest that, although cumulative causation holds over this period, the slowdown of its pace is, nonetheless, apparent post 1992. Revisions in responses (e.g. policy) along with further research are thus recommended. © The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Rethinking Economic Growth in a Globalizing World: An Economic Geography Lens*

Abstract: This paper argues that cumulative causation processes are fundamental to understanding growth and development. Such processes derive from spatially concentrated increasing returns to scale including thick market effects, knowledge spillovers, sectoral and urban clustering, and self‐reinforcing improvements in physical and social infrastructure. These sources of agglomeration have been extensively analyzed in the economic geography literature. They imply that spatial unevenness in economic activity and incomes is an equilibrium outcome. Growth tends to be ‘lumpy’, with some sectors in some countries growing fast while other countries lag. The policy challenge is to lift potential new centers of economic activity to the point where they can reap the productivity and investment climate advantages of increasing returns and cumulative causation.

Endogenous Growth and Trade Liberalization between Asymmetric Countries

The paper presents a general equilibrium model of endogenous growth and trade between two countries, an advanced country (A) and a backward country (B). The development stage is summarized by the level of knowledge stock accumulated through R&D investments. The latter generates technological progress that intermediate goods producing firms, operating under increasing returns to scale and monopolistic competition, perform to obtain process innovations (reduction of production costs) when they are incumbents, or product innovations if they are new entrants. The model shows that convergence in long-run growth rates can be obtained even in absence of international technology spillover, in which case, under the assumption of no variety overlap, the gain from trade will be only static. Dynamic effects will be delivered instead in presence of an initial overlap in the varieties produced in the two countries, together with a wide gap in unit production costs. In this case it is shown that the impact of trade liberalization on firms' profits might generate a cumulative causation process which may lead to a polarization of innovative productions in the advanced country.

The Influence of Cumulative Causation Process on Regional Divergence in Lithuania during 1995–2003

We have aimed to analyse the processes of divergent development of Lithuanian regions by estimating the basic parameters and causes of the process of inter-regional stratification during 1995–2003. We have carried out an estimation of the process of differentiation using region’s GDP, FDI and investment in tangible fixed assets in a separate region. Mydral-Kaldor cumulative causation theory was used to analyse the reasons for uneven development. The situation analysed shows that return from investment in education is bigger in economically stronger regions. Therefore in order to overcome the effect of cumulative causation intervention on the part of government is necessary. Government should finance and promote investment in labour force education. Employees’ low qualification and lack of human capital in a region determine inefficient production and economic loss.

International Migration and Gender in Latin America: A Comparative Analysis

We review census data to assess the standing of five Latin American nations on a gender continuum ranging from patriarchal to matrifocal. We show that Mexico and Costa Rica lie close to one another with a highly patriarchal system of gender relations whereas Nicaragua and the Dominican Republic are similar in having a matrifocal system. Puerto Rico occupies a middle position, blending characteristics of both systems. These differences yield different patterns of female relative to male migration. Female householders in the two patriarchal settings displayed low rates of out-migration compared with males, whereas in the two matrifocal countries the ratio of female to male migration was much higher, in some case exceeding their male counterparts. Multivariate analyses showed that in patriarchal societies, a formal or informal union with a male dramatically lowers the odds of female out-migration, whereas in matrifocal societies marriage and cohabitation have no real effect. The most important determinants of female migration from patriarchal settings are the migrant status of the husband or partner, having relatives in the United States, and the possession of legal documents. In matrifocal settings, however, female migration is less related to the possession of documents, partner's migrant status, or having relatives in the United States and more strongly related to the woman's own migratory experience. Whereas the process of cumulative causation appears to be driven largely by men in patriarchal societies, it is women who dominate the process in matrifocal settings.

A Model of Take‐Off and Fast Growth in Open Economies

This paper proposes a stylized (hence very partial) explanation of the experience of those economies which, like the East Asian newly industrializing economies, managed to create an economic take‐off, characterized by a rapid expansion of manufactured exports, and to maintain for many years a high and relatively stable rate of growth of the economy. The model is based on the hypothesis that growth rate differences across open economies depend on differences in international competitiveness. During the take‐off of an open competitive economy, its competitiveness is amplified over time by a Kaldorian process of cumulative causation. To prevent a boundless increase in the growth rate and interpret also a phase of high but approximately constant growth rate the paper introduces what may be called ‘dynamic decreasing returns’, which capture the obstacles to the acceleration of the growth rate. The higher the growth rate of the economy, the more important they become, and eventually they make the growth rate settle on a constant positive path.

Change, continuity or cycles: The population turnaround in New South Wales

This study examines population flows from Sydney and other regions to perimetropolitan and coastal areas of New South Wales, the two main foci of the population turnaround since 1971. It uses census internal migration statistics for the five intercensal periods between 1971 and 1996, and estimated resident population statistics between 1997 and 2000. Fluctuating trends are described with respect to variations in age structures of migration flows and net migration gains by SLAs in coastal areas over time. Evidence of fluctuating trends is evaluated in relation to population structure change and local socio-economic multipliers in turnaround areas. The turnaround is far mor than a net migration gain from large metropolitan areas; it is also associated with interregional migration which avoids metropolitan areas, and which is at least in part environment- and amenity-related. The experience of some other countries, such as the USA where net migration reversals in population turn-around regions have occurred, has not been replicated in Australia. While elements of explanation for the complex cumulative causation process of the population turnaround in Australia are discussed, including the issues of fluctuating or cyclical trends, much more understanding of the economic and social factors involved is required.