Backward Areas in Advanced Countries

Location theory, in its earlier forms, had very little to contribute to the understanding of regional differences of economic activity. In the hands of Weber, and of those whose thinking primarily derived from Weber, the theory was essentially micro-economic. The problem that Weber and his followers set themselves was that of explaining the geographical location of the individual firm, assuming given physical locations of the necessary materials for production, assuming, if relevant, the existence of possible external economies in some locations, and assuming also — and most important — the location of the market to be served. The theory was micro-economic in the sense that the decision-making unit was by implication small enough for supply and demand to be treated as wholly independent of each other.

In his foreword to Kusum Nair’s Blossoms in the Dust ² Gunnar Myrdal describes the human factor in development as of paramount importance: ‘People’sattitudes to work and life, hardened by stagnation, isolation and poverty, and underpinned by tradition and often by religion, are frequently found to be inimical to change of any kind.’ In addition to this general statement may I make a few carefully chosen quotations from Blossoms in the Dust? Writing about the Madras farmers the author tells us that ‘five acres on lease is the limit of their aspiration. … Their demands are calculated solely on the basis of the family’sconsumption requirements of rice at two meals a day …’ (p. 31). About Kerala she remarks that ‘an average Malayalee … would prefer the security of a small job than take any risk whatever’ (p. 40). Caste also is a drawback to development.’ Not one of these Brahmin farmers [in Bihar] ploughs, or is permitted by caste custom to plough and work on the land’ (p. 90). In West Bengal ‘many communities among the peasants consider it below their dignity to take their farm produce to the market for sale’ (p. 141). And one more quotation:’ [a landlord’s] reaction to land reforms — proposed imposition of a ceiling on land holdings and the fixing of a minimum wage for agricultural labour — is perfectly logical and natural. He feels that they will affect the landlords adversely.

It is not possible, nor indeed desirable, to attempt a full factual description of the history and operation of regional policy in Britain in this paper. The paper begins with statements of the main problems which have necessitated regional policy. It then moves on to an analysis of the objectives and some of the main issues of regional policy in the United Kingdom and concludes with a discussion of the relationship between national and regional economic planning. This subject is treated at some length because the organisers of the conference wished us to do so, and because it is an issue which is central to both national and regional economic policies in the United Kingdom at the present time.

Since 1961 when the late President Kennedy signed the Area Redevelopment Act, the federal government has extended financial and technical assistance to depressed areas and regions. The assistance comes in three forms: grants and loans to communities to help cover the cost of public facilities such as access roads and sewer systems which are deemed to be essential for industrial development; long-term low interest loans to new or expanding private enterprises locating in these areas; grants and direct staff assistance in support of planning and research within the community or on behalf of the community.

French economic policy has always paid considerable attention to the subject of regional development. The field of action has even been considerably extended in recent years, with separate projects for crisis areas giving way to a more general policy aiming to eliminate imbalances in the growth pattern of the country’smajor economic regions. The present trend is towards measures to improve the geographical distribution of economic activity and budgetary expenditures. Today, the requirements of European integration (profitability, increasing productivity, concentration and the like), the industrial readaptation necessitated by the depressed conditions in such sectors as textiles, the progress in techniques and marketing, the slowdown of growth in a climate of recession, and the need to satisfy collective needs in economically active regions whose infrastructures (roads, recreational facilities and so on) have reached saturation point, are all factors promoting intervention by the public authorities which tends to benefit highly developed regions as much as, or more than, backward ones. It may well be that equality of development opportunities for all regions has always been an illusion; but it appears ever more true that the mechanisms of economic growth and the logic governing changes in economic structures operate to prevent any reduction of existing imbalances.

Like other areas where industrialisation started early, the Walloon area suffers from a structural maladjustment due, on the one hand, to the high cost of the energy used (in this case, Belgian coal) and on the other hand to trade deficiencies in certain industrial sectors, even when technical progress is most advanced, as it is in metal industries or in chemicals. These particular sectors, including iron and steel industries, have specialised in branches of production the demand for which increases very slowly or even declines.

Switzerland has one of the most highly developed economies in the world, but there are appreciable differences in the level of development as between one canton and another. This may seem astonishing in so small a country; the explanation lies in natural and human divisions. Factors of production do not easily move between cantons, and there is no large-scale federal expenditure to equalise opportunities between unequally well-endowed regions. Yet a poor canton does not compare with a rich canton in the same terms that a depressed area compares with an advanced one, and this is one reason why the case of backward regions in Switzerland is of special interest.

In Switzerland the tertiary sector possesses the same features as the secondary sector:

In West Germany, interest in promoting a balanced regional economic development and in aiding its problem areas by an active regional policy is as old as the Federal Republic. This preoccupation with regional problems does not merely have its roots in a long tradition of locational studies. It has been necessitated by problems of the regional distribution of the population influx after the war and has more recently been based to a growing extent on a desire to improve the educational and employment opportunities in all low-income areas through industrialisation and accelerated economic growth — so as to offer people in all parts of the country ‘equal chances’, whatever that may mean. According to a recent definition,² 144 out of 566 county districts and cities were backward in 1964, with 34 per cent of the area of West Germany, 12 per cent of the population, 5 per cent of industrial employment and 7.6 per cent of gross domestic product. These districts were mainly located (see Map 1) as follows: in Schleswig-Holstein (Area I); in Lower Saxony: Emsland (Area II) and part of the Luneburg Heath (Area III); in Rhineland-Palatinate; the Eifel region (Area IV); in Hessen and Northern Bavaria, the Rhön—Vogelsberg mountains (Area V); and in Eastern Bavaria, the Forest region (Area VI).

The concept of underdevelopment is largely relative. The degree of development, economic or cultural, in any one area should always be seen in relation to the level of development in other areas of the same country. Thus an area may appear to be highly developed in relation to one area, but in comparison with another it may seem underdeveloped.

In the immediate post-war period, the nature of the Mezzogiorno problem did not closely correspond with the problems that are principally to be discussed by this conference. The Mezzogiorno was a large underdeveloped area almost on a national scale, and one which, even if in some places it presented conditions no more backward than those of other parts of the country, taken as a whole was characterised by a low level of economic development in comparison with that of most of Europe, and by special backwardness in economic and social structures. It was therefore legitimate to regard the underdevelopment of the Mezzogiorno as substantially different from the problem of a backward area such as occurs in many highly developed countries. It was rather a problem all of its own, comparable with that of the so-called underdeveloped countries.

The subject will be dealt with in two parts: the first part will be devoted to an analysis of the post-war economic policy whereby Czechoslovakia proposed to solve its basic regional problem and stimulate the development of its less advanced area, namely Slovakia; the second part will contain the more general ideas and conclusions emerging from the lessons and the achievements of this regional policy.

Yugoslavia is a country with a dual structure, a multinational structure of her population, a federal system with socialism on a self-management basis and an institutional system which is experiencing deep changes. Intricate conditions had to leave visible traces upon the whole treatment of the development of backward regions. This paper is an attempt to strike at the root of this development, to find out where the bases of some of its sufficiently evident characteristics are to be found. Some of these are: strong evidence of backward areas; contradiction between desires and possibilities; different emphasis placed on distribution and the concept of development; the insufficient conformity between sectoral and territorial structure.

In order to present the main problems of the underdeveloped regions and regional development policy in Poland during the past twenty years it is necessary to look first at the sources of the regional economic structure of Polish territories. The evolution of the present structure was influenced by various factors acting differently in three historical periods determined by changes in Poland’spolitical circumstances:

In spite of the small area of Hungary (93,000 sq. km., with a greatest width east-west of 528 km. and north-south 268 km.), the geographical distributions of both population and economic activity are characterised by great variations and by a certain measure of concentration. A fundamental feature is the discrepancy between the Budapest agglomeration and the rural areas, and the associated differences in development levels.¹

The history of humanity covers a great number of great events but none which produced so great an influence on the course of world development as did the October Socialist Revolution of 1917. This revolution radically changed society’sentire political and economic set-up. The experience of the Soviet State has shown that only after the October Revolution were the necessary conditions created in the Soviet Union for the transformation of the country’sbackward regions into progressive industrial regions with highly developed industry and agriculture, science and culture. One of the republics of the Soviet Union, the Uzbek Republic (or Uzbekistan) can serve as an illustration of this.

In Tsarist Russia, Armenia was an underdeveloped region, supplying only raw materials and agricultural products. In 1913, 89·5 per cent of the population lived in villages and only 10·5 per cent was urban. The Armenian demand for industrial commodities was met mainly by import. There was virtually no industry. Large-scale industry was represented by two branches only — the copper and wine-cognac industries. The former was in the hands of French capitalists; cognac production was in the hands of Russian capitalists. The greater part of the output was produced by small domestic enterprises; these were responsible for 68·7 per cent of all output. Such industry as existed in Armenia was based on backward techniques, with hard manual labour predominating.

I am only too painfully aware of being probably the only participant in this conference who is innocent of any experience in actually diagnosing and prescribing for the problem of a backward area in an advanced country. Under the circumstances, it seems most fitting that I try to contribute by offering the impressions of an interested observer on some of the controversy on relevant development theory and policy in recent years. I shall attempt, then, to put into focus what seem to me the most important issues at stake, and to relate them to each other. Little if any of this will be news to members of the conference, but I may succeed in making some sufficiently provocative statements to provide a basis for constructive discussion by the real experts. I shall also have occasion, towards the end of this paper, to propose some fruitful lines of further inquiry.