What is the Neoclassic Growth Theory?

Local and regional ‘development’ is focused on the long-run reduction of geographical disparities in income per capita and output. Regional disparities are only ever temporary since spatial inequalities set in motion the self-correcting movements in prices, wages, capital, and labor. There are different types of regional convergence: conditional convergence which refers to the movement towards a steady state growth rate resulting in constant per capita; and absolute convergence which suggests that per capita income will become equalized across countries over time. Richer countries will tend to grow slower than poorer countries which start from a lower level of development.  Nations and regions specialize in economic activities in which they hold a comparative advantage. Furthermore, Specialisation and trade promote efficient resource allocation and inter-regional convergence.  It focuses upon the reduction of regional growth disparities in their approach to local and regional development.Markets are seen as potentially exacerbating or increasing rather than ameliorating or reducing disparities in economic and social conditions.

The post What is the Neoclassic Growth Theory? appeared first on interaksyonph.