The different regions across the globe exhibit a great level of distinction in factors of production for which there is a huge difference in the costs of production within these regions, hence, the difference in economic growth and development across these regions. The understanding of the economic, spatial change is linked to the overall processes of transformation of capitalist markets and institutions, and productions systems due to the recognition of the contribution of various locations of economic activity. The regional economic performance has been pegged on a number of factors across the economy. First, is the use of knowledge to be the key driving element of economic growth across the different regions. That is, the structural analysis of the different regions-tech knowledge network which is critical in propelling the economic growth of the cities and regions. Second is the competitive nature of the various firms and industries across the different economies (Maskell and Malmberg 157). The aspect of globalization has prompted a greater level of competitiveness in the local and international markets in order to scale a survival mechanism and thus keep in business. Thirdly, the technical know-how among the various individuals in the different regions hugely impact on the economic growth of these regions. The high numbers of professionals and experts within a region have positively impacted on providing technical assistance, policy formulation and profession guiding to facilitate productive activities within the various regions.
On the other hand, the difference in the endowment of the natural resources across the regions has enormous contribution to access and availability of these resources necessary for the economic productions and growth. The availability and access of the natural in different regions has facilitated the framework by which the various firms within such locations employ production processes on the basis of using capital, knowledge and labor inputs to foster economic growth.
This paper is structured to tackle the various aspect of difference in economic growth across various regions. This would encompass factors like: the difference in technological across the various nations, the endogenous factor accumulation, demographic transition and population growth, the relative price of investment goods, The difference in geographic variables, and the contribution of knowledge acquisition and dissemination. The paper then finally ends with an insightful summary of the general aspect of the issues discussed in the paper.
Technological advancement
The technological advancement across the different regions has played a significant role in the relative growth performance of various economies. Conventionally, there is a substantial contribution in the differences in total factor productivity in the explanation of the differentials across economies in GDP per capita. This context gives technology a huge significance due to its strong endogeneity of the population growth and investment rates (Balland and Rigby 281). The rich economies exhibit a scenario in which children are regarded as “consumption” but rather not “investment” goods. Such economies have a complete transition to a regime of a low fertility and low population growth. Therefore, a region which initially experiences a little advantage in total factor productivity sees the advantage magnifies into a huge advantage of output per capita, due to its steady growth path with a higher capital-output ratio and a low population growth.
Likewise, an economy which is considered rich has a relatively low prices of capital goods. Within such framework of a rich economy, a given share of national product saved is translated into an enormous real investment effort than if the economy had the world’s average price structure. The channel magnifies the differences created in total factor productivity into the larger differences in output per capita, propelled through the steady capital output ratio.
The endogenous factor accumulation
The aspect of conditional convergence is a critical element in the analysis of the models explaining the difference in economic growth across various regions. The existence of conditional convergence was first stressed by great growth economists; Mankiw, Barro, Romer and Well in the post-World War II growth rates across economies. The interpretation of the findings of Mankiw (1995) indicates that the straightforward Solow growth model works better as time goes. It is has become the case of the difference in economic growth across the various regions in relative levels of GDP per capita and thus reflecting the difference in steady capital intensity as implied by the rates of factor accumulation and growth in population.
Demographic transition and population growth
Among the various reasons encapsulated in the entire framework of evaluating the difference in economic growth among different regions is the endogeneity of population growth. During the fifteenth and the eighteenth centuries, the human race went through what was hoped to be its last "Malthusian" episode, where the rise in population and limitations in agricultural resources led to the nutritional deficits, which is higher than the average mortality, and the population stagnation. The pace of in improvement of productivity in agriculture since then has kept ahead of the population growth and agricultural resource scarcity that has led to the increase of the world’s population from one to six billion. Nutrition has considerably been high by historical standards, as well as natural fertility, and a low natural mortality. In the past, it has appeared that the richest human populations have also experienced the fastest population growth (Houseman and Machiko 329). Though, the beginning of the eighteenth century has led to the emergence of a new pattern, in which increases in GDP per capita did not result in faster population growth and greater fertility but rather to slower population growth and lower fertility.
The Relative Price of Investment Goods
This aspect looks into the large divergence exhibited between the purchasing power parity and the current exchange rate measures of the relative GDP levels per capita. The existing spread between the lowest and highest levels of GDP per capita today, by use of the current exchange rate-based measures, is a factor of 400; while the spread between the lowest and highest GDP per capita levels, by use of the purchasing power parity-based measures, is a factor of 50. In case the purchasing power parity-based standards are correct, the real exchange rates vary by a factor of eight between relatively poor and relatively rich economies.
The real exchange rates ensure that the prices of traded manufactured products and services are roughly the same in the various regions across the world, considering one side over- or under-valuations produced by macroeconomic conditions, tariffs among other trade barriers, and the most desirable investment flows in the international arena. Therefore, the eightfold variation in real exchange rates between relatively poor and relatively rich economies reflects an approximately eightfold variations in the price of the easily traded goods: Relative to an average basket of goods and prices on which the measure of "international dollar" is based. The real price of traded manufactured products in relatively rich countries is only one-eighth the real price in relatively poor countries.
The difference in geographic variables
Given the variations in general patterns of regional economic growth, the other aspect that hugely contribute to the growth patterns across regions is the geographic variables. The geographic variables of interest here are the length of coastlines, distance to the coast, (accessibility to international investments and trades), and the average elevation (costs of transportation induced by topographic barriers). Therefore, closer to the coast, lower average elevation and longer coastlines have contributed positively to economic growth for the different regions.
The contribution of knowledge acquisition and dissemination
Walking the path of economic growth emphasizes on the critical aspects of knowledge of the operations of the various sectors and economies from time to time. That is, gaining the advantages of being in the right local milieu and the benefits of spatial proximity between the different parties engaged in business dealings have been highly pegged on the knowledge of latest production technologies and the globally available organizational designs – which has made the low-cost areas to be more competitive (Houseman, and Machiko 264). A knowledge-based region, consequently, makes the firms in high-cost regions to either shield its valuable pieces of knowledge from access to the global arena, or they would rather accumulate, acquire, create and utilize codifiable knowledge a little faster ahead of their cost-effective competitors. Moreover, the process of knowledge creation is strongly affected by particular localized capabilities, for instance, institutions, resources, cultural and social structures.
Conclusion
The economic growth across various regions have been propelled on different aspects. The regions have experienced different levels of economic growth due to the endowment of the natural resources, demographic transition, and population growth, the relative price of investment goods, the advancement in technologies accompanied with creativity and innovation in different industries, the difference in geographical variable, and the aspect of knowledge acquisition and dissemination across the economy. These among other factors have justified the difference in economic growth within various regions across the globe.
Works cited
Balland, PA and D.L. Rigby. The geography of complex knowledge. Forthcoming in Economic Geography. 2016. Print.
Houseman, Susan N and Machiko Ōsawa. Nonstandard Work In Developed Economies. Kalamazoo, Mich.: W.E. Upjohn Institute for Employment Research, 2003. Print.
Maskell, P and A. Malmberg. The competitiveness of firms and regions: ‘Ubiquitification’ and the importance of localized learning. European Urban and Regional Studies 6: 9-25. 1999. Print.
