Regional disparities play a pivotal role in shaping the trajectory of economic development within a country, exerting a profound influence on its overall prosperity and well-being. These disparities manifest in variations across different geographical areas in terms of income levels, infrastructure, education, and access to resources. The impact of regional disparities on economic development is multi-faceted, affecting both the affected regions and the nation as a whole. These disparities can impede the equitable distribution of opportunities and resources, exacerbate social inequalities, and hinder the optimal utilization of a country’s economic potential. Understanding the intricate dynamics of regional disparities is essential for policymakers, as it allows for the formulation of targeted strategies to address these imbalances and foster a more inclusive and sustainable economic development path.
Answer
According to A.E. Smailes, regional imbalance is the phenomenon where certain areas are well developed, while others are not,thereby exhibiting variability in the landscape, leading to unequal distribution of wealth, resources, and opportunities thereby significantly impacting a nation’s overall economic growth and social well-being.
Impacts of regional disparities on economic development
- Creation of islands of prosperity in the sea of poverty
- Reduced Economic Growth Potential due to regional disparities
- Income Inequality and reduced GDP growth
- Unequal Access to Opportunities and impact on economic development
- Migration and Urbanization and impact on economic development
- Poor Social and Health Outcomes and impact on economic development
- Rise of social tensions and impact on economic development
Creation of islands of prosperity in sea of poverty
- Concentrated development in few regions will lead to formation of pockets of prosperity having high backwash effect with low spread effect.(Gunnar Myrdal)
- Leads to formation of many underdeveloped regions which hampers sustainable and equitable economic development.
Reduced Economic Growth Potential due to regional disparities
- Regional disparities leads to small domestic market,people from poorer regions having low disposable income,difficult for businesses to grow and create job
- Study by world bank found,10%decrease in regional disparities in India could lead to 1.5%increase in overall GDP.
Income Inequality and reduced GDP growth
- Regional disparities often result in significant income inequality between prosperous and underdeveloped regions, compromised sustainable long-term economic growth
- Study by IMF found increase in the Gini coefficient by 1% leads to a 0.08% decrease in GDP growth.
Unequal Access to Opportunities and impact on economic development
- Regions with fewer resources and economic opportunities have limited access to education, healthcare, and basic infrastructure, hinder human capital development, reduce potential for economic growth.
Migration and Urbanization and impact on economic development
- Regional disparities can lead to rural-to-urban migration as individuals seek better job prospects in more prosperous regions.This can strain urban infrastructure and contribute to the growth of squatter settlements and slums.
- A study by UN-Habitat found,that unsustainable urbanisation can cause 2%decrease in global GDP by 2050.
Poor Social and Health Outcomes and impact on economic development
- Regions with limited access to healthcare and education experience poorer health outcomes and lower life expectancy,perpetuating the cycle of poverty.
- WHO study found that malnutrition costs the Indian economy USD 51 billion,restricting overall economic growth and development.
Rise of social tensions and impact on economic development
- WB found one point increase in WB’s Social Tension Index is linked to 0.5% decrease in annual GDP growth.
- For eg.In India communal violence led to the destruction of property and life which discouraged overall investment and economic development.
North East Industrial and Investment Promotion Policy, Aspirational Districts program, and Appalachian Regional Development (ARD) Program (Canada) are some of the programs across the globe taken to bridge these regional disparities.
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