Export base theory

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The export base theory is a macroeconomic approach to explain the economic development of an area, i.e. a regional growth and development theory of economics . It assumes that the economy of a region is divided into an export-oriented basic sector ( basic ) and an area that satisfies domestic demand ( non-basic ). The success of the export sector is decisive for the economic upswing and the increase in prosperity. The surplus achieved in the basic area is invested in the region. Domestic demand is increasing and regional prosperity is growing. So it is a multiplier effect . The first export-based models and studies were presented from 1950 by Richard B. Andrews , James Duesenberry and Douglass North .

Model by Duesenberry

Using the example of the United States in the 19th century, Duesenberry examined the effects of the export of goods from one region on its growth process using a two-region model.

Starting position:

  • Region 1 is a recently settled, agriculturally structured, and economically underdeveloped area, which exports agricultural products to Region 2 beyond its own needs .
  • Region 2 has been settled and industrialized for a long time and is generally at a higher level of development.

Consequences:

  • The export leads to an increase in income in Region 1 and a decrease in income for farmers in Region 2 .
  • The rise in income in Region 1 increases the demand for industrial products. These cannot be satisfied locally, which leads to an increased import of these products from Region 2 . The income gain resulting from this for region 2 exceeds the macroeconomic decline in income in the agricultural sector caused by the increased imports from region 1 .
  • In Region 1 , too, an industrial sector that initially only satisfies the local market is gradually emerging as a multiplier effect due to the income growth. Together with the strong income gains in agriculture, this also leads to an overall higher income.

Results:

  • In both regions, foreign trade increases income. This also induces positive impulses in the economic sectors that supply the local market. Duesenberry sees this as one of the engines of economic development and modernization, especially in Germany and England at the beginning of the industrial revolution.

Model by North

North also sees exports as the decisive determinant of regional economic growth. In contrast to Duesenberry for a single region, it also describes quantitatively the growth mechanism triggered by the export sector.

The expansion of the export of an initially limited number of raw materials from an original subsistence economy into further developed areas creates the basis for a regional growth process. The rise in income resulting from agricultural exports leads to an accumulation of capital that exceeds the absorption activity of the export economy. This makes it worthwhile or imperative to invest capital in the development of an industry that initially only serves the local market. Internal and external company savings of the created structures additionally facilitate this process and lead to a diversification of the income base. North, like Duesenberry, predicts / promises an overall upswing of the economy through the export share.

The total income of a region ( E g ) is made up of the exogenous income ( E ex ) and that of the local sector ( E l ).

The local income is to North a function of export income, which only on the marginal consumption rate ( Q k ) and the marginal import rate ( Q i is as follows dependent).

By inserting both formulas we get for the total income:

The expression below the fraction is called the multiplier . The larger the marginal consumption quota and the smaller the marginal import quota, the greater the multiplier effect for total income.

criticism

In regional scientific literature, the value of the export base theory for explaining regional economic growth is increasingly being questioned.

  • The export base theory explains regional economic growth only according to the classical foreign trade theory. In contrast to neoclassical models , the treatment of the production potential of a region is neglected. It is one-sidedly demand-oriented, concentrates on the demand side exclusively on export demand and neglects the effect of intra-regional demand. It is therefore only suitable for regions with underutilized production capacities and low impulses from intra-regional demand.

Individual evidence

  1. ^ Richard B. Andrews: Mechanics of the Urban Economic Base. Historical Development of the Base Concept . In: Land Economics , Vol. 29 (1953), pp. 161-167, ISSN  0023-7639
  2. ↑ Ludwig Schätzl : Wirtschaftsgeographie, Vol. 1: Theory ( UTB ; Vol. 1052). 2nd edition Schöningh, Paderborn 1981, p. 106 ff. ISBN 3-8252-1052-9 .
  3. ↑ James Duesenberry: Some Aspects of the Theory of Economic Development . In: Explorations in Entrepreneurial History , Vol. 3 (1950), pp. 63-102, ISSN  0884-5425 .
  4. ^ David E. Keeble: Models of Economic Development . In: Richard J. Chorley, Peter Haggett (Eds.): Models in Geography . Methuen, London 1977, p. 267, ISBN 0-416-29020-5 .
  5. ↑ Ludwig Schätzl: Wirtschaftsgeographie, Vol. 1: Theory (UTB; Vol. 1052). 2nd edition Schöningh, Paderborn 1981, p. 107, ISBN 3-8252-1052-9 .
  6. ^ Douglass C. North: Location Theory and Regional Growth . In: The Journal of Political Economy , Vol. 63 (1955), pp. 243-258, ISSN  0022-3808 .
  7. ↑ Gerold Ambrosius, Dietmar Petzina , Werner Plumpe : Modern economic history an introduction for historians and economists . Oldenbourg Verlag, Munich 2006, p. 129, ISBN 978-3-486-57878-2 .
  8. ^ Harry Ward Richardson: Regional economics. Location theory, urban structure and regional change . Weidenfeld & Nicolson, London 1969, pp. 336 ff. ISBN 0-297-17912-8 .
  9. ^ Hans Heuer: Socio-economic determinants of urban development . 2nd edition. Kohlhammer, Stuttgart 1996, p. 66, ISBN 3-17-004216-5 (plus dissertation, University of FUB 1975).
  10. ↑ Magali Talandier, Laurent Davezies: Repenser le développement territorial? : Confrontation des modèles d'analysis et des tendances observées dans les pays développés . La documentation française - collection Puca-Recherche, Paris 2009, ISBN 978-2-11-097034-3 , p. 144 .
  11. ↑ Klaus Rittenbruch: On the applicability of the basic export concepts in the context of regional studies (writings on regional and traffic problems in industrialized and developing countries; Vol. 4). Duncker and Humblot, Berlin 1968, p. 48.