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Validity of The Center - Periphery Linkage in The Economy of Bangladesh: An Empirical Investigation
Validity of The Center - Periphery Linkage in The Economy of Bangladesh: An Empirical Investigation
1. Introduction
The center-periphery (or core-periphery) four-stage model of regional development describes the
structural relationship between the modern center and an undeveloped periphery, either
within a particular country or between a capitalist and a developing country/region(John
Friedmann 1966). Friedmann classified economic regions into four categories core regions
(characterized by the concentration of advanced sectors), peripheral areas (their proximity to
centers encourages industrial growth that takes advantage of indigenous resources), newly
developed areas that were previously virgin land and lastly, depressed peripheral areas
(characterized by stagnant rural economy and subsequent migration of population). In a simpler
version of the model when a city grows fast putting an increasing pressure on its carrying
capacity, it must expand to support the bigger population at least at the existing standard of
living by providing various goods and services. Usually, the inner city will grow first, then it will
expand to the surrounding areas creating suburbs and then it may grow beyond that to farther
areas. Generally, it is assumed that peripheries will benefit in the long run through the trickledown effect.
The central economy is determined by market forces, relatively capital intensive and having a
high wage rate. The periphery is labor intensive and characterized by low wage. The wage gap
between the center and the periphery induces capitalists to locate their production units in the
periphery. The interaction between the central and peripheral areas, generally typified by
interconnected streams of information, capital, goods & labor and usually in the form of
dominance of the former over the latter, provides incentives for innovations. This interaction can
displace economic activities that are unable to meet the status of the center. The diffusion of
innovations and information takes place on three levels from center to periphery, from higher
level center to second degree center and lastly, to the circumferential cities. However, the gap
between center and periphery remains and uneven growth in the two regions provides an impetus
for the emergence and reproduction of spatial inequality. The present study aims at examining
the Centre-Periphery relationship in the context of economic development in Bangladesh. It may
be mentioned that there exists lacuna in this area and the present study is first of its kind in
Bangladesh with regard to ascertaining Centre-Periphery relationship in the context of economic
development.
2. Historical Background and Main Theme of Center- Periphery Linkage
Historically the centre-periphery thesis owes its origin to Raul Prebisch, Hens Singer and
Gunnar Myrdal. Later on, the centre-periphery thesis was reckoned as Prebisch-Singer theory of
centre-periphery linkage. In the context of international trade to examine the experience of
systematic determination of terms of trade (net barter terms of trade) implying that the
developing nations need to export increasing amount of its primary products in exchange of
imports of manufacturing items from advanced countries because income elasticity of demand
for manufactured goods is greater than that for primary products. As income increases, the
demand for manufactured goods increases more rapidly than the demand for primary products.
The Prebisch-Singer thesis enjoyed a high degree of popularity in the 1960s and 1970s and
provided a justification for Import Substitution Industrializing (ISI) policies in the less developed
countries. The Centre-Periphery thesis begins with the observation that the periphery produces
primary products to export it to the centre and the centre produces secondary goods for export to
the periphery. The theory states that as technology improves, the centre is able to retain the
savings made due to higher wages and profits through developed unions and commercial
institutions.
In the 1960s economists developed an extension of Prebischs thought on Structuralism into
Dependency Theory in which economic development of the periphery is believed to be
impossible. Dependency theory states that resources flow from a Periphery of poor and
under developed states to a Crore of wealthy states enriching the latter at the expense of the
former. It is believed that the poor states are impoverished and rich ones enriched by the way
poor states are integrated into the world system. The premises of Dependency Theory are that (i)
poor nations provide natural resources, cheap labor, a destination for obsolete technology and
markets for developed nations, i.e. for (a) using the periphery as a source of raw materials and
(b) making the periphery a market for manufactured goods produced by the centre. (ii) Wealthy
nations actively perpetuate a state of dependence by various means and (iii) wealthy nations
actively counter moves of dependent nations to resist their influences by means of economic
sanction and / or the use of military force.
According to Friedmans analysis of structural relationship between the modern Centre and an
undeveloped Periphery, in the process of development, the Inner (core) city will grow first,
then it will expand to the surrounding areas creating suburb and then it may grow beyond suburb
to farther areas. It is believed that in this process, periphery will benefit through trickle-down
effect. The periphery will continue to flourish, development activities will be accelerated,
diversified investment in all sectors will take place, the wage differential between centre and
periphery will eventually be diminished. The terms of trade between centre and periphery will
gradually improve. The dependence of periphery on the centre will be minimized. The periphery
will turn to be a developed region. This continued process will transform the undeveloped
economies into developed ones through trickle-down effects.
3. Literature Review
Quite a number of papers endeavored to dwell upon the issue of Centre-Periphery linkage but
most of the studies concerning the Centre-Periphery model (CPM) have tried to investigate the
convergence or divergence in development between the core and the periphery and the factors
underlying such outcomes in general. Specific instances of convergence or divergence have
hardly been highlighted.Raagmaa (2003) used the CPM to analyze the regional development of
Estonia in the historical perspective. Though spatial processes and deconcentration of the 1970s
and 1980s supported the model, in the 1990s the model became less relevant owing to its
assumption of the continuity of industrial society. It also argues that similar spatial developments
may stem from entirely different sets of factors and attempts to combine the classical CPM with
new conditions. Simon (2011) identified several sources of the center-periphery relationship both
at the national and international level. According to the model factors like low urban income,
high rates of unemployment among the youths, weak industrial base of the periphery and
inefficient use of resources caused by corrupt leadership are the factors responsible for the
existing uneven development between the centers and the peripheries. Gren (2003) found EU
Structural Funds transport infrastructure actions successful in reducing the gap between core
and periphery. Using data from Portuguese industrial sector Ferro and Jensen-Butler (1984)
found an apparent core-periphery structure in regional industrial development. However,
according to them the underlying patterns did not conform to the CPM.
4. Objectives of the Study
The present academic pursuit aims at examining (i) the changes in structural dependency and (ii)
extent of trickle-down benefits accruing to the periphery in the context of Bangladesh. It is
relevant to mention that no such academic exercise was initiated before in the perspective of
Bangladesh. The present study, thus, may be treated as humble effort to delineate centre
periphery linkage which may add to the existing knowledge of dependency theory and CentrePeriphery relationship with regard to research on the issues within the purview of development
economics. The present paper aims at pinpointing the center-peripheral relationship between
Dhaka and Mauna a Union located approximately 75 kilometers away from Dhaka. In the last
two decades the economy of Bangladesh has registered significant growth and Dhaka, being the
capital and the largest city of the country, has experienced remarkable expansion. Within the
framework of the center-periphery model Dhaka is the center of modern economic activities and
Mauna Union is the periphery. Our conjecture is: the economic growth and geographical
expansion of the capital has assumingly caused significant economic changes in its periphery,
Mauna.
5. Methodology and Organization of the Paper
To examine the centre-periphery relationship between Dhaka and Mauna, one of the twenty
villages that constitute Mauna Union was chosen randomly. The village is 12 kilometers off the
Union Head Office. Data were collected by the students of the Department of Economics,
Stamford University Bangladesh. A detailed questionnaire was carefully filled out by directly
interviewing the villagers of different age-sex groups. The questionnaire collected information
about villagers income and income sources, educational progress, health care facilities,
transportation & communication, trade and commerce, environmental issues etc.
The paper has been organized as: (1) Introduction (2) Historical Background and Main Theme of
Center- Periphery Linkage(3)Literature Review (4) Objectives (5) Methodology and
Organization of the paper(6) Findings of the Survey (7) An Overview of the survey (8) Center
Periphery Premise and Some Implicit Assumptions and (9) Limitations & Conclusion.
6. Findings of the Survey
This section presents an analysis of the findings of the investigation carried out in the Periphery
(Mauna). The analysis comprehends both social and economic characteristics of the respondents,
their opinion about the present socio-economics conditions of the locality, available trickle
down effects for being located in the close proximity of the centre (Dhaka)and perception of the
local people with regard to the backwardness of the area.
Table 6.1 compares the number of people in different income groups across the two time periods.
At present 71percent individuals have an annual income greater than BDT 50,000. A decade ago
the corresponding figure was merely 14 percent. At present, 29 percent of the people interviewed
have an annual income of BDT 50,000 and below. A decade earlier the corresponding figure was
86 percent. It is worth mentioning that the sample size varies across the two periods. Even then,
it is quite conspicuous from the of table 6.1 that in general, the number of people in the lower
income groups has decreased whereas that in the highest income group has increased manifold.
Table 6.1 Villagers in Different Income Groups (Now and Ten Years ago)
Income groups (Yearly)
Frequency
A Decade Earlier
8 (22.22)
2 (5.55)
10 (27.77)
2 (5.55)
9 (25)
At Present
6 (13.33)
3 (6.67)
0
2 (4.44)
2 (4.44)
0-10,000
10,000-20,000
20,000-30,000
30,000-40,000
40,000-50,000
50,000+
32 (71.11)
Total
45
Note: Figures in parentheses represent percentages.
Source: Sample Survey
5 (13.8)
36
Table 6.2 exhibits the number of people in different occupational categories across the two time
points. Agriculture was and still is the major source of income of the villagers. Even though, the
sample size in the two time periods doesnt match, it can be inferred that important changes have
occurred in terms of the composition of sources of income. Employment in businesses and
service sector has increased. The number of people having no sources of income has almost
halved.
Table 6.2 Changes in the Major Sources of Income in the Last Ten Years
Number of people
Sources of income
1.Nothing
2.Agriculture
3. Business
4.Service
5.Others
Total
Sources: Sample survey
At Present
6
23
A Decade Earlier
11
22
13
8
5
55
3
5
4
45
+10
+3
+1
However, seven people reported that they had no income 10 years ago and they are not earning
anything now either. They did not say anything about whether they are better off now or they
were better off a decade earlier. For the remaining analysis of this subsection we disregard these
individuals.
Now
0
50,00000
1,68,840
1,93,462.50
A decade ago
0
12,00000
60,647.27
69,491.67
12
5
22
15
13
37
2
13
40
108192.73
55.41%
-.25303
3.781240247
3.16338856
3.568409458
2.573859245
Percentage
8.45
2.81
25.35
23.94
15.49
23.94
100
around 70 percent of the people have annual income greater than BDT 50,000. The
corresponding figure was about 14 percent a decade ago. Agriculture is the major source of
income followed by business and services. Average annual income has grown by more than 55
percent between the two decades and now stands at BDT 168,840 and 67 percent replied that
they are better off now compared to their situation a decade ago as against 20 percent reporting
the opposite scenario. The correlation between ones perception about ones welfare change and
his/her income change is negative which can be explained by increasing inequality. There are 3
educational institutions and one health center in the village. Most people need to pay for medical
services and face problems in getting health care. The major problems in availing health services
are lack/absence of doctors and insufficient health centers / medical equipment.
Though new roads have increased accessibility to growth centers, schools etc., it did not have
significant impact on the commercial viability of the area. Cellular phone is the dominant means
of contacting people. Major commodities traded in the nearby market are vegetables, fruits and
cloth. Almost everyone uses roads to send goods to Dhaka. The major environmental problems
that the village is facing are water pollution and air pollution. Two most important causes of
environmental problems are filling up rivers, canals & estuaries and industrial effluent &
emission of smokes. According to the villagers, road construction, establishment of educational
institutions and health care facilities are the most important factors for future development of the
area.
8. Center- periphery Premise and some Implicit Assumptions
Although Centre - Periphery Linkage is a very useful economic concept in the analysis of
development trend, it has certain limitations. The premise may be true for some countries and
may not be universally applicable under all circumstances. Its applicability depends on some
endogenous as well as exogenous determinants. The conditions for validity of the Centre
Periphery model have been identified as follows:
The investigation carried out in this instance reveals that the socio-economic condition prevailing
in the Centre (Dhaka) and Periphery (Mauna) differs significantly. Although the periphery had
undergone changes in some respects over a decade and so in no way it compares satisfactorily
with the socio-economic conditions of the Centre (Dhaka).The modern facilities which exist in
the Centre (Dhaka) are hardly available in the Periphery even after a decade. It is still beyond
imagination how long the periphery will take to come up to the level of the Centre (Dhaka) and
be identified as a developed region of the country.
The investigation shows that the desperate condition of the periphery has been reckoned to be the
outcome of some dampening forces which need to be over come to make the periphery more
viable and competitive. The most important forces which deserve to be considered in this context
are education, health care facilities, transport and communication facilities, trade and business
facilities, exposure to modern amenities of life and acceleration of income generation by
exploring new sources of income. Apart from these major obstacles as revealed from the present
study, some other social constraints deserve to be addressed. These include lack of
environmental awareness of people living in the area, inefficient utilization of available
resources and non- existence of some exogenous determinants such as integrity and committed
leadership of the local elites which has strong influence on the development pattern of a
Periphery. Removal of all these obstacles, thus, should be preponderantly considered as precondition to development of a Periphery.
The study points to an interesting fact that the Center- periphery linkage model which achieved
popularity in the sixties and seventies as a universal premise for development of periphery
through trickle down effect, suffers from some other shortcomings. The linkage model could
not take into cognizance that the universal applicability of the model can not be pondered on
without fulfilling certain conditions involved in the process of economic development of a
country. The present study evidences that the periphery could not accelerate development
because the major preconditions could not be fulfilled even over a decade.
The lapses mentioned above, thus, suggest that the centre- periphery model needs to be
considered within the framework of certain assumptions. If these assumptions hold good, the
universal applicability of the model can be envisaged.
The implicit assumptions which emerge from the present empirical investigation comprehend (i)
the fulfillment of the above preconditions for realizing the trickle down effects (ii) assertion of
validity of the premise only in the long run rather than short run and (iii) positive role and
commitment of local elites in the development process.
9. Limitations and Conclusion
The present study considered the findings of the survey conducted in a particular area adjacent to
Dhaka. It could have enriched the content of the paper and possibly would have provided greater
insights into the Centre-Periphery linkage if some more areas could have been surveyed to
establish the premise of Centre-Periphery linkage. But such effort could not be undertaken
because of time constraint as well as lack of resources needed for this purpose. Thus, the present
study can not preclude the limited acceptability of the present research for validation of the
Centre-Periphery premise. It is, however, to be mentioned that the caveats as emerged in this
study should encourage future research in this field particularly concerning the developing
countries of the world. Further, the present study could not take recourse to sophisticated
quantitative analysis due to inadequacy of required data. Future research in this area is deemed
appropriate to obviate the difficulties faced in this context.
Appendix Tables
Table A.1 Age-Sex Distribution
Age-group
0-14
15-24
25-45
46-64
64+
Total
Percentage
Male
1
8
22
5
2
38
69.09
Female
5
3
9
0
0
17
30.91
Total
6
11
31
5
2
55
Percentage
10.91
20.00
56.36
9.09
3.64
100
Occupation
Agriculture
Business
Service-holder
Housewife
Student
Other
Total
Sources: Sample survey
Total
14
10
5
9
11
6
Percentage
25.46
18.18
09.09
16.36
20.00
10.91
55
100
1
0
0
2
3
Yes
38 (80.85)
36 (78.26)
No
9 (19.15)
10 (21.74)
Total
47
46
19 (44.18)
24 (55.81)
43
23 (56.09)
27 (84.38)
18 (43.90)
5 (15.62)
41
32
Frequency
Long distance
Lack of Doctors
Absence of Doctors
Medical equipments are not available
Hospitals are not available
2
6
5
5
6
Total
24
Yes
No
Total
13 (35.13)
24 (64.86)
37
23 (46)
22 (48.88)
30 (68.18)
27 (54)
23 (51.11)
14 (31.82)
50
45
44
5 (20)
20 (80)
25
Users
Percentage
2
35
9
8
54
3.70
64.81
16.67
14.81
100
24
17
19
7
7
15
89
Percentage
26.96
19.10
21.35
7.86
7.86
16.85
100
Percentage
Roads
Train
Waterways
Total
Sources: Sample survey
30
1
1
32
93.75
3.12
3.12
100
18
16
12
1
7
54
Others
Total
Sources: Sample survey
40
41
20 (50)
40
Total
Percentage
33.33
29.63
22.22
1.85
12.96
100
13 (32.5)
15 (36.58)
Percentage
7
15
14
4
14.89
31.91
29.78
8.51
7
47
14.89
100
References
Ferro J, Jensen-Butler C 1984. The centre-periphery model and industrial development in
Portugal. Environment and Planning D: Society and Space. 2(4) 375 402.
Friedmann, John 1966.Politics of Regional Development A case study of Venezuela. MIT
Press.
Gren, Jrgen 2003. Reaching the Peripheral Regional Growth Centers. European Journal of
Spatial Development. no 3.
Raagmaa, Garri 2003. Center-Periphery Model Explaining the Regional Development of the
Informational and Transitional Society. 43rd Congress of the European Regional Science
Association (ERSA), Jyvskyl, Finland.
Simon, Wilson O 2011. Center-Periphery Relationship in the Understanding of Development of
Internal Colonies. International Journal of Economic Development Research and Investment,
Vol. 2 No. 1. Pp 147-156.