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Modern Theories of Regional Development – a Review of

Some Concepts

Article in Oeconomia Copernicana · July 2012

DOI: 10.12775/OeC.2012.007

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 OeconomiA
copernicana

2012 Nr 2
ISSN 2083-1277

Marcin Bogdański∗
University of Warmia and Mazury in Olsztyn

MODERN THEORIES OF REGIONAL

DEVELOPMENT – A REVIEW OF SOME CONCEPTS

JEL Classification: O18

Keywords: regional development, theories of regional development

Abstract: Researches on determinants of regional development are an important

part of economic thought. And just like the whole economic theory, it was the sub-
ject of visible evolution as the whole economy had changed and as we gained some
practice in stimulating economic development. However, in the public awareness
one can still observe a strong influence of “old” or traditional theories. Many
(also some economists) still see regional development as an exogenous process
which should be inspired and managed by a central government. Also, there is
a strong tendency to consider the main goal of regional policy as artificial leveling
of regions’ development. Only recently there has been a visible shift in the ap-
proach to the problem of regional development. The aim of the article is to present
some most commonly recognized modern theories of regional development, which
stand opposite to the traditional approach. It shows the evolution of theories of
regional development from exogenous to endogenous concepts, and from the sec-

© Copyright Polskie Towarzystwo Ekonomiczne Oddział w Toruniu.

Date of submission: June 28, 2011; date of acceptance: April 1, 2012.

∗
Contact: [email protected], Uniwersytet Warmińsko Mazurski w Olsz-
tynie, Katera Makroekonomii, ul. Kurta Obitza 2, 10-725, Olsztyn.
26 Marcin Bogdański

toral to holistic view on this issue. Of course, it does not cover all of the thoughts
of a fruitful discussion on this topic. It is rather an inspiration to increase and
improve one’s knowledge of this topic.

INTRODUCTION

After the World War II models of economic development, including re-

gional development, were based on the assumption that the key role in
stimulation of these processes is played by large enterprises as the sources
of regional demand and innovation. Growing economies of scale allowed
them to successfully compete on international markets and a large network
of regional cooperants should allow for reaching convergence at the re-
gional and international scale (Jewtuchowicz 2005, p. 55). The economic
policies of many countries based on these assumptions and on dominating,
at that time, theory of growth poles and a theory of core and peripheries,
have led to a relatively long period of stable economic growth. These poli-
cies were realized by a centralized localization decisions and by economic
incentives to a potential investors, in order to make them establish their
new companies in less developed regions (Benko 1993, p. 42).
However, already in the 60`s the first symptoms appeared, showing that
this approach towards economic and regional development is inadequate to
changing economy. The growing uncertainty on the international markets,
the rising elasticity of demand and increasing role of innovations and tech-
nological progress neglected the weaknesses of Ford type organization of
production process – inertia of large companies and their slow adaptation
to ever changing markets. Also, the regional economic policy that have
ignored economic calculation in localization decisions led to establishing
many “cathedrals in the desert”, that is large plants and companies which
were deprived efficient regional background and form this reason were
unable to work and to produce their goods efficiently (Rokicki 2007, p. 1).
At the same time, the growing success of seemingly weaker regions, like so
called Third Italy, raised some fundamental questions on the sources and
key factors of regional development (Olechnicka 2004, pp. 62-66).
The facts presented above have burst a lively discussion on the determi-
nants of regional development. As a result, this process begun to be viewed
from a new perspective. From then on, the sources of regional development
were searched in the endogenous potential of regions, independent form
exogenous factors. One of the most important goals in these emerging
“bottom-up” theories was to use the regions labor force and natural re-
sources in an efficient and harmonious way. First, it is essential to satisfy
the basic needs of people living in a given region, than by using produced
 Modern Theories of Regional Development… 27

surpluses of goods, going in to new ways of economic activity in order to

make the regional economy more diversified (Stawasz 2004, p. 68).
In the 80`s some of the theories of „bottom-up” growth were united
with the theories of endogenous growth and from that time new theories of
regional development were described as the endogenous theories, or theo-
ries of development from the bottom. They have highlighted the role of
endogenous potential of region, which, because it is immobility, has to be
used in the best possible way to create full employment accompanied by
a high productivity of other production factors (Stawasz 2004, pp. 68-69).
In other words, regional development is a such development whose sources
are based on creating, using and improving inner resources on every spatial
level: local, regional and national (Domański, Marciniak 2003, p. 136).
In opposition to many other earlier theories of regional development,
especially to the classical ones, among the basic assumptions of endoge-
nous theories was the possibility of divergence. It was underlined that the
process of capital accumulation and a free trade, as the determinants of
economic development, rarely lead to a convergence. Relatively high in-
vestment attractiveness of some regions causes the larger inflows of for-
eign direct investments, which makes mechanism of regional development
to be driven by itself (Domański, Marciniak 2003, p. 135). The differences
in the ability to create and to adapt innovations and new technologies are
also important. Despite the fact that the knowledge and technology as
goods are non-exclusive and non-competitive the revenues from their use
are spatially diversified. Technology flows and external, technological
economies of scale are polarized (Pike, Rodriquez-Pose, Tomaney 2006,
pp. 104-105). Its sources can be found in the research personal, which is
mainly concentrated in large agglomerations. Also the knowledge and
technology flows among a city or a region can be the way of defending
their dominant competitive position (Domański, Marciniak 2003, p. 136).
It explains why some regions are characterized by a very high growth dy-
namics, and why some others are the subjects of economic regression.
Lastly, the divergence can be caused by the differences in the economic,
social, cultural potential of regions. That is why it should not be perceived
as a negative tendency, unless the observed differences are so high that
they lead to social unrest, growing tensions in central government budget
or they would lower the competitiveness of a whole economy (Kuciński
2005, p. 51).
Main directions of researches done among the theories of endogenous
growth are the concepts of: industrial districts, territorial systems of pro-
duction and clusters, New Economic Geography, theory of sustainable
development and post-developmentalism. Some of these theories are often
described as the network concepts of regional development because of their
28 Marcin Bogdański

strong focus on the role of network linkages between the entrepreneurs,

local authorities and financial institutions.

INDUSTRIAL DISTRICTS

This term was first used at the end of 19th century by Alfred Marschall
in his work entitled “Principles of Economics”. He described industrial
districts as social-territorial units characterized by a high activity of entre-
preneurs and people. Their presence and cooperation can be described as
a perfect diffusion (Pietrzyk 2001, p. 45). A very important role, in the
emerging phase of an industrial district, is played by non-market relations
between the companies. Also, the key thing is that, despite different inter-
ests, there is one higher goal that unites entrepreneurs and force them to
reach compromise Every company functioning in the district specializes in
one, sometimes more, stages of production process which is specific to
a given region. It allows to reach a high level of specialization based on the
rules of cooperation and interplay, which means providing free services to
other companies clustered in a district. It improves and accelerates the pro-
cess of learning and creating and diffusing of innovations. It also improves
the information flows (Jewtuchowicz 2005, p. 76). Openness of a district
and its wide linkages with companies located outside is the other factor
which ensures its high competitiveness (Pietrzyk 2001, p. 45).
The attractiveness of a district isn’t only the result of calculation of in-
dividual localization benefits, but of the external economies, which com-
pany can obtain just by being clustered in the district. The district „pro-
vides” companies with many benefits which are related to: knowledge,
marketing, local financial services (Jewtuchowicz 2005, p. 76).
The concept of industrial districts was long forgotten, until it was
brought back in the 80`s by an Italian economist G. Becattini. He described
a specific kind of a district, which evolved in north and northeast Italy in
the region called Third Italy. The specification of Italian districts is two-
dimensional. First, the network linkages are „build” not only by the entre-
preneurs alone, but also by the regional bank institutions and local gov-
ernments. These networks are also flexible, and they are constantly
changed with every new manufacturing process. They are also interde-
pendable, which means that every entrepreneur is linked not only with one
company. It can participate in many projects stimulatingly. Secondly, the
specific of industrial districts is based on a broad use of technology and
innovations in industrial branches which were perceived as traditional.
Thanks to these technological innovations, which were the foundations of
 Modern Theories of Regional Development… 29

their emergence and which were the emanation of their territory, market
success is possible to achieve (Jewtuchowicz 2005, p. 78).
A good example of such district are the entrepreneurs clustered in the
region of Veneto, north Italy. During the first twenty years of the previous
century they were specializing in manufacturing of climbing boots. Con-
stant improvement of quality, focus on innovation and sharing of experi-
ences has allowed this region to be, at present, the world leader in manu-
facturing some equipment for winter sports. About 7 thousand people work
in a circa 500 SME`s clustered in that region. However, which is more
important, these companies have 75% share in world market of boots for
skiing, 50% share in the market of snowboard boots and 80% share in the
production of boots for motor sports (Olechnicka 2004, pp. 40-41).

TERRITORIAL SYSTEMS OF PRODUCTION (TSP)

Observations of industrial districts and their steady evolution have in-

spired some researchers to distinguish another concept of regional devel-
opment – the theory of territorial systems of production (TSP). TSP is
a special type of regional economic organization system, which had ema-
nated from the industrial districts, but with one important difference – they
include all types and forms of manufacturing that are spatially integrated.
Hence it is impossible to point out one, ideal model of TSP; instead there
are a lot of their variations, spatial configurations in one single concept of
territorial system of productions (Pietrzyk 2001, p. 53-55). The factors
which are essential to establish and to evolve for TSP are (Chądzyński
2007, p. 185):
− the will and ability for cooperation of entrepreneurs clustered in TSP. It
is also important to know how to manage the system of cooperation-
competition;
− openness, both for the local actors localized in the system and for the
outer environment;
Very important to shape the specific regulations typical to TSP, which
also decides about their competitiveness, is the partner approach to create
efficient relations between the private and public sector. It turns to be spe-
cially effective and useful during the crisis conditions and in the necessity
of changing the regional production profile during the times of uncertainty
(Pietrzyk 2001, pp. 55-57).
The specific forms of TSP organization may be very diversified. That is
why one could point out at least for trajectories of TSP development de-
pending on the relations with territory (Pietrzyk 2001, pp. 57-58):
30 Marcin Bogdański

− Trajectory based on science – it relates to new technologies, products

and organization forms of production. It emanates from the geographic
proximity and different form of relations of entrepreneurs cooperating
with each other in research and development (R&D);
− Trajectory based on a strategic role of entrepreneurs – it uses the exter-
nalities created when the manufacturing process is organized on a large
scale. It is also strongly based on higher level services and agglomera-
tion effects;
− Trajectory based on a rejection of hitherto production profile – manu-
facturing profile of the region is reorganized and modernized (also by
creating innovations) with the use of competencies and capital acquired
in earlier stages of development. This strategy is most useful and de-
sired in regions that have to face the problem of restructuring traditional
manufacturing branches;
− Trajectory of diversified development – it is the form of manufacturing
organization which is based on endogenous potential of region. Howev-
er, its main goal isn’t the creation of innovation and knowledge. It ra-
ther uses available innovations to produce goods (with a high added
value) specific only to a given region;
Very characteristic types of TSP (according to some authors, its higher
form of development) are technological districts, also called territorial sys-
tems of innovations or technopolies. The basic differences between TSP
and technological districts are as follows. First of all, the informal charac-
ter of relations between the local and regional actors is replaced by a pro-
fessional one. Also, the vertical integration of companies is replaced by
a diagonal one with the cooperation ways going through various types of
manufacturing and services (Pietrzyk 2001, pp. 55-57). The concept of
technological districts strongly emphasizes the strategic role of innovations
and a strong orientation on creation of new technologies and knowledge.
The feedback created by innovations let this system to be exceptionally
dynamic. Although they are some doubts, if this strategy, based on a tacit
knowledge and learning by doing, without any effort paid to research and
development (R+D) could be effective to stimulate regional development
in the long term (Asheim, Clark 2001, p. 808); it seems that, at least in the
early development stages of region, it can improve the dynamics of regions
economic growth.
 Modern Theories of Regional Development… 31

CLUSTERS

One of the theories that have played an important role in shaping re-
gional policy goals and tools, was the concept of clusters. The idea was
created by Michael Porter. He defined clusters as groups of entrepreneurs
and connected them with different institutions (bank, universities, local
leaders and authorities) which are working in the same, or similar, manu-
facturing branch. They are one of the types of network, where spatial prox-
imity of various actors (not only productive ones) creates some kind of
community and improves the frequency of their contacts and relations
(Jewtuchowicz 2005, p. 89). It allows for using the economies of large
scale quicker or in a more efficient way. It also improves the process of
product development, distribution networks allowing to widen the competi-
tive advantage of a cluster (McDonald, Huang, Tsagdis 2007, p. 40). The
value of cluster as a whole is bigger than the sum value of every entrepre-
neur alone, because the connections created between companies, which are
at the same time cooperating and competing, are building an added value.
It also creates three groups of positive effects (Olejniczak 2005, pp. 28-29):
− Increase in efficiency of companies and sectors localized in cluster. It is
the result of: availability of qualified labor force and other production
factors, easier access to market and technical information and also to in-
stitutions and quasi-public goods and services;
− Improved ability to innovate, by mutual observations and imitations. It
results in introducing the most efficient solutions used be a partner or
competitor and in a lower costs of developing and initiating of innova-
tions in a cluster;
− Incentives to create new companies thank to an easier entry into the
market (lower costs, better information) and by the “spillovers” of com-
panies. It can also be a result of drawing new companies from related or
complementary sectors;
Porter’s starting point in creating the concept of clusters is the so-called
localization paradox. According to this well known paradox, in a modern
economy goods are manufactured locally, but sold globally. Thus, if the
manufacturers want to hold their competitive advantage it is essential to
cluster them in spatial hubs of producers working in the same sector and
cooperating with them institutions. It induces competition, which forces the
companies to improve their competitiveness, but it also creates potential to
start new joint ventures. This enables to stand out for the challenges which
couldn’t be faced by a one company alone (Reid, Carroll, Smith 2007, p.
45).
32 Marcin Bogdański

Although this concept is strongly influenced by other theoretical works

on regional development (including industrial districts and territorial sys-
tems of production), there are several important distinctions between them.
Firstly, as the clusters can cover from a few up to a dozen production
chains, industrial districts are limited only to one type of manufacture. Al-
so, in the concept of clusters there is a weaker emphasis on agglomeration
effects to, at the same time, underline the importance of cross-sector exter-
nalities. Finally, the most important attribute of cluster theory, is consider-
ing competition as the fundamental factor in creating a competitive ad-
vantage of a territory. This competition can be observed in three dimen-
sions: between the companies localized in a cluster, between the clusters
and, in the same cases, in the global scale (Olejniczak 2005, pp. 29-30).
The competitiveness of nations and regions is based on interactions be-
tween four key factors creating so-called diamond of competitiveness
(Jewtuchowicz 2005, p. 89):
− Skilled labor force and the infrastructure essential to the industry;
− Specifications of local demand for goods and services provided by the
industry;
− Presence of related (supportive) and supplying industries;
− Strategies, structures and competitive nature of entrepreneurs located in
a cluster.
In other words, Porter points out that the system of industrial clusters is
highly determined by social and institutional factors specific only for
a particular culture and social structure. It explains why some countries and
regions are able to specialize in a very specific types and forms of manu-
facturing. For example, Germany and its economy characterized by a high
discipline in management and a relatively large share of banks in a finan-
cial system (which means acceptance to a relative long term of return on
investment) are predisposed to develop such industrial branches like chem-
istry, optics or machinery (Grosse 2002, p. 37).

NEW ECONOMIC GEOGRAPHY

At the beginning of the 90`s of the twentieth century a new theory has
emerged, which until now, has played an important role in understanding
the process of regional development – New Economic Geography (NEG).
One of its precursor is thought to be Paul Krugman, who recently was
awarded for its achievements with Bank of Sweden Prize in Economic
Sciences in Memory of Alfred Nobel.
 Modern Theories of Regional Development… 33

Very characteristic to the New Economic Geography is fact that it

unites various thoughts of other theories (like the neoclassical and demand
theories or a new growth theory of P. Romer) to explain the reasons of
spatial concentration of economic activity. It also allows to understand the
process of regional divergence (Churski 2009, p. 1). According to
Krugman and others, the key determinant of the spatial polarization of
economy is the process of urbanization and metropolization of space. Eco-
nomic environment of big cities provides entrepreneurs with strong exter-
nalities like agglomeration effects, which drive the process of regional
divergence. In order to explain the sources of agglomeration effects, NEG
researchers are reaching to the heritage of urban economics started by von
Thünen and the theories of regional development of such authors like Isard,
Lösch or Christaller. As Krugman points out, the concept of von Thünen
explains in a very exact manner how the revenues from economic activity
are related to the distance from the central place, but one thing it did not
explain is: which mechanisms have led to the creation of that center (Fu-
jita, Krugman 2004, p. 141).
In order to understand the process of concentration of economic activity
Krugam describes a model of a hypothetic economy with two regions. At
the beginning, in a steady state, entrepreneurs in two sectors – agriculture
and industry – are equally placed in the space. Homogenous agriculture
goods are manufactured only with the use of labor force with constant
economies of scale. On the other hand, industrial goods are heterogeneous
and their production is characterized by growing economies of scale. Like
in the first case, also here the only production factor is labor force, but
when agriculture workers are immobile, industrial workers are perfectly
mobile. Both groups raise demand for agriculture and industrial goods. The
last assumption made by Krugman is that there are no costs of transporta-
tion for agriculture goods, and as for the other products, their transportation
cost increase along with the distance. By including factor of time, it is pos-
sible to observe some characteristic dependencies in a given economy. One
can distinguish two opposite forces – one of them is the source of concen-
tration of economic activity, and the other leads to its dispersion. The latter
is mainly caused by the lack of mobility of agriculture workers (Fujita,
Krugman 2004, p. 145).
To explain the cause of concentration of production, one has to refer to
the assumptions typical for neoclassical economists (Eckey, Kosfeld 2004,
p. 2):
− Consumers are interested in maximizing their total utility;
− Workers are interested in maximizing real wages;
− The main goal of entrepreneurs is maximizing of their profits;
34 Marcin Bogdański

− Strong competition reduces the profits to zero.

By taking these assumptions, it is possible to explain why companies
and workers tend to concentrate in space of a region. It is shown in figure
1.

Figure1. Circular causation through linkage effects

Demand effect Consumers move

into region
Forward linkages

Entrepreneurs

Backward linkages
move into
region Higher real wages
for the employees

Larger choice of
Real wage increase
diversified products
in the region

Source: Eckey, Kosfeld (2004, p. 2).

When a new group of consumers comes into the region (it can be
caused by any reason: migration, increase in number of population), a new
demand emerges. This new demand can only be satisfied by new entrepre-
neurs. A concentration of manufacturers on relatively little space generates
positive agglomeration effects like: gaining access to a bigger markets and
qualified labor force, cheaper supply or intensification of process of mutual
learning. This, in combination with strong competition, forces the compa-
nies to improve their offer of goods and services. Furthermore, their goods
are sold at lower prices. This means that the real income of workers in-
crease. In a result a new group of consumers can migrate into region.
Krugman’s first model was a great inspiration for further researches, in
which the model of analyzed economy was gradually improved to reflect
real processes appearing in the economy of region. In another model, Fujita
and Krugman made the assumption that the production of agriculture goods
requires both land and labor force (but this time workers are homogenous
 Modern Theories of Regional Development… 35

and fully mobile), and that the transportation costs for both kinds of goods
are increasing with the distance (Fujita, Krugman 1995). Subsequent anal-
ysis has expanded the scope of research to: a dynamic analysis of a equilib-
rium at the labor and real estate market and another factor of production –
capital (Fujita, Mori 1997), higher number (up to 80) of regions and cities
placed in the analyzed economy (Fan et all 2000), variable transportation
costs (Mansori 2003) and also a detailed inquiry into different kinds of
agglomeration effects (Murata, Thisse 2005).
Conclusions of all of these researches are the same. The factors which
are responsible for a dispersion of economic activity in space are so-called
centrifugal forces, which consists of: agglomeration costs, diversified skills
of labor force, differences in real wages and, on some conditions, transport
costs. If these forces are strong enough, they can lead to a regional conver-
gence. On the other hand, a tendency to concentrate production can be
a result of: existence of demand for heterogeneous goods, vertical linkages
between companies and economies of scale (Allonso-Villar 2007, pp. 61-
62). Krugamn adds to this list the presence of agglomeration advantages
and the occurrence of knowledge spillovers, which can be explained as
a process of accelerated and improved transfer of knowledge between dif-
ferent companies. It is a result of their spatial proximity (Fujita, Krugman
2004, p. 156).
Agglomeration advantages can be described in four dimensions (Quing-
ley 1998, p. 131):
− Scale economies in production, within firms and in consumption;
− Shared inputs in production and consumption;
− Lower transaction costs in production and consumption;
− Statistical economies in production and consumption.
According to researchers related with NEG a tendency for concentration
is always stronger. This explains why, in recent years, one can observe
growing clustering of production in larger cities and metropolises. The
validity of important thoughts typical to New Economic Geography was
confirmed by numerous empirical studies on the economies of the Unites
States of America and the European Union (Rokicki 2010, p. 1).

SUSTAINABLE DEVELOPMENT

In the last dozen of years, this theory has gained a growing recognition
among the theorists and practitioners of regional development. In this con-
cept, regional development is seen in a holistic way, by including various
categories and factors of development – from economical ones, through
36 Marcin Bogdański

social and cultural, to ecologic. This term was first used in 1972, but even
so, there is still no agreement on such fundamental issues like: how to de-
fine sustainable development or how to conceptualize its determinants and
measures, not to mention the strategies of introducing sustainable devel-
opment.
B. Pointek defines the very essence of sustainable development as the
will and determination to provide a constant improvement in the quality of
life of nowadays generations by preserving proper relations between three
kinds of capital: economic capital, human capital and natural capital (Pi-
ontek 2002, p. 27). Special attention is paid to ensure that the process of
economic development will have a permanent character – also by using
automatic mechanisms which give it a “clean” nature by eliminating side
effects to the environment (Korenik 1999, p. 37). In its assumptions, the
concept of sustainable development is aimed at integrating economic, so-
cial and environmental goals to achieve overarching goal, which is the
improvement the living conditions of present generations, while allowing
for future growth (Pike et all 2006, pp. 113-115). The tools supporting
sustainable development mentioned are, among others: creation of trade
networks that have local character and that are oriented on local needs, and
environment-friendly tax system.
One can distinguish two approaches to the problem of sustainable de-
velopment, especially taking into account the relations of human vs. nature
(Pike et all 2006, p. 115):
− “Weak” development – sometimes it is described as a shallow environ-
mental approach, in which development is regarded as a process of an-
thropogenic nature. It emphasizes the need to increase material re-
sources of man, but with maintaining compromise with nature. The use
of renewable energy sources, the search for substitutes for non-
renewable resources and more efficient utilization and recycling of
waste should do it.
− Strong development – in the comparison with weak development it
inverts the relations of human with nature – nature is now considered as
the most important resource, which has to be protected with absolute
care. It stems from a deep critique of the capitalist organization of pro-
duction as a system which is not able to ensure a rational use of natural
resources. In this approach, it is the human who has to adjust to the laws
of natural environment. Wealth is understood in non-material way, as
well-being and harmonious coexistence with nature.
The term ‘sustainable development’ is often replaced with ‘eco-
development’. Its most important attributes are (Kupiec 2008, p. 25):
− Unification of economic, social and ecological aspects of development;
 Modern Theories of Regional Development… 37

− At the same time ensuring social justice (including intergenerational),

economic growth and environment protection;
− Rational use of natural resources;
− Ensuring intergenerational safety for environment;
− Endeavor for spatial cohesion;
− Incorporation of sustainable development requirements for legal, eco-
nomic and management system.

POST-DEVELOPMENTALISM

Nowadays one can also observe a growing interest in the concept of

post-developmentalism. It is a very heterogeneous group of theories in
which modern, linear, cumulative and neutral approach to knowledge is
criticized. Knowledge is seen as a resource which is complex, contradicto-
ry and subjective, determined by intuition and culture. And since there is
no objective truth which describes reality (every culture has its own sense
of truth) one cannot talk about universal theories of economic develop-
ment, which would be efficient both in highly developed regions of rich
North and in poor South. Post-developmentalism is also characterized by,
a specific to postmodernism, methodological eclecticism and criticism of
contemporary social doctrines (Goncalves 2006, pp. 1151-1155).
The concepts of post-developmentalism are in opposition to the strate-
gies of regional development, which are described as Europecentrism or
Strategies of best possible way. These strategies were only successful in
the highly-developed countries of the Northern Hemisphere. Also, they are
being imposed on the poorer countries and regions of the South by the
system of loans granted by International Monetary Fund and World Bank.
In reality, they only preserve the dominant position of rich countries, being
a new kind of economic colonialism.
According to the protagonists of post-developmentalism, the previous
understanding of economic development and the way for its stimulation
suggests that the only way for poor nations the catch up with the most de-
veloped countries is to copy their culture, institutions and economy struc-
ture. However, this strategy is doomed to be unsuccessful because non-
urbanized regions will always be less competitive than urbanized ones, the
country will always be poorer than a city, the industrial sector is always
more productive than the agricultural one and so on (Cavalcanti 2007, pp.
89-90). Modern theories of regional development are also criticized for not
resolving the real problems of poor regions, but only proposing the re-
placement of one economic system by another, transition from traditional
38 Marcin Bogdański

to modern economic structures, which are also imperfect (Piasecki 2007, p.

23). Imposed development theories will always be ineffective, unless they
respect the customs and habits of local cultures. It is also important not to
create unnecessary technological and social distance between the countries
offering and profiting from economic support (Cavalcanti 2007, pp. 90-91).
A region can only be thought as developed if the people living there con-
sider so. This does not mean that material wealth is essential. On the con-
trary, material wealth is considered as the source of some kind of enslave-
ment and dependency (Pike et all 2006, pp. 117-118).
The theories of post-developmentalism emphasize the need for search-
ing new determinants and measures of economic development, which will
be consistent with the regions’ social determinants. What is significant here
is the rejection of the capitalist approach to the economy as it awakes ten-
sion and conflicts, particularly between poor and rich. Each entity has the
right to their own understanding of wealth and development and the right
to choose a way to achieve it. The greatest value of these theories is con-
tained in the indication of the role of cultural factors as important stimuli
for development.

CONCLUSIONS

The aim of this paper was to present the evolution and to describe some
modern theories of regional development which have influenced the most
understanding of this process. One can observe here a visible evolution
form theories of balanced development to the theories of polarization, from
the exogenous to the endogenous theories and from looking at the regional
development in a very selective way to the holistic approach, which sees
regional development in a broad context of economic, cultural and techno-
logical determinants.
The appearance of the endogenous theories in the second half of the
twentieth century enabled to see the process of regional development in
a new dimension. According to these concepts, regional divergence could
be explained by the differences in the endogenous potential of region. It
can be hitherto level of development, quality of human and social capital,
system of linkages between regional entrepreneurs, innovative environ-
ment. As a result, the goals and tools of regional policy were re-devalued.
The new approach was aimed mainly at leveling the endogenous potential
of regions. The process of regional development is seen this way in the
theories of: industrial districts, territorial systems of production, clusters,
also partly in the New Economic Geography. Also, the common feature of
all of these theories is the strong emphasis on the crucial role of linkages
 Modern Theories of Regional Development… 39

(both formal and informal) between companies in stimulating regional

development. Hence these theories are often described as network theories
of regional development.
The theory of sustainable development looks at the economic processes
from the perspective of consequences it can cause in the future. It is postu-
lated to manage the development in way that will preserve proper relations
between production factors and will increase the quality of living of pre-
sent generations without limiting this possibility for the future.
Post-developmentalism rejects most of the thesis of previous theories
(especially those from the mainstream economy) because they do not an-
swer the needs and capabilities of poor regions. There is a need for search-
ing new strategies of development that will respect the specifics of a given
region and its society.
Presented theories were chosen subjectively by the author. Although the
choice was preceded by the literature studies it did not covers all the vari-
ous threads in the discussion on the determinants of regional development.
However the author is hoping that this paper will be an inspiration to
a deeper study on the subject.

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