Myrdal's Backwash and Spread Effects in Classical Economics: Implications for Multilateral Trade Negotiations

By Ho, P. Sai-wing | Journal of Economic Issues, June 2004 | Go to article overview

Myrdal's Backwash and Spread Effects in Classical Economics: Implications for Multilateral Trade Negotiations


Ho, P. Sai-wing, Journal of Economic Issues


Within the economics profession it is well understood that what informs the "trade" part of multilateral trade negotiations (MTNs) is deeply, though by no means solely, rooted in the orthodox version of classical trade theory. What has largely been left out of that version, however, are the dynamic elements in classical trade analyses. These dynamic forces, acting through trade and other international economic activities, trigger what Gunnar Myrdal labeled as "backwash" and "spread" effects and thus possibly engender a process of uneven development. This consideration serves as an illuminating contrast with the orthodox theory as far as support of MTNs is concerned.

It is the purpose of this paper to juxtapose the backwash and spread effects in classical trade analyses, (1) with the hope that the discussion can shed some light on the North-South divide in MTNs. The discussion begins with Myrdal, an institutionalist who devoted himself during the postwar decades to studying uneven development and who characterized it as a result of the interplay between backwash and spread effects in circular and cumulative processes. Both effects are then identified and illustrated in classical trade analyses, which then sets the stage for comprehending the North-South divide on major issues in the recent rounds of MTN. (2)

Myrdal on Backwash and Spread Effects

To Myrdal, orthodox trade theories, or for that matter orthodox economic theories, were "never developed to comprehend the reality of great and growing economic inequalities and of the dynamic processes of under-development and development" (1963, 151). The major reason for this blind spot, he argued, is that those theories have all been dominated by the "assumption of stable equilibrium," which entails the belief that any change will normally call forth as reaction secondary changes with an opposite direction. That assumption and others (e.g., that development analysis can be restricted to interactions of "economic," while ignoring "non-economic," factors) enables trade to bring about greater economic equality between regions and countries (10, 144, 151-2).

Under an alternative and what Myrdal regarded to be "more realistic" assumption, economic processes can be viewed as "cumulative because of circular causation" and will unfold as some combination of backwash effects and spread effects (1963, 152). He referred all relevant adverse changes, caused outside a locality (nation), (3) as the "backwash effects" of economic expansion in that locality (nation). These could comprise brain drain and capital flight from, and deindustrialization in, localities (nations) outside of the center of expansion (27-30, 51-3, 58). They are engendered "via migration, capital movements and trade as well as all the effects via the whole gamut of other social relations ... and the term refers to the total cumulated effects resulting from the process of circular causation between all the factors, 'non-economic' as well as 'economic'" (30-1). By implication, the spread effects of momentum from a center of economic expansion--again operating through the media of trade, capital movement, migration, and so on--refer to all favorable changes experienced outside that center, and these could likewise "weave themselves into the cumulating social process by circular causation" (31). They could arise from increased demand by the center for agricultural products and raw materials; something akin to Albert Hirschman's various linkage effects (1977); the emergence of new secondary centers of expansion; or how industrialization may inculcate "a new spirit of rationalism, enterprise, discipline, punctuality, mobility, and efficiency" (Myrdal 1963, 31; 1968, 1186-7, 1196). Depending on which set of effects predominate in a setting, the cumulative process could evolve upward, as in the "lucky" regions, or downward, as in the "unlucky" ones (1963, 27). It is thus in a situation where the spread effects are weak relative to the backwash effects, which Myrdal regarded to be very often the case among the underdeveloped countries that he studied, that international trade becomes the medium through which market forces tend to result in increased inequalities (152). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Myrdal's Backwash and Spread Effects in Classical Economics: Implications for Multilateral Trade Negotiations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.