Regional problems are “balance-of-payments” problems

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Abstract
Thirlwall A. P. (1980) Regional problems are balance-of-payments problems, Reg. Studies 14, 419–425. A demand-oriented model of regional growth and unemployment is developed in which it is argued that regional problems of slow growth and high unemployment are, in essence, balance-of-payments problems stemming from a weak trading sector, working through the Harrod trade multiplier. The model contrasts with the supply orientated models of neoclassical theory with their stress on factor supplies and productivity growth, apparently exogenously given and independent of demand. The model is in the Keynesian spirit, with supply adjusting to demand through factor mobility and with exports as the major component of autonomous regional demand.

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