Define the term "backwash effects" (5)
The term "backwash effects" is taken from Gunnar Myrdal; a Swedish economist who observed that backwash effects often outweighed the spread effects that were supposed to transmit economic development from rich to poor countries, or from rich areas within a country to poorer areas. In a broad sense backwash effects are the negative impacts of the growth of the core region on the peripheral regions, which tend to be poorer. An example would be the brain drain from many of the poorer parts of Mexico to the large cities, which are seen to be profitable and offer better quality of life. The migrants tend to be young and of working age, thus leaving the area worse off due to lack of labour. Core regions can produce good more efficiently due to the large skilled workforce they attract and the higher demand for the goods within a country.
This leads to markets in the periphery being penetrated and dominated, as competition is very unlikely due to the difference in economies of scale. The investment of capital into core regions leaves the periphery under funded; this can be seen in almost every country and has a large impact on the development of these regions.
Investment also tends to find it's way to core regions such as in the case of the Mezzogioro in Southern Italy losing labour, investment and development to the developed North Italy. Industry in the South is lost to Industry in the North in the field of high tech goods and information.
The same theory can be applied on a much larger scale between MEDCs and LEDCs where money tends to find its way back into western banks from LEDCs through either corruption or payment oh debt with interest. It is this debt...