This paper discusses the post-Keynesian explanation of the causes of disparities in regional growth and unemployment rates. It begins by examining the relationship between the real wage rate, the level of demand and regional unemployment. Next, it shows how regional growth is primarily determined by the rate of growth of exports. A two-region model is outlined which demonstrates how regional growth rates are interrelated through interregional trade flows and the regional balance of payments constraint. The paper concludes with a discussion of the cumulative causation theory of regional growth.
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