The aim of this paper is to analyze the processes of polarization and agglomeration, to explain the mechanisms and causes of these phenomena in order to identify similarities and differences. As the main implication of this study should be noted that both process pretend to explain the concentration of economic activity and population in certain places, through cumulative phenomena, but with different perspectives, in other words, the polarization with a view of economic development and agglomeration with a perspective of space.
Over the course of economic development has seen something that can be designated as the phenomenon of "dualism" and there is, therefore, a clear tendency for social, economic and geographical division between center and periphery, urban and rural and town and countryside, a fact that has heightened and strengthened, especially from World War II.
This process is not primarily the result of inherent differences in the exogenous resources at different locations, as advocated by the neoclassical theorists, driven primarily by the forces of supply of inputs. But above all, the existence of increasing returns and endogenous factors, which underlie the creation of a process of circular and cumulative growth, as emphasized by (1) Myrdal (1957) and (2-4) Kaldor (1966, 70 and 81). However, the ideas of Myrdal were not new, since authors such as ( 5) Young (1928), Adam Smith and ( 6) Marshall (1920), among others, had already alerted for the issues of increasing returns and cumulative processes, although with other perspectives.
It was based, then in the idea of increasing returns and circular and cumulative processes that appeared after Myrdal two types of processes, agglomeration and polarization, to try to explain the “dualism”, associated with different theoretical approaches.
The agglomeration with concerns of location, has tried to explain, especially where economic activity is located and why, trying thus to explain the geographical dualism. The polarization, in turn, approaches related to economic development, seeks to explain why certain areas are more developed than others, trying to explain the dualism and the forces promoting economic growth and development.
The polarization as a result of cumulative growth, walked always associated with the Keynesians, where the variables associated with the forces of demand have particular importance. The explanation of the process of agglomeration with spatial objectives and concerns, already referred, walked more associated with economic geography, where the variable space assumes especial importance.
The polarization process is widely associated with authors like Myrdal, Hirschman and Kaldor, is inspired, as noted, by the “High Development Theory” and is based on the existence of increasing returns to scale in the industry (almost only in this sector), advantages comparative, endogenous and competitiveness of economies. The relationship of increasing returns with the circular and cumulative process develops, in opposition with the process of agglomeration, through the Verdoorn’s law, where the productivity is endogenous and depends on the growth of output. In this way, the economic growth is, for the Keynesian, driven by the exogenous demand, the growth of output depends on the strength of demand, especially demand autonomous (as Kaldor, influenced by Harrod, calls), where the main component is the exports. On the other hand, exports are an endogenous part of the demand and depends on efficiency wages (between wages and productivity) that are lower where productivity is higher and this is where the greatest growth of output, too, is larger and so on. It is then in this way that develop the polarization process, an explanation that was due, above all, of the work of Kaldor. Thirlwall, in turn, added to these explanations the importance of the balance of payments has on economic growth, where a balance of payments in deficit may limit demand and therefore growth. The figure below shows a summary of this process.
The process of agglomeration, in turn, is currently associated with the New Economic Geography, and authors such as Krugman, Venables and Fujita. The main difference this new approach to spatial issues in relation to Traditional Economic Geography, resides primarily in an attempt to reconcile and to model the existence of increasing returns to scale with the market structure of imperfect competition. However, models with the introduction of the variable space, is not exactly an easy task, these authors manage to develop tractable models, have adopted some “tricks” (name them), such as modeling monopolistic competition of the (7) Dixit-Stiglitz (1977 ), the “ad hoc dynamics” and transportation costs, “iceberg”. Therefore, the agglomeration process is explained, based also in the inspiration of the “High Development Theory” and taking into account the work of traditional economic geography, especially those associated with known geometry German Weber (1909), ( 8) Christaller ( 1933) and ( 9)Losch (1940), the cumulative processes of ( 10) Pred (1966), the market potential of ( 11) Harris (1954) and ( 12)Lowry (1964), the local external economies of Marshall (1920) and ( 13)Henderson (1974) and ( 14)von Th u nen model (1826), modeled in conciliation with the market structure, through the “tricks” mentioned above. Considering the above, the process is described through “backward and forward” linkages, resulting from the existence of increasing returns to sc
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