1.2.6 Theory of Circular Causation

Myrdal opposes the strategy of development poles because social systems and economic processes do not develop towards an equilibrium but, on the contrary, factors tend to cumulate to positive or negative cycles. Under laissez faire' conditions in developing countries, there is a tendency towards a negative cumulation. In principle, Myrdal's theory is a negation of the monocausal explanation of problems of developing countries by economic factors alone. Rather, in a comprehensive way, all social relations have to be incorporated. At national level—different stages of development between regions—as well as international level— trade between industrialized and developing countries—differences tend to increase because of the spread effects in the more developed areas and modern sectors and backwash effects in backward areas and traditional sectors. For instance, industrial import goods are in competition with traditional crafts; terms of trade deteriorate; capital is being transferred, etc. The direction of processes depends on the initial situation and the factors causing the change. Under the conditions in developing countries, increased regional dualism often is a consequence of such processes of circular causation.