Circular and Cumulative Causation Approaches to Local Economic Development
Cumulative Causation Theory refers to the domino or snowball effect that happens when "one event leads to another, and together they lead to more. It can work in the direction of growth or collapse for a rural economy, and frequently happens with great speed. The rural economy is very fragile in that any up or downturn can have drastic effects, with huge implications.
- people need jobs, and if there are no local options have to move quickly;
- banks are not risk-takers, and if the risk level of of an area rises, money tightens up quickly;
- muninicipal tax bases are based on very few players, so if a major player goes, support of infrastructure drops quickly.
When using this perspective to assist with local economic development, it helps planners to look for cumulative effects of any eventuality, and play "what-if". Three of the most common new features that can assist the flow to turn positive are discovery of natural resource, new industries opening , and dispersing of government offices to the region.
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