Profit Cycle Approach to Local Economic Development
The Profit cycle theory is the mechanism in the neo-classical economic approach to economics that provides its "self correcting" aspect. The problem is that it usually fails to work in the rural economy. In urban economies when there is a decline in the overall economy and the wages fall, there is more chance that the result will be an increase in profitability owing to the drop in labor costs. However in the rural areas, usually an overall decline does not mean an increase in profitability owing to the lack of diversity in the economy. There is no rush of investors into the rural economy at the best of times. At the worst of times there are fewer.
In terms of usefulness of this aspect for local economic development, the advice would be "don't wait up nights for it to come along, it likely won't".
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