The geographical Matthew Effect

We have seen in our blog about the Matthew effect that water always flows to the sea. This old Dutch proverb is meant to indicate something about people. The rich tend to get richer and the poor tend to get poorer. The proverb is however also true in a geographical sense: rich regions tend to get richer and poor regions tend to get poorer. This is in a certain way obvious: the wealth of a region is determined by the wealth of its people, therefore if the Matthew effect is applicable to people, it must also be applicable to regions. Perhaps we could call it the Matera effect, referring to the South Italian town of Matera, a town that once almost got deserted because of its poverty.

And indeed, we see this on a small scale, in towns, when some quarters flourish and others decay. In one end of town, crime rate goes up and real estate value goes down, in the other quarter, it is the opposite. We see, within the same country, regions that go extremely well, and others that go backwards. In the last presidential elections in the U.S., we have seen the envy of the Mid-West states against the pride of California and New York. In Europe, we see countries like Luxembourg that attract highly qualified people from neighbour countries. The best proof that being small is not a disadvantage for a country. On the other hand, we still see regions in the former Easter Europe that struggle to survive. In some villages, only older people are living; all younger people with talent have left the place for the more successful cities. 

Very often regional welfare differences within the same national state lead to independence aspirations for the stronger region. In times of crisis, the intuitive fear for a negative Matera effect (being sucked down by weaker neighbour regions) reinforces the pro-independence voices.

The geographical Matthew effect has such adverse effects nowadays because of the extremely high mobility of people, capital and goods. At times where the economy needed to be more local, the effect was modest because every region needed to have a minimum of self-sustainability. In times of globalisation, like this time, people, capital and goods are so volatile that some countries and continents are completely “out-of-economic-game”. This leads to numerous conflicts and refugee crises. By charging a fair price for our mobility, including a fee for the environmental cost of transport, we could re-invest money in areas that are being hit by the Matera effect.

I also refer to my blog "Poverty: Source of all Trouble"

Picture: the tanneries of the town of Fes in Morocco.