According to Kaidor (1972), this Keynesian view is necessary to enable the Youngian
cumulative causation process.
In turn, the analysis of these questions rests on three theoretical propositions: the technological gap trade theory, Thirlwall's Law, and the Kaldorian contributions relative to the cumulative causation processes.
Nevertheless, this does not prevent cumulative causation from following its course, which it does to the extent that all increases in the rate of equilibrium compatible with the external constraint are positively and significantly related with the increase in real production.
Third, we have confirmed that the Kaldorian cumulative causation processes operate effectively through the compliance of Verdoorn's Law, that is, the positive effect of increases in income over those observed in productivity.
The third implication of the story is that industrialization is likely to be rapid, as the cumulative causation cuts in.
Summarizing, the model of cumulative causation and spatial agglomeration predicts that industrialization will take the form of sequential and rapid industrialization by countries in turn, as industry spreads from its initial location to new ones.
Yet another process of
cumulative causation is that the availability of surplus migrant labour brings down the wage rate (NCEUS 2007).
The study of cumulative causation and consequent concentration of activity has been largely neglected by international economics and by the mainstream economics profession in general, although it has had its proponents (for example, Kaldor, 1972); Myrdal, 1957), and has been important in some sub-fields of the subject (such as economic geography).
But if they increase then there is cumulative causation - doing more of the activity raises the returns to it.
