The Core-Periphery model (see below) helps explain why some inner city areas enjoy considerable prosperity, whilst others display all the signs of urban deprivation and poverty.
Services, investment and jobs are concentrated in the core Central Business District (CBD), but accessible inner city areas may benefit from a trickle down of wealth from the core. For example, in some areas there may be a through-flow of office workers to the inner city seeking low-price lunchtime meals. The core also provides work for inner city residents.
The introduction of a new industry or the expansion of an existing industry in an area also encourages growth in other industrial sectors. This is known as the multiplier effect which in its simplest form is how many times money spent circulates through a country’s economy.
Money invested in an industry helps to create jobs directly in the industry, but it also creates jobs indirectly elsewhere in the economy. New industrial development, for example, requires construction workers who themselves require housing, and services such as schools and shops. An increased demand for food will benefit local farmers who may increase their spending on fertiliser.
Workers employed directly in the new industry increase the local supply of skilled labour, attracting other companies who benefit from sharing this labour pool.
Other companies who supply components or use the new industry’s products are attracted to the area to benefit from reduced transport costs.Spin-off effects include new inventions or innovations that may lead to further industrial development and new linkages.
Through this multiplier effect, an area can develop as a growth pole, as illustrated in the diagram below.
Less accessible inner city areas may experience a backwash effect, with the little investment that does occur in the inner city becoming concentrated close to the CBD, widening the poverty-wealth gap. This is illustrated in the diagram below, a reversal of the core-periphery model