ABSTRACT
This chapter provides a theoretical explanation of the close association between bad trade-off curves and wide regional disparities. The Machine, the Structure, and the Game interact, each having its impact on the operation of the other two determinants of the performance of the economy. Four kinds of foreigners influence the outcome of the Game: exporters, importers, investors, and migrants. The problem is more complex where the disintegration is sectoral rather than regional. The stock advice of economists to countries like the United States, Canada, and Australia, where traditional enterprises can no longer compete, is "move on to higher technology and abandon the traditional industries. Government must lend a hand in the process if small-scale manufacturers are to survive in a world of increasingly liberalized trade. The consequence is further raising of the capital: output and capital: labor ratios and further aggravation of the cost-push.
