Profitability and accumulation

Abstract

It is common in location theory, regional growth theory, and development theory to assume that differences in rates of accumulation are correlated with differences in rates of profit and then to seek factors that would explain why rates of profit differ. This paper argues that this procedure is invalid, for there is evidence that profitability and accumulation are not well correlated. Even in well behaved models, there may be net capital flows towards low profit regions or industries, furthermore, the concept of a profit is not relevant to such enterprises as independent commodity producers, union pension funds, and the state. With this assumption out of the way, spatial economic theories ca..