Institute for Development Studies, University of Nairobi

In this paper the causes of persistent or increasing regional inequality are discussed. Two main types of influences are identified. First, there are endogenous economic forces. It is pointed out that internal economies of scale tend to generate concentration of production, but from this we cannot draw any conclusions, about where the agglomerations will be located. It is argued that input-output linkages among producers and the links between final demand and producers are determining locational choice. Secondly, there are the effects of economic policies, which may either counteract or reinforce the pattern of development generated by the endogenous economic forces. After a general discussion of these issues a broad outline is given of an interregional input-output simulation model to be applied in Kenya. In this the development of production and employment by region and sector as well as migration will be simulated.