Each attempt to raise the standard of living for people within the depressed area is met not only with defeat, but with the need to increase the amount of financial support just to maintain the status quo. For example, assume that the government seeks to develop and raise income in a depressed area by transferring income from its productive sector to the depressed sector. The transfer payment is an infusion of new money supply into the area. In theory, as these new money balances are spent and recirculated, they provide an inducement to produce more new goods and services, thus raising income and output. In reality, the theoretical conclusion fails to materialize for several reasons.
Sellers generally live outside the depressed area.
Therefore, the new money balances are repatriated after initial circulation to the high income sector. New money balances circulate only once. There is no second round effect. The injection is not self-sustaining. Therefore, the experiment must be repeated to maintain the same standard of living.