East Central European mosaic Reasons and consequences of regional divergence in East Central Europe under transition

Transcription

1 Reasons and consequences of regional divergence in East Central Europe under transition KUTTOR, Dániel University of Miskolc, Department of Regional Economics Institute of World and Regional Economics 21st November 2012 Glasgow, CRCEES

2 Introduction Theoretical background Spatial polarisation Dimensions of polarisation Reasons of polarisation Content Development gaps Clustering regions Conclusion and recommendations

3 Dilemma of development: efficiency or equation? Which is first? Competitiveness versus cohesion; Efficiency versus equation. Divergence Overall goal during the transition period: Macroeconomic convergence; Welfare but not for everyone (not for every region)? Integration into the euroatlantic defence and political systems; Convergence BUT what about the integration into the EU and global production systems?

4 Main socio-economic priority: macroeconomic convergence!

5 Theoretical background Large number and valuable preliminaries Contradictory experinces and theories Classical economics Endogenous growth theory Neo-classical theory Convergence theories Location theories Keynesean theory Post- and neo- Keynesean theories Export base theory New economic geography theory Theory of growth poles 17th 18th 19th 20th 21th

6 German contribution: J. H. v Thünen (1826) A. Weber (1909) W. Christaller (1933) A. Lösch (1940) American(-British) contribution: A. Marshall (1925) E. M. Hoover (1948) W. Isard (1956), founder of regional economics Other European contribution: F. Perroux (1949) K. G. Myrdal (1957) J-R. Boudeville (1964) Spatial economic theories (Location theories):

7 Spatial economic theories (Growth and development theories): Neocalssical economics - R. M. Solow (1956) Endogenous growth theory - R. E. Lucas (1988), R. J. Barro (1994), X. Sala-i-Martin (1995) Post-Keynesian economics - N. Kaldor (1981) New Economic Geography - P. Krugman (1998, 2003, 2005), M. Fujita and A. Venables (2001)

8 Other concepts on economic growth and spatial differentiation J. G. Williamson (1965) Inverted U hypothesis

9 Other concepts on economic growth and spatial differentiation D. Meyer and J. Lackenbauer (2006) Trade off between interregional inequalities and agglomeration

10 (PPP) % Major territorial tendency: polarization But three sections with different characters! Mean and standard deviation of regional GDP per capita figures Mean Std. Deviation 0,5 0,48 0,46 0,44 0,42 0,4 0,38 0,36 0,34 0,32 0,3 Source: EUROSTAT data, own compilation.

11 Millions $ Why these three intervals of polarisation? Export volumes by countries Source: UNCTAD STAT data, own compilation.

12 Millions $ Why these three intervals of polarisation? FDI volumes, inflow, by countries Source: UNCTAD STAT data, own compilation.

13 (%) Significant differences among V4 countries, both aspects (speed and degree)! Standard deviation of regional GDP per capita figures, by countries Source: EUROSTAT data, own compilation.

14 Std. Dev. Testing the Williamson Inverted U hypothes 0,8 0,7 0,6 0,5 0,4 0,3 0,2 Standard deviation of regional GDP per capita figures, by countries 0, Source: EUROSTAT data, own compilation. CZ SK PL HU Sorozatok1 Sorozatok2 Sorozatok4 Sorozatok6 GDP pc (EUR, PPP)

15 ln GDP growth ( ) ln GDP növ ( ) Limited adaptability of convergence, only convergence clubs can be identified! ln Yi ln Y i 0 1,8 1,6 1,4 1,2 1,0 0,8 0,6 t y = 0,3957x - 2,418 0,4 8,6 8,8 9,0 9,2 9,4 9,6 9,8 10,0 10,2 10,4 Source: EUROSTAT data, own compilation. ln GDP/fő (2000) ln GDPpc (2000)

16 Reason of polarization: size of regional markets! Categories GDP annual growth, , % GDPpc in percent of EU average (PPS, 1995) GDPpc in percent of EU average (PPS, 2007) Population density more than 150 persons/km 2 4,25 75,92 97,00 Population density more than 120 persons/km 2 3,48 53,03 61,93 Population density more than 90 persons/km 2 3,57 46,45 51,61 Population density less than 90 persons/km 2 3,01 43,01 46,97 Source: EUROSTAT data, own compilation.

17 Reason of polarization: economic structures! Categories GDP annual growth, , % GDPpc in percent of EU average (PPS, 1995) GDPpc in percent of EU average (PPS, 2007) Significant primary sector 3,17 39,41 45,95 Significant secondary sector 3,60 52,51 57,96 Significant tertiary sector 4,09 65,28 85,58 Source: EUROSTAT data, own compilation.

18 GDPpc GDP/fő (, (PPS) PPP) Reason of polarization: Reorinetation, changed geopolitical situation! W Phenomenon of west-east incline! y = -547,84x R² = 0,6277 y = -805,84x R² = 0, Hosszúsági fok Longitude Source: EUROSTAT data, own compilation. E Lineáris (1995) Lineáris (2007)

19 Reason of polarization: Considerable spatial concentration of growth factors!

20 Reason of polarization: Considerable spatial concentration of growth factors! Geographical distribution of settled FDI Name of the regions Percent cz01 Praha 49,30% cz02 Strední Cechy 10,70% Rest of Czech Republic 40,00% Total CZ 100,00% hu10 Közép-Magyarország 67,70% Rest of Hungary 32,30% Total HU 100,00% pl12 Mazowieckie 24,30% pl22 Slaskie 13,50% pl41 Wielkopolskie 11,60% pl51 Dolnoslaskie 8,40% Rest of Poland 42,20% Total PL 100,00% sk01 Bratislavský kraj 63,20% sk02 Západné Slovensko 10,30% Rest of Slovakia 26,50% Total SK 100,00% Source: EUROSTAT data, own compilation.

21 Reason of polarization: Considerable spatial concentration of growth factors! Limits of creation of knowledge economy: Population with tertiary education! Name of the regions Value Percent cz01 Praha 239,9 25,13% cz02 Strední Cechy 83,7 8,77% Rest of Czech Republic 630,9 66,10% Total CZ 954,5 100,00% hu10 Közép-Magyarország 508,1 45,25% Rest of Hungary 614,8 54,75% Total HU 1122,9 100,00% pl12 Mazowieckie 837,8 20,00% pl22 Slaskie ,70% pl41 Wielkopolskie 331,9 7,92% pl51 Dolnoslaskie 333,2 7,95% Rest of Poland 2195,8 52,42% Total PL 4188,7 100,00% sk01 Bratislavský kraj 118,2 23,51% sk02 Západné Slovensko 148,6 29,55% Rest of Slovakia ,94% Total SK 502,8 100,00% Source: EUROSTAT data, own compilation.

22 Reason of polarization: Considerable spatial concentration of growth factors! Limits of creation of knowledge economy: HRST (Human resource in Science and Technology)! Name of the regions Value Percent cz01 Praha 397,4 20,75% cz02 Strední Cechy 197,1 10,29% Rest of Czech Republic 1321,1 68,96% Total CZ 1915,7 100,00% hu10 Közép-Magyarország 674,0 42,83% Rest of Hungary 899,5 57,17% Total HU 1573,4 100,00% pl12 Mazowieckie 1082,3 19,06% pl22 Slaskie 702,6 12,37% pl41 Wielkopolskie 446,3 7,86% pl51 Dolnoslaskie 467,8 8,24% Rest of Poland 2979,2 52,47% Total PL 5678,1 100,00% sk01 Bratislavský kraj 179,3 20,27% sk02 Západné Slovensko 288,8 32,65% Rest of Slovakia 416,5 47,08% Total SK 884,6 100,00% Source: EUROSTAT data, own compilation.

23 Reason of polarization: Considerable spatial concentration of growth factors! Limits of creation of knowledge economy: GERD (Gross Expenditure on R&D)! Name of the regions Value Percent cz01 Praha 531,7 37,53% cz02 Strední Cechy 287,5 20,29% Rest of Czech Republic 597,8 42,19% Total CZ 1416,9 100,00% hu10 Közép-Magyarország 559,5 69,35% Rest of Hungary 247,3 30,65% Total HU 806,8 100,00% pl12 Mazowieckie 577,4 41,67% pl22 Slaskie 109,0 7,87% pl41 Wielkopolskie 108,3 7,81% pl51 Dolnoslaskie 86,1 6,22% Rest of Poland 504,9 36,44% Total PL 1385,7 100,00% sk01 Bratislavský kraj 92,5 47,58% sk02 Západné Slovensko 56,9 29,27% Rest of Slovakia 45,0 23,15% Total SK 194,4 100,00% Source: EUROSTAT data, own compilation.

24 Reason of polarization: Considerable spatial concentration of growth factors! The market forces creating agglomerations (centripetal forces) strengthened during the pre-crisis period! With the help of Herfindhal-Hirschman index the spatial agglomeration of production and employees has been tested. H n i 1 2 s i

25 Development gaps in V4 countries Changing relationship of neighbouring regions! Largest development gaps around the cores! Weakening the spread effects (+) and fostering the backwash effects (-)! Case in 1995 Case in 2007

26 Development gaps in V4 countries Development gaps along the borders! Source: EUROSTAT data, own compilation. Development gaps around the cores!

27 Benefitting regions <> loosing regions Absolute winners Potential followers Threatened losers Cluster analysis Endogenous Human resource Infrastructure Industrial structure Income level Knowledge (R+D, HRST) Exogenous Export volumen FDI inflow EU economic growth World economic growth

28 Benefitting regions <> loosing regions Regions can be considered as winners or beneficiaries of the transition: The group of the primary beneficiaries, or absolute winners : regions around the capitals displaying dynamic growth, with flexible, active and trained labour force, an extensive services sector, well-developed infrastructure and good accessibility. This category includes two clusters (Prague and Bratislava, as well as Central Hungary). The group of secondary beneficiaries, or potential followers : regions with favourable geopolitical locations (western), which are urbanised, with considerable and modernised industrial traditions and capacities as well as developed services sectors, and have been successfully integrated into the European division of labour and value creation (cluster 3). Regions can be considered as losers of the transition: The group of losers, or threatened losers : regions with unfavourable geographical, i.e. peripheral locations (internal or external), where the process of economic re-structuring is slow or blocked. It can be seen in the disadvantageous sectoral structure of the economy and the unfavourable labour market conditions (cluster 4).

29 Is there nothing new under the Sun? Source: Grzegorz Gorzelak, 1996 Industrial core or triangle from 19th century (Budapest Cracow/Katowice - Leipzig) East European Boomerang from the mid-20 century (Budapest Prague - Gdansk)

30 Concluding remarks Significant polarisation (due to the export oriented economic structure, high geoconcentration of industrial activities and knowledge economy). Growing development gaps with many aspects: Inter- and intraregional; Sectoral (primary-secondary-tertiary), key role of manufacturing; Urban-rural (growth poles), Core-periphery (cases of border regions), Western-Eastern incline (especially in SK and HU, and not really in Poland), Concentration of economic activities (agglomerations). Both endogenous and exogenous factors contributed to this differentiation! Positive consequence of the polarisation: a few developed, competitive cities, regions in East Central Europe exist (Bratislava and Prague among the TOP 20 regions of EU in 2009 by GDPpc; Budapest and Warsawa are close to the EU average). Growth poles! On the other hand a high number of regions is in inferior, exposed situation. An active, structure-oriented sectoral and regional policies are needed to foster them in a sustainable way!

31 Concluding remarks The main effects of the current crisis: First to be stated that not homogenous on V4 countries economy (PL >< SK, CZ >< HU), depending on the financial status of the country and the market size. The main negative mechanisms vulnerating the economies are the falling volumes of export and direct investment (reduced consumption both local and foreign; reduced budget for fixed capital formation). The improvements (decreasing development gaps) are just apparent and illusive. Mainly thanks to the slowed down growth of cores and NOT the accelerated growth of peripheries. EU regional policy (with national contributions) is accelerate the catching up process in ECE. chance for a

32 Recommandations For the core regions ( absolute winners ) the main priority is to help the further integration into European and global networks. This requires that as many as possible multinational and trans-national companies and international organisations be established in the cities and their catchment areas. In terms of income generating capacity and competitiveness, further expansion of the research and development profile and the innovation capacities are to be fostered (both the infrastructure and human resources). For this purpose, the establishment and subsequently improvement of the international prestige of the education and training (primarily vocational and higher education) institutions are to be promoted. The infrastructure of the core regions are relatively good, but the depreciation of the railway network and the lack of rapid rail system may later cause a bottleneck in transport and transportation. Access to the West European markets is provided by the motorways and airports, however, the network needs to be developed towards the internal peripheries and the East European markets. These developments are indispensable for strengthening the beneficiary (spread) impact of the central regions.

33 Recommandations For the secondary beneficiary (potential followers) regions the main priority is the dynamisation of the already existing key industries and locations (particularly in the current crisis situation). Therefore there is a primary demand for developing the human capital and for investment in the knowledge- and capital-intensive manufacturing and production industries, particularly in the processing industry. These measures will contribute to an improvement of regional competitiveness and capitalattracting capacity, and maintaining and re-gaining the foreign trade potential and exports volume. It is a cardinal issue for the future whether it will be possible to strengthen the income- and labour-absorption capacity. Developing the weak, underdeveloped R&D infrastructure and human resource background as well as organising the local economic players and enterprises into clusters and operating them may efficiently assist in achieving the above objectives.

34 Recommandations In order to ease and abolish the negative consequences of the differentiation of the past two decades, the main priorities are for threatened loser the followings: Improving the labour market conditions and entrepreneurial conditions. For this purpose it is essential to establish labour-intensive industries and to boost the income-generating capacity of the agriculture and the rural areas. The access to the larger markets is not solved for these regions ( Eastern wall ), thus there is a realistic threat of economic-social marginalisation and isolation. In order to avoid this, and to play a kind of hub (bridge-head) role towards Eastern Europe or rather Asia, the transportation and telecommunication infrastructure needs to be developed. Since several of these threatened regions do not have any growth poles, improvement of accessibility towards the further national centres is also of importance. For the modernisation and restructuring of the local economies and improving the quality of services it is essential that R+D activities and funds as well as working capital are oriented into the regions.

35 Thank you for your attention! Contact me: Visit the Institute: gtk.uni-miskolc.hu/iwre