The Routledge Handbook to Regional Development in Central and Eastern Europe

Gábor Lux, Gyula Horváth, Gábor Lux, Gyula Horváth

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781472485717
• eBook ISBN: 9781317123934
• Topic: Politics & International Relations
• Subtopic: Local & Regional Planning Public Policy
• Index: Politics & International Relations

Twenty-five years into transformation, Central and Eastern European regions have undergone substantial socio-economic restructuring, integrating into European and global networks and producing new patterns of regional differentiation and development. Yet post-socialist modernisation has not been without its contradictions, manifesting in increasing social and territorial inequalities. Recent studies also suggest there are apparent limits to post-socialist growth models, accompanying a new set of challenges within an increasingly uncertain world.

Aiming to deliver a new synthesis of regional development issues at the crossroads between 'post-socialism' and 'post-transition', this book identifies the main driving forces of spatial restructuring in Central and Eastern Europe, and charts the different regional development paths which take shape against the backdrop of post-crisis Europe. A comparative approach is used to highlight common development challenges and the underlying patterns of socio-economic differentiation alike. The issues investigated within the Handbook extend to a discussion of the varied economic consequences of transition, the social structures and institutional systems which underpin development processes, and the broadly understood sustainability of Central and Eastern Europe's current development model.

This book will be of interest to academics and policymakers working in the fields of regional studies, economic geography, development studies and policy.

1
Regional development paths in Central and Eastern Europe and the driving forces of restructuring

An introduction

Gábor Lux

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Introduction

The transformation of Central and Eastern Europe (CEE) has been the subject of considerable interest in social sciences. With systemic change, EU integration and accession, followed by the years and aftermath of the global financial and economic crisis, the CEE group of countries has undergone deep socio-economic restructuring, leading to new patterns of regional differentiation and development.

Influenced by a combination of inherited and newly emerging factors, territorial disparities have been on the rise. Examples of catching-up with western EU member states in the capital cities and a handful of successful regions are contrasted by the re-emergence of deep socio-economic problems in traditionally underdeveloped peripheries and newly hollowed-out regions still struggling with the legacies of industrial decline and the loss of economic functions. These differences, reflected in several spheres (e.g. competitiveness, social cohesion, governance and sustainability), shape the new national and subnational dividing lines of post-crisis Europe.

This volume, collecting the results of a comparative research project on the driving forces of spatial restructuring and regional development paths, aims to deliver a comprehensive view on the complex system of regional development within CEE. In its chapters, focused on the different aspects of restructuring, the authors identify the common features of spatial restructuring, as well as the underlying patterns of socio-economic differentiation, showing the CEE group to be just as heterogeneous as the EU15.

The global financial and economic crisis serves as a common lynchpin for many contributions, as its far-ranging effects can be said to represent the start of something new – a ‘post-transition’ period where the inherited problems of post-socialism slowly give way to new dilemmas. The dilemmas of post-transition evidently continue to be influenced by historical and institutional legacies, but the specificity of ‘post-socialism’ will be weaker, one among a set of influences dominated by deepening European integration, and against the backdrop of a new era of global uncertainties.

Researching the regional development of Central and Eastern Europe

Over the transformation of Central and Eastern Europe, studies on the macro-region have mostly been dominated by macro-level analyses and thematic studies. Research on regional development has been a relatively smaller field of enquiry, going through multiple phases of interest. Pickles (2008), as summarised by Czirfusz (2011), put forward four waves of transition studies: a first wave centred around the broad policy issues of economic reforms, a second wave concerning increasing socio-economic inequalities, a third wave on spatially and socially uneven regional development, and a fourth wave ‘when logics and theories of transition studies became objects of scrutiny’ (21). In spite of constant academic interest, research has also had its ‘blind spots’ where much fewer works have been completed. While the EU accession period saw the proliferation of research programmes on structural and cohesion policy, most thematic volumes have either focused on the regional transformation of individual countries, or on specific topics (e.g. declining industrial regions, the spatial distribution of Foreign Direct Investment (FDI), the transformation of rural spaces, or new directions in urban development). In contrast, relatively few works have presented a comprehensive view of the macro-region in a monographic format, and most of these were written more than 15 years ago (Gorzelak, 1996; Heenan and Lamontage, 1999; Bachtler, Downes and Gorzelak, 2000; Turnock, 2001; and Hughes, Sasse and Gordon, 2004). Recent works with a broad outlook include Herrschel (2007) and co-authors with a systemic review of post-socialism and transition from a global perspective, Gorzelak, Bachtler and Smetkowski (2010) on development dynamics and policy responses, Gorzelak and Goh (2010) on the early consequences of the financial crisis, and Lang et al. (2015) on polarisation and peripherisation. However, the new development directions of CEE regions and the questions of the post-crisis period have not yet been adequately explored. More research is needed on the subject, and this book can only hope to contribute to the discussion.

The identities and interests of researchers who deal with CEE subjects are themselves worth noting. In a detailed study of publication patterns across 15 leading international journals in regional studies and human geography, extending to the period between 1995 and 2011, the author of this chapter found 485 articles dealing with various development issues of the CEE macro-region (Lux, 2012). Interest in CEE was more or less stable across this period, with most attention dedicated to the subject of urban development (19 per cent of all papers), followed by public administration (11 per cent), then regional policy, manufacturing, regional differences and rural issues (10 per cent each). The specific problems of post-socialism (8 per cent), border issues (6 per cent) and services (5 per cent) received comparatively less attention. There were two features of particular interest in publication patterns: first, the clear dominance of individual case studies fitted into western theories, with a much weaker representation of comparative, synthetic or theoretical papers with a CEE connection. Indeed, where the latter three were found, they were usually written by western primary authors, although sometimes with local co-authorship. Second, the examined articles demonstrated proof of what is commonly referred to as the ‘Anglo-Saxon hegemony in human geography’ (for the broader debate, see Gutiérrez and López-Nieva, 2001; Rodríguez-Pose, 2006; Aalbers and Rossi, 2007; and Paasi, 2013; and for the specific question of CEE, Stenning, 2005, as well as Timár 2004a, 2004b). There was promising evidence of growing internationalisation: the share of papers with CEE primary or co-authors had risen from 52 per cent between 1995 and 2004, to 61 per cent between 2005 and 2011. Nonetheless, for good or ill, the production of regional studies was clearly tied to the dominant research hubs of the United Kingdom, the Netherlands and North America, and reflected the curiosity and research agendas of western academia.

Rationale for the book: emerging doubts about the CEE regional development model

Regional development in Central and Eastern Europe has long been framed by notions of transition from one model to another: central planning to market economy, authoritarian rule to democracy and top-down to bottom-up social organisation. While most components of transition have been articulated on a general, society-wide level, some are anchored in space: eastern vs. western orientation, hierarchies vs. networks, and centralisation vs. decentralisation. The spatial embeddedness of transition was not generally made explicit at the time of systematic change, and did not emerge as a cohesive agenda of spatial justice (c.f. Soja, 2009), but some of its elements were implicitly present in specific goals, particularly concerning the autonomy of local communities, and non-discrimination in development funding.¹

The notion of transition, often conceptualised in the form of dichotomies, suggests instability along with fast-paced, substantial and lasting change towards a new stable system. However, the early hopes of transition failed to materialise: rapid change in some regions was counterbalanced by lagging development or decline in others; improvement in varied spheres by new crises and vulnerabilities. There is, perhaps most prominently in Hungary, also a certain sense of missed opportunities: the CEE macro-region has remained a periphery within Europe and on the global stage, and did not produce the standout growth rates, globally competitive firms, brands and narratives of the iconic post-war examples of successful modernisation. Politically, CEE has little influence beyond its borders and own affairs, and does not play on the European, let alone global, scale. It has little in the way of cultural exports, and its outside representation is deeply problematic whether we consider its public image or media coverage. There are success stories and hopeful signs, but hardly a reason for celebration. The roots of this disillusionment run deep. Crucial empirical evidence of increasing regional differences and limited modernisation under post-socialism was already presented in a comprehensive manner by Sokol (2001) and Dunford (2005), and troubling extrapolations until 2030 and 2050 have been provided more recently by the long-term development scenarios of the ESPON ET2050 programme (2015). Twenty-five years represent a rather long period in the development of countries and macro-regions, and yet expected benefits have failed to materialise, while many socio-economic problems thought to be short-lived seem to have become permanent features of the post-socialist condition. The explanations and responses to this dilemma have given rise to two major interpretations of post-socialist development.

One interpretation places emphasis on the slow-paced nature of regional change. Contradicting scenarios that calculate with fast-paced transformation, this approach posits that the malaises of state socialism are deeply rooted, and change must take place over decades, perhaps even generations. These explanations can draw especially relevant lessons from the results of the institutional turn in economic geography (Martin, 2000; Amin, 2001), as well as the emerging field of evolutionary economic geography (Boschma and Frenken, 2006; MacKinnon et al., 2009), which offer an array of useful concepts for discussion. Path-dependent development, lock-ins, institutional rigidities or problems associated with the accumulation of financial, social and knowledge capital may be seen to hold the key to explain ‘historically embedded’ growth processes. Similarly, institutions act as carriers of history – except in CEE, they are often considered the ‘wrong’ kind of institutions, either oriented towards reproducing undesirable results (similar to the vicious cycles characterising ‘Old Industrial Regions’), or insufficiently prepared to accommodate and realise modern policies. Indeed, the chapters in this volume offer a wealth of evidence that hint at the evolutionary nature of CEE regional development paths, and to the outstanding relevance of institutions in shaping them. As Lengyel and Bajmócy (2013, p. 6) propose, ‘[u]nderstanding the changes in institutions or the behaviour of individual actors, recognising enduring behavioural patterns or bounded rationality arising from centralised decision-making are all crucial components in understanding post-socialist transition’.

Another group of responses seems to lead to the conclusion that in a sense, ‘transition’ may no longer be accurately described as an intermediate development phase, but a new, stable system with its own operating logic. These explanations can trace their origins to early criticism of neo-liberal development policies in CEE, particularly two in-depth papers by Gowan (1995, 1996), but they have taken full form in the ‘varieties of capitalism’ debate (Bohle and Greskovits, 2004, 2006; Peck and Theodore, 2007; Rugraff, 2008; Nölke and Vliegenthart, 2009) which proposes the existence of a specific ‘dependent market economy’ (DME) model of capitalism to describe Central and Eastern European countries. The DME is ‘neither fish nor fowl’, differing from both the ‘liberal market economies’ (LMEs) exemplified by the Anglo-Saxon countries, and the more regulated ‘coordinated market economies’ (CMEs) mainly found in continental Europe.²,³ In particular, Nölke and Vliegenthart (2009) make a persuasive case in charting the modern socio-economic dependencies of the macro-region, and calling attention to its inherently low upgrading potential. Most notably, this train of thought has seen further elaboration by Farkas (2011), who provides empirical proof of this distinct developmental model; by Drahokoupil and Myant (2015), who outline how upgrading processes may take place within a system of external dependencies; and by Medve-Bálint (2014), who places emphasis on the EU’s role in providing substantial policy support to establishing and maintaining this development model through its FDI policies.

While they are both useful in understanding the nature of regional development in CEE, and the truth may indeed lie somewhere in the middle, neither of these interpretations are without serious problems or contradictions. The first explanation can be contrasted by the experiences of geographic peripheries which have managed to chart an impressive development trajectory in recent decades, contradicting the notion that development is an a priori sluggish process. These examples include Ireland’s rapid modernisation from a rural, low-wage economy through a predominately FDI-based development path (Horváth, 1998), Scandinavia’s rise through the welfare state’s heavy investments into human capital and the knowledge economy (Pogátsa, 2016), and the developmental states of East Asia (Gereffi, 1995; Rugraff, 2008; Cimoli, Dosi and Stiglitz, 2015). While there is precious little to unite these cases (except perhaps a general attention to developing human capital), and their own problems must not be neglected, they seem to have demonstrated a modernisation performance surpassing that of post-socialist Central and Eastern Europe.

The second explanation – while it is internally self-consistent, and correctly identifies that many of CEE’s problems are not merely symptomatic, but systemic – has an uncomfortable tinge of geographic (and in some cases, cultural) determinism, and robs the varied actors of the macro-region of both their agency and their responsibility. Defeatist narratives neglect to consider the possibilities of individual and collective action, or even to appreciate the instances where they have achieved lasting, meaningful change (Domański, 2004; Pogátsa, 2014). The second explanation also tends to discount, or at least undervalue, the significance of rising inequalities and lagging growth within global/European core regions, and how they influence the growth prospects of CEE countries and regions. If CEE development is characterised by externally dependent relationships, then these dependencies also serve to transmit the ongoing crisis of post-industrial society, projecting its consequences on the admittedly more vulnerable socio-economic fabric of the CEE macro-region (Chapter 4 in this book provides a clear-cut example). All in all, ‘fixing’ the problems of CEE regional development cannot be discussed independently of ‘fixing’ the problems of Europe itself; and in a sense, this is an encouraging reaffirmation of the positive results of European integration.

Aims and scope of the book

In the original research...

Table of contents

• Cover
• Half Title
• Title Page
• CopyrightPage
• Table of Contents
• List of figures
• List of tables
• List of contributors
• 1 Regional development paths in Central and Eastern Europe and the driving forces of restructuring: an introduction
• Part I Economic transformation processes before and beyond the crisis
• Part II Social structures and governance
• Part III Challenges in sustainable development
• Index