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Territorial Scenarios and Visions for Europe ET2050 Eastern & Danube Region ,

Jan 25, 2016




Territorial Scenarios and Visions for Europe ET2050 Eastern & Danube Region ,. GÁL, Zoltán (PHD, Dr habil.) [email protected] Centre for Economic & Regional Studies, Hungarian Academy of Sciences University of Kaposvár, Faculty of Economics. ESPON T-2050 Brussels , 18/02/2014. - PowerPoint PPT Presentation

  • Territorial Scenarios and Visions for Europe ET2050 Eastern & Danube Region ,

    ESPON T-2050 Brussels, 18/02/2014

    GL, Zoltn (PHD, Dr habil.) [email protected] for Economic & Regional Studies, Hungarian Academy of SciencesUniversity of Kaposvr, Faculty of Economics

  • Background document/outputs by HAS RKK (Regional Research Institute)Gl Z. , Lux G., Ills I..eds: Danube Region: Analysis and Long-Term Development Trends of the Macro-Region. Szerk.: Gl Z., Lux G., Ills I. Pcs: Institute of Regional Studies Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences, 2013. 59 p. (Discussion Papers, 90) (ISBN:978-963-9899-62-9)Scenarios/baseline trends in the Danube Region for the Second Interim ReportPaper on Differentiated industrial development and economic convergenceShort paper on the Hungarian polycenricity and FUAsPaper on Modernization slope: Long-term path dependent analysis of Central and Eastern Europe catching up or loosing behind? Comment s on the vision from Eastern regions perspectives



    Eastern European countries will hardly be able to sustain the strategy of growth of the previous decade, when many industries were attracted, many from the Southern European regions. While large cities and capitals may have agglomeration economies, rural areas will tend to be depopulated. Migrations from East to West will continue. Social Welfare may grow slowly, and the gap with Northern and Central regions may also grow.*

  • Evulutionary economic approachEurope as a whole, and Central and Eastern Europe is losing its share in the world economy because of the much faster rising new Asian and overseas economies. Historical datasets show continuous and sharp decline, which verifies our steady European decline expectation for a longer-term.


  • Catching up experiments in CEEThe CEE region became the periphery of a transforming West during the early modern Age (16-17th century). The nineteenth and twentieth centuries were characterized by 3 major periods (waves) of catching up with the West.

    Turn of the 19th and 20th centuries experienced the most successful catching upModernization under the centrally planned economyPost-communist transformation and transition

    In general, during the last quarter of the 20th century transition process CEE generally slowed down and started to decline.One-, one-and-half decades of gradual catching-up period (speded up after the Millenium) with the West, faster growth rates and productivity increase, stopped in 2007-2009.


  • Changes in per capita GDP level Eastern Europe (7) in comparison with Western European Countries (EU 12 =100%) between 1870 and 2012


  • Economic trendsEconomic trends: despite European catching-up processes, the large economic and territorial inequalities can not be eliminated in dependent economies due to constant capital scarcitiesCatching-up in the region will take place, but with internal disparities on the increase, particularly between metropolitan centres and peripheral regionsWith the continuing dominance of FDI among investments, the role of domestic capital and markets will receive more emphasis than previously,CEE economic differentiation and strong integration into EU-wide ransnational corporate networks: zones alongside the main corridors in CEE are heavily linked to FDI and to Western European industrial networks (automotive)More ambiguous mixture of FDI-driven reindustrialisation and the surviving domestic industrial capacities with rapid deindustrializing (CEE vs. SEE)Weak innovation: R&D investment relative to GDP funded by the business sector except in Austria and the Czech Republic was low (moderete or weak innovators)


  • Peculiarities of the transition model in CEECEECs followed the pattern of a dependent market economy (DME) type of capitalism which is characterized by high dependency on imported foreign capital.Foreign investors not only contributed to the modernisation of the economy, but also increased its structural and spatial segmentation created by the dual economy. The strong correlation between higher FDI increase and higher growth can not be proved in the CEECs. Camagnis sensitivity analysis found the same since new investments generate higher imports. (increasing tax rate in correlation with indebtedness)Rajan found that developing/emerging countries that relied more on foreign finance have not grown faster in the long run and typically have grown slowly.Low-income-based competitiveness represents a development trap that counteracts the accumulation of financial and social capital, hinders upgrading to high value-added production, and encourages migration to higher-wage regions.CEE is falling behind its peers in other emerging markets. The global financial and economic crisis exposed the weaknesses of the post-socialist neo-liberal economic development model in East-Central Europe.Wage differences will remain significant in comparison with the Eastern regions (Wegener)


  • Risk of Increasing National Disparities. In CEECsAccording to G. Kolodko (2001), there is not one single future growth prospect for CEE. He differentiated four long-term growth path. Our graphs verifies the increasing disparities between CEECs. Sustainable catching up process is jeopardized by the dualistic feature of the transition economies unveiled the weakness of indigenous (domestic) sectors.Less developed countries may grow in the short-term because of the reduction of the current unemployment levels, and a reduction of salaries in real terms.Meantime income and intraregional differences significantly increased.


  • Changes in per capita GDP level in CEECs in comparison with Western European Countries (12 =100%) between 1870 and 2012

    *Source: Zoltan Gals calculation based on Maddison database

  • Risk of Increasing Regional Disparities At regional level, we may see disparities growing more than before; in new member states capital regions are the winners, while rural and eastern border regions may likely be the losers. Clashes between growth- and sustainability-oriented policies are to be expected. (GMR model)A net increase in the service sector is expected in Eastern regions, clustered in main cities, but growth in non-metropolitan regions will maintain a significant industrial element.Industry will remain a backbone of competitiveness in non-metropolitan Eastern regions, shifting to deeper territorial embeddedness and higher local added value.The concentration of advanced business services corresponds to the urban network: it exceeds 50% in the capital regions of Slovenia, Slovakia, Bulgaria, Hungary and Croatia, is at 43% in the Czech Republic and below 40% in Romania, where a more polycentric urban network is present.


  • Polarised development is one of the most serious problems of the CEE (Eastern) Region. After EU accession the divergence of GDP per capita continued both between counties and within countries as well. The macro-region is also notable for its internal disparities. The poorest region of the EU where the GDP per capita is less than 30 percent of the EU average (TOP 20 pooerest regions, Cohesion R)Capital city regions (Praha, Kzp-Magyarorszg, Zahodna Slovenija, Bratislavsky kraj, Bucuresti-Ilfov) have higher per capita GDP than the EU average, in the case of Prague and Bratislava, double the average. The location of FDI driven manufacturing industries: integration zone stretching from the ViennaBudapest corridor to south-western Poland, with strengthening linkages to Western European industrial networks, predominantly automotive industry. This integration is heavily linked to FDI, which, outside capital cities, shows its highest levels in these industrial regions;


    MTA Regionlis Kutatsok Kzpontja

    Development level by per capita GDP (PPP, % of EU27 average) Note: The numerical value in the upper box shows the ranking of the individual region within the sample. The value in the lower box shows the change in the regions ranking between 2000 and 2008.

  • Development gap between the most developed and the least developed regions (GDP per capita in the percentage) in 2000 and 2007

    *Sorce: Gl-Ills-Lux (2013

  • Winners: Capital city regionsThe change of the relative development level of capital cities and capital regionsin the EU 19952009Source: Eurostat. Gl-Ills-Lux (2013)[1]

    Convergence processes have been most beneficial for capital cities. It means that the overwhelming part of GDP is produced in the capital-city-regions (in Bulgaria 48%, in Hungary 48%, in Slovakia 60%, in Croatia 47%).


    Capital city or regionsCountryPer capita GDP as a percentage of EU15 average19952009ChangeStockholmSVE1961924,0PragueCZ49123+74,0MadridESP103128+25,0BudapestHU4988+39,0BratislavaSK41121+80,0BucharestRO1341+28,0AttikiGR70115+45,0Lisbon and Tejo ValleyPT8495+11,0UusimaaFINN175190+15,0Central HungaryHU3865+27,0MazowieckiePL2455+31,0

  • Differentiated industrial development and economic convergence (tertiarization paradox)

    The degree of tertiarisation between the national economies of Central Europe does not correspond to development level.Besides capital cities western border regions and gateway cities have become the most successful, becoming the main target areas of industrial FDIInvestment.Economic development is only service-based in central regions The differences of industrial decline and reindustrialisation are essential factors in regional competitiveness: cities and regions integrating into international industrial networks can count on a substantial increase of their competitiveness, while services on their own are unable to achieve this effect. Naturally, tertiary devel

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