Crisis, institutional change and peripheral industrialization: Municipal-central state relations and changing dependencies in three old industrial towns of Hungary

Nagy, Erika; Gajzágó, Gergő; Mihály, Melinda; Molnár, Ernő

doi:10.1016/j.apgeog.2021.102576

Cited by 14 publications

(12 citation statements)

References 33 publications

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“…The big picture conceals in-depth restructuring processes in terms of ownership, production activities, and branch structure: this shift was generally benevolent, representing a shift towards higher value-added industries and activities, and gradual upgrading processes. Yet, restructuring within the branch structure of the economy has also been accompanied by the dissolution of production networks and knowledge bases in low-tech industries (Gwosdz, Domanski 2019;Molnár 2021;Nagy et al 2021), hindering future innovative re-industrialisation opportunities due to deskilling, and the hard-to-reconstruct loss of specialised knowledge sets. The advantages have also come at the price of increasing regional disparities.…”

Section: Meso-and Micro-level Perspectives With Spatial Implicationsmentioning

confidence: 99%

FDI-based regional development in Central and Eastern Europe: A review and an agenda

Gál

Lux

2022

TéT

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This review article reflects on thirty years of FDI-dependent development in Central and Eastern European regions (with a special emphasis on the Visegrad countries). The modernisation potential of FDI-led European integration is examined from a critical and comparative perspective. The authors argue that the FDI-led “Dependent Market Economy” (DME) model has fallen short of its anticipated modernisation potential, while other, potentially lucrative development alternatives have been neglected. While early-stage benefits were considerable, the development model now faces signs of exhaustion and an increasing number of contradictions. The paper builds on previous original research by the authors, as well as a review of international academic literature to describe the limitations and trade-offs of the DME development model, followed by an overview of three alternate growth paths for the future. In the macro-level perspective, it is argued that long-term catching-up rates across Central and Eastern Europe over 30 years have been limited, and signs of slowdown are increasingly apparent. Likewise, FDI does not seem to contribute significantly to domestic capital accumulation. On the micro-economic and regional levels, limited income effects are coupled with intangible risks and trade-offs. Strengthened socio-economic and territorial disparities ultimately pose problems for both metropolitan core regions and peripheries, while low capital embeddedness and limited spillovers denote weak territorial integration. It I advanced that the DME model may exacerbate future structural crises and exogenous shocks, and finally, that a development model dependent on exogenous capital structures shows curtailed capability to explore, learn, and benefit from beneficial growth opportunities. The paper makes the case that, while the DME model cannot be realistically dismantled in the foreseeable future without considerable risk to the CEE economies, a comprehensive diversification agenda should seek to gradually reduce its risks and foster alternate sources of growth. Embedding foreign capital into local economic networks represents one possible compromise, coupled with growing supplier networks and anchoring value creation in business services as well as innovation and R&D activities. However, alternate sources of development are also to be explored. The new revival of industrial policies in Europe and across the world opens opportunities before previously ‘inconceivable’ state-led development initiatives, including support for the emergence of new national champions. Last but not least, a strengthening domestic SME sector with competitive medium-sized enterprises and locally embedded production networks should serve to strengthen entrepreneurial ecosystems in domestic capital accumulation and value creation. Together, these and similar steps have the capability to shift the balance from the DME model towards a more competitive and resilient “successor model” where the interests of FDI and domestic development can be fruitfully reconciled.

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Section: Meso-and Micro-level Perspectives With Spatial Implicationsmentioning

confidence: 99%

FDI-based regional development in Central and Eastern Europe: A review and an agenda

Gál

Lux

2022

TéT

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“…In local investment strategy, domestic and foreign enterprises seeking new locations, local small and medium-sized enterprises, and the local population are identi ed as main target groups, and the electronic industry and agrobusiness belong to the ve focal sectors (Megakom 2017). However, there is a 'missing link' between general national development priorities and local ambitions, while the importance of this link because of the changing relations between central and local state and the takeover of control over local resources by the central government (Nagy et al 2021) signi cantly grew during the 2010s and determines much more the success of any bargaining process (Figure 3, A). Which spatial priorities does the national government have, and what kind of support can the municipality channel from above to achieve its own economic development goals?…”

Section: Discussionmentioning

confidence: 99%

“…However, 'open and systematic centralisation' after 2010 re-regulated municipal nance and competences, set up a hierarchical institutional system to control local processes and mediate political power, and also made local municipalities increasingly powerless through a series of reforms of the local political system. As a consequence, local resources (labour market, education, and training, infrastructure development and land use) have been placed under central governmental control (Nagy et al 2021). While the local economic development function of municipalities due to the loss of other important competences has appreciated, their ability to shape local assets within the multi-level mix of institutions has largely decreased and local 'capacity to act' has become more dependent on political lobby power.…”

Section: Regional Assets and Institutions In A Small Townmentioning

confidence: 99%

Strategic coupling on the European periphery: A case study of a small Hungarian town

Molnár

Saidi

Szabó

2022

TéT

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The FDI-based economic development policies in East-Central Europe and the strategies of transnational firms seeking cost-efficient production locations close to the main markets of the EU have led during the last decades to the integration of the region into different global/regional production networks, mainly in the form of locations for industrial production. While the intensity of re-industrialization largely determines economic growth and spatial socioeconomic inequalities outside metropolitan regions, the long-term success of this model, which tends to result in a dual economy, dependent development, and the ‘middle-income trap’, has been challenged. According to the GPN literature, which comprises the main theoretical basis of our research, the means of integration is the key to understanding the potential outcomes of this economic model. The process seems to depend on the quality of global-local interactions based on enterprise strategies and multi-level regional assets and agency. Our article focuses on making a comparative analysis of two transnational companies in a small peripheral town and uses the concept of strategic coupling as the analytical framework for the interpretation of the global-local interactions and their developmental outcomes. Based on secondary and primary sources, we examine the key assets and actors in the local environment, follow the development (upgrading trajectories) of subsidiaries, and analyse the dimensions and depth of their local/regional socioeconomic integration. We contribute to the special issue’s main objectives through our case study that reveals strategic coupling dynamics and quality and discusses the chance of more advantageous developmental outcomes in a peripheral location with limited and diminishing local (human) assets.

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“…The post-socialist transformation of Central and Eastern European (CEE) economies implied their (re)integration into global capitalism (Hardy 2014;Themelis 2016) as "dependent market economies" (Nölke and Vliegenthart 2009) which are dominated by foreign direct investment and have only a limited degree of economic sovereignty (Smith and Timár 2010;Nagy et al, 2021). This development was accompanied by internal polarization, with some regions being transformed into important hubs of global capitalism and others losing economic relevance (Schmalz et al, 2021).…”

Section: Peripheralization and The Rise Of Right-wing Populismmentioning

confidence: 99%

“…Social enterprise researchers need to be reflective about the legacies of cold war ideologies when studying social enterprises in CEE. The aim of this research is to present examples of rural social enterprises from the CEE region to show that participatory SSE initiatives are possible in our region, notwithstanding state-socialist oppression of civil society (Galera 2009: 254;UNDP 2008: 35), withdrawal of the state from funding civil society that questions the establishment (Kövér 2015), centralization of power and funding sources (Nagy et al, 2021;Pálné Kovács 2021), and the limited access of inhabitants of rural areas to processes of political decision making (Amin et al, 2002: 17).…”

Section: Peripheralization Political Discontent and Social And Solidarity Economymentioning

confidence: 99%

Peripheralization, Political Discontent, and Social and Solidarity Economy—Case Studies From Rural Hungary and Germany

Mihály

2022

Front. Polit. Sci.

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The reintegration of Central and Eastern European (CEE) economies into globalized capitalism resulted in increasing regional polarization and the emergence of internal peripheries. The crisis of the globalized capitalist economy in 2008 resulted in the further peripheralization of rural areas, and the related crisis of representative democracies triggered rural resentment against the existing order. Inhabitants of peripheralized areas have a feeling of abandonment and political discontent. The rise of right-wing populism may be understood as a revolt of people living in precarious conditions in peripheralized areas both in Hungary and Germany. Left-wing populism, which builds on equality and social justice and is based on radical democracy, has not been able so far to reach the precaritized inhabitants of peripheralized rural areas. Solidarity economy, which is a contemporary social movement, refers to a comprehensive program aimed at transforming the entire economy, and may have the potential to address the political discontent of people living in peripheralized rural areas. In spite of the rising support for right-wing populism, social and solidarity economy (SSE) initiatives are being carried out in rural peripheries. These initiatives are based on the principles of participatory and economic democracy. Spaces provided by SSE initiatives can become forums for deliberation and co-management to develop economic democracy and become seeds of a solidarity economy movement in CEE. Therefore, based on a critical realist ethnographic approach, this paper aims to answer the question of how SSE initiatives may address the everyday material challenges and political discontent of people living in peripheralized villages by studying two SSE initiatives being carried out in two contrasting cases of peripheralization. Studying SSE initiatives in relation to 1) the locality they are embedded in, 2) “subaltern” groups within the locality, and 3) participatory, economic and 4) representative democracy helps to better understand in what ways SSE initiatives can mobilize political discontent to strengthen the solidarity economy movement in CEE.

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Crisis, institutional change and peripheral industrialization: Municipal-central state relations and changing dependencies in three old industrial towns of Hungary

Cited by 14 publications

References 33 publications

FDI-based regional development in Central and Eastern Europe: A review and an agenda

FDI-based regional development in Central and Eastern Europe: A review and an agenda

Strategic coupling on the European periphery: A case study of a small Hungarian town

Peripheralization, Political Discontent, and Social and Solidarity Economy—Case Studies From Rural Hungary and Germany

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