STRATEGIC MANAGEMENT
7. Regional policies
Regions in Central Europe
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Reason of the presentation
During the last decades spatial economy was one of
the more rapidly developed topic in economics.
The main-stream production strategy changed
(adaptability and just in time became important
instead of economy of scale and mass
production).
So, parallel with the globalisation’s theory the
regional concepts became more and more
important in the theory and the practice of firm’s
strategy and the economic development at all.
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Today a firm manager also have to know the
main element of the spatial theory and use
their business opportunities.
The key questions of the modern regional policy
are the regional competitiveness and the
effective strategies in the competition. The
answers can help the firm’s decisions about
foundation and co operations.
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Theoretical base
First element of the spatial economy was based
on the phenomenon that transport costs
influence the production’s effectiveness.
A. Marshall stated that low transport costs
between firms which are located close to each
other, can explain the development of
industrial districts.
After the first world war researchers observed
the development of the division of labour
between the „industrial” districts („centres”)
and their „peripheries”. Firms in the centre
offer services to the firms in the peripheries.
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According to M. Porter in a developed economy the
types of the regions can be the following:
- cost-conducted (neo-fordist), where the typical
aspiration of firms is the cost-reduction,
- investment-conducted, where firms adapt the
new inventions quickly.
- innovation-conducted, where the actors create
knowledge (inventions),
In the developing economies there are costconducted and other types.
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The leading centres in the world are the main
engines of the technical development as well.
Their location changed during the centuries
from the Manchester district to the Ruhr-area,
after this to the great lakes in the USA.
(Sources: Krugman, Saxanien, etc.)
Nowadays the most competitive regions of the
World are USA, Japan, the European „blue
banana” (figure) – and, in spite of their
backwardness, China and India.
.
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The „blue banana”
(Source: Brunet)
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The centres formed under the influence of the
cooperation of firms, the distance of which is
„small” (e.g. in the near past in middle England,
Baden-Württenberg and Northern Italy). These
networks (clusters) of firms offer more and more
new competition’s advantages of their cooperation (so called synergies).
Nowadays the notion of „small distances” has been
extended because of the effects of the new
opportunities of the information technology. This
phenomenon also gives possibilities to increase
the level of cooperation and competitiveness.
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In the US practice, a competitive region has at
least 3 millions inhabitants (and often 150.000
employees in high-tech industries).
The centre of an innovation-conducted region
(where the main profile is high-tech industry,
e.g. electronics, biotechnology) always has an
entrepreneurial university. This university – its
researches and knowledge-transfers - can be
one of the main catalyser of the regional
progress.
In a cost-conducted region with traditional
branches (e.g. machinery, textile) a university is
not so important.
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„Competition” among regions
There is great difference between the
competition of firms and that of regions.
The goal of the regional „competition” is the
increase of the GDP and the living standard of
the population in the region.
The main tool of realisation is the creation of
good business environment for the successful
enterprises and employment.
At the result of the „competition” often all
regions are winners. If a region is looser, the
consequence is not its liquidation.
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Elaboration of a regional strategy
Regional strategies analyse many topics. Their
content is defined by the principle of
subsidiarity.
It says, that the decisions have to make in places
where decision-makers have most of the
information about the given topic.
The main goals of the regional policy can be the
support of the employment’s and
productivity’s growth.
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The arsenal of the regional development is rich.
Regional policy have to develop industrial
infrastructure (public utilities, transport,
communication etc.).
An important tool of the employment increase is
the education, the creation of the competitive
manpower. So, regions have to encourage the
settling (home-making) of good teachers,
professors, maintain and control schools,
develop professional trainings etc.
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Important task of the regional management is
the aid of the SMEs’ development. It can
support firm’s incubation, development of
industrial parks, creation of business services,
especially consulting etc.
Very important task to create simple ways to the
enterprise creation, and the capital
redistribution (so, the sale and liquidation of
firms).
The stimulation of the mentor’s, business
angel’s activity can be very effective as well.
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The regional policy can help the creation and
distribution of the knowledge with the
techniques of management, intellectual
property protection, support of researches,
spin-offs, adaptation of modern technologies
etc.
Often the development of financial market, and
the stimulation of foreign direct investments
(FDI) are helpful.
These can create both new workplaces and
higher productivity.
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During the working out of a regional plan the
social dialog is a key factor of success. In the
interest of the plans’ fulfilment all
„stakeholders” have to agree with the
envisaged main goals and tools .
The social dialog can also clarify who (which
organisations) are the allied, and who can go
to opposition. The planners can transform the
views of the opponents trough a bargaining
process .
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Regions in Central Europe
In Central-Europe the most developed
(industrial) regions are situated in the so
called „red” boomerang (figure).
The analysis of our EU project RECORD stated,
that in many regions of the boomerang the
number of the good R&D institutes (Centres of
Excellence, COEs) is restricted (figure).
It is a real danger of Central Europe, that the
developed regions of „blue banana” attract
the creative capacities from its developing
„boomerang”.
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Central European „red boomerang”
Red boomerang
Eastern wall
Centres
Brown fields
Source: Gordzelak
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CoEs in Central Europe
Source: RECORD Map
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In spite of their common problems, the Central
European countries do not have a common
„regional” strategy. The causes can be
different.
• Often the competition among the regions for
FDI, EU subventions etc. is strong.
• Between some countries the conflicts of
nationalism have traditions as well etc.
EU protect the catching up of the less developed
regions.
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Regions in Hungary
Principles of the EU’s territorial distribution are
fixed in the „Nomenclature of Territorial Units
of Statistics” (NUTS).
Hungary has 7 „NUTS 2” regions. The central
region is Budapest and its surroundings, the
others were formed by unifying 3-3 counties.
Eger is in the Northern-Hungarian region.
There are immense differences among the
Hungarian regions (tables).
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Source: Statistical Yearbook of Hungary
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Main problems of the Hungarian regions (except
for the central one):
• they are too small,
• they do not have organic traditions, common
cultural centres, leading institutions, and do
not have any financial resources,
• often a (smaller or larger) part of their real
economic territory is over the borders of
Hungary.
The differences of development between the
Eastern and Western regions are too great.
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Regional development goals
In Hungary regional development plans were first
developed at the end of the 1990’s because of EU
requests. Further concepts were fixed in the National
Development Plan of 2004-2006.
The regional bodies and representatives have not had
enough possibilities in influencing the development of
these documents. So, in spite of their existence the
regional strategies fixed in these documents have many
problems and cannot be the base of the regional
policies.
Neither of these two types of documents analyses the
questions related to the borders and centres of the
regions.
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All the official Hungarian spatial concepts and
plans are too general, they do not map the fields
of development (and disinvestments) in
particular. E.g. there are no clear concepts,
• how a region can increase the participation rate
(create education for illiterate unemployed etc.),
• how it can stimulate economies and
entrepreneurship of its population,
• in what fields and how it can develop relations
between firms and R&D institutes of its area,
• how it can improve competitiveness of SMEs,
• in what fields and how it can attract FDI.
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To solve these problems planning authorities can
put the EU recommendations on social dialogue
and subsidiarity into practice.
• They have to inform regional partners about the
government’s (ministries’) concept on regional
development.
• They have to map the claims, aspirations of the
population and firms of the region, and, if it is
possible, they have to enforce these in the plan.
Finnish and Irish good practice shows that these EU
recommendations actually work fine.
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In many cases important methodological problems
of spatial planning are the harmonisation of
counties’ interest (protection of the counties’
individuals and institutions) further the
coordination of their development’s actions as
well.
Often the collaboration of the actors of different
counties who have similar goals can be very
efficient. E.g. experts of the University of
Picardie offer a method which helps the
selection of counties which are in a similar
situation (figure).
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Determination of similar regions
Factor analysis: the two
main factors were
calculated based on
particular data of
employment in the given
counties
Heves
(Source: Girard)
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Eszterházy College of Eger searches for the ways of the
participation in the regional planning / development.
• The College tries to prepare students for
entrepreneurship.
• It has good relations with many regional firms and the
Chamber of Commerce.
• It won a tender and organises a survey to map the
possibilities how to develop the relations among firms
and R&D institutes of Northern Hungary.
• The College often helps the development efforts of
SMEs.
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Thank you for your attention!
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