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Economic Convergence and Divergence in Europe

Economic Convergence and Divergence in Europe

Growth and Regional Development in an Enlarged European Union

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

This highly topical book addresses the challenge of economic convergence within Europe, beginning with a thorough review of the theory of growth and related empirical research. Historical and more recent economic developments within the present EU and current accession countries are discussed, along with the design for the process of further integration of accession countries into the EU and the Euro area. Moreover, the potential to achieve a sustainable catch-up process in Western Balkan countries, the Ukraine and Russia is explored, focusing on the task facing the EU in designing proper policies vis-à-vis these countries. The contributors’ varied perspectives ensure that the theories and policies postulated are linked closely with the actual situation in accession countries and offer up-to-date insights.

Chapter 5: Restructuring industrial areas: lessons in support of regional convergence in an enlarging Europe

Michael Steiner

Subjects: economics and finance, regional economics, urban and regional studies, regional economics


Michael Steiner 5.1. INTRODUCTION1 Problems of structural-industrial adaptation are a common feature of changing economies (an expression which comes close to a pleonasm). They are nowadays a dominating problem in countries in transition in Eastern Europe, they are a pertinent problem in specific regions of the socalled Western world. Old industrial areas (OIAs) – in the context of the United States also called ‘rust-belt’ areas – as a typical form of a combination of regional and sectoral decline in these post-industrial economies have been treated extensively in the literature of industrial organization, regional economics and technological and social change (see for example Norton and Rees 1979; Tichy 1981, 1986; Steiner 1985, 1990b; Prisching 1985; Markusen 1985; Geldner 1989). They are typically characterized by a large industrial base going back to the last century (or longer), an overrepresentation of a few sectors leading to a monostructure, a domination of large, often nationalized firms with a limited range of products, low mobility (both of firms and workers), above average wage levels, a wellorganized labour force, and strong hierarchical organizations within the firms. In Eastern Europe the starting point of transformation was an overdimensioned industry, characterized by nationalized big firms with soft budget constraints based on generous credits of nationalized banks, a restricted market orientation and a limited degree of competition from the world market (see for example Döhrn and Heilemann 1992; Brenton et al. 1997; Welfens 1997) – problems that seem very similar to those the OIAs in the Western countries have or...

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