Reindustrialisation and path-dependence: ideas related to the spatial dynamics of the Hungarian industry

Abstract

In our study we wish to demonstrate the mechanisms of path-dependence influencing the spatial development of industry. The study relies on case studies carried out in small and big town environments in a county of the Hungarian Great Plain which is considered to be relatively more successful in terms of industrial renewal.

The concept of path-dependence emphasizes the negative lock-in effect in an industrial district. But according to other researchers (particularly Martin 2009; Martin, Sunley 2010) this theory can also be used to explain the positive development of an industrial economy. We used mainly this approach.

However, it is also necessary to mention that the Hungarian Great Plain has never been an industrial district. As a consequence, we could neglect this element of the premises of the theory of path-dependence in this study.

The first case study focuses on the conversion of Hungarian-owned, medium-sized firms: Their market relations, product structure, technology and features of production organisation gradually changed with the adaptation to a new environment. Indirect effects enforced by supplier relationships (connected to transnational companies) contributed to this adaptation in addition to the circumstances inherited. The presence of relatively small foreign capital still increased the chances of a more radical restructuring, but since the role of these equity investments remained modest in Mezőtúr, the recent industrial development of the town is determined by the actors (and their constraints) rooted in the industry of the socialist period.

The second case study concentrates on the phenomenon of layering caused by foreign direct investments. There are no direct organisational and locational links between the greenfield investments in the industrial park established by the local government of Szolnok and the industrial heritage of the socialist period. However, the milieu which was built around the industries of the region played a detectable role in the location of firms – partly reproducing the inherited structure of industry. In this example, the influencing effects of the decisions made in the past on the present are represented by a qualified labour force (and the concomitant educational institutions), the locally produced raw materials and the physical infrastructure which served the former industrial base as it serves today’s local economic actors.

The significance of the actors in the local economy of both towns investigated suggests that the concept of path dependence is worth more attention in research studies concerning domestic industrial geography. Our examples clearly show that the phenomenon cannot be interpreted only in terms of a dual economic structure, but has to be seen also in the light of foreign equity investments calling for more radical industrial restructuring. If we accept pathdependence as shaping the spatial structure of the Hungarian industry to a certain degree after the change of the political system, we can more easily see the questions related to the general adaptability of economic development strategies within the framework of re-industrialisation.

Therefore we intend to continue our research with an attempt to comprehend the opportunities and constraints of development and to interpret the transformation processes after the change of the political system within the context of labour-intensive, capital-intensive and technology-driven industries, as well as that of small and big town environments (including first and foremost: Debrecen) – focusing on the region of the Hungarian Great Plain.