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                                                                                     •    2006-2007: Interreg project with the cooperation of the Keszthely-
                                                                                          Hévízi Kistérségi Társulás (Association of Keszthely-Hévíz
          DEVELOPMENT FEATURES OF                                                         Microregion) + Pannon Egyetem Georgikon Mezıgazdaság-
                                                                                          tudományi Kar (Pannon University, Georgikon Faculty of Agriculture)
                                                                                          + Agricultural College of Krizevci
           CROSS-BORDER REGIONS                                                      •    Theme: Surveying the specific features of cross-border regions, and
                                                                                          developing an educational and training programme adequate to the
                                                                                          economic demands in order to improve the competitiveness of
                     A training course                                                    cross-border regions in Hungary and Croatia.
              supported by the INTERREG IIIA                                         •    Elements:
                                                                                             – Research (preparing interviews, questionnaires in the Croatian and
                           project                                                             Gungarian border counties.)
               No.: 4012-106/2004/01/HU-74                                                   – Training, education, curriculum development.

                                                                                                            DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS
                                                                                                              A training course supported by the INTERREG project
                                                                                                                       with number: 4012-106/2004/01/HU-74

                                                                                             Summary of lectures:
                                                                                1.         Regions, regionalism, regional development: (BZs)

                       Introduction                                                      –

                                                                                                Elements, fbasic conceptions of regional economics, reasons of differences in the
                                                                                                development state of the regions, theoretical models.
                                                                                                Regional deviations/divergences of the factors of production, their mobility, The concept and
                                                                                                elements of regional competitiveness
                                                                                         –      Indicators, analytical methods and index-numbers used to characterize regions.
                                                                                2.         Concept and characteristics of border-regionalism. Cross-border cooperation. (BZs)
A brief introduction of the Interreg project – role of the educational                   –      Appearance of the concept of border-regionalism and cross-border cooperation in the
                                                                                                European Union: emergence and development of regionalism in the EU-policies.
 sub-project                                                                             –      Problems of border location, its natural and social factors. Appearance of border location in
Targets of the education:                                                                       the region development planning
                                                                                         –      Examples of inter-regional cooperations in the EU. Conditions, forms and types of
• Economic, social, cultural and environment-protecting function of the rural                   cooperation and success.
  areas,                                                                                 –      Examples of inter-regional cross-border cooperations in the EU: co-operative work-teams
• Specific conditions and relations of the border regions,                                      and EU-regions k (analysis of case-studies)
                                                                                3.         Peripheric regions and cross-border cooperation programmes in Hungary
• Revelation and exploitation of the possible advantages of being a border
                                                                                         –      Natural and social factors (BZs)
  region                                                                                 –      Economic and infrastuctural factors (BZs-KE)
• Overcoming disadvantages                                                               –      Natural endowments of the Hundarian border counties, their experiences in rural and
                                   Training experts                                             territorial development, history of rural development in Hungary from the shift of the regime
                                                                                                until now.(KE – ld. Kutatás általános része)
• Knowledge, skills,                                                            4.         The Croatian-Hungarian border region (KE)
• Acquiring knowledge of the relevant EU-supportations, grants and projects,             –      Natural endowments of the Hungarian border counties (along the Croatian borederline) and
                                                                                                their experiences in rural and territorial development, history of rural development
• Experience gained from the successful co-operations,                                   –      Natural, social and economic endowments, resources of the Croatian border counties
• Example of the Croatian border-regions bordering on our territory                      –      System of institutions for rural and territorial development in the Croatian border counties - a
                                                                                                historical survey from the shift of the regime until now.
                                                                                5.         Conditions of the successful development cooperation in the Croatian-Hungarian border region:
                                                                                           endowments and hindering factors (case study) – analysis of some concrete development
                                                                                           aspects of the border area (BZs-KE)

         Recommended literature                                                                 Assessment, examination
• Lengyel I.- Rechnitzer J.: Regionális                                              • Regular appearance and active
  gazdaságtan. Dialóg-Campus, Budapest-Pécs,                                           participation in the lectures (2 lessons per
• Pál Ágnes: Héthatáron. JGYF Kiadó, Szeged,                                           week, 30 contact hours)
  2002.                                                                              • Individual preparation (in written form) of
• Rechnitzer J.: Szerkezeti változások a                                               one optional case-study handing it in
  regionális gazdaságban. Pécs, PTE KTK, 2001                                          before the given time-limit (topic: analysis
• Research and educational reference materials,                                        of a chosen border area in given aspects)
  reader, etc. completed in the frames of the
  INTERREG project (edited by Zsuzsanna Bacsi                                        • Written exam at the end of the semester
  and Ernı Kovács, 2006.)
                                                                                     • Credit value: 3

                                                                                        Topic 1: Elements and basic
                      A training course
             supported by the INTERREG project
                                                                                      knowledge of regional economics
           project number: 4012-106/2004/01/HU-74
                                                                                    • Definition of the region, types of regions,
                                                                                    • Reasons of regional differences,
                                                                                      motivations of chosing a place for
                     Lecture 1:                                                       settlement,
           Elements of Regional Economics                                           • Accessibility,
                                                                                    • Peripheriality, characteristics of being

              Regions, regionalism,
              regional development                                                                    Types of Regions
    Elements of regional economics, reasons of differences in the                   • homogeneous region: the parts of the area have very
              development level of regions, theoretical models                        similar natural, social or economic characteristics,
    Definition of region:                                                             features. They have a , uniform (or homogeneous)
    –   Region is ”a specific area, studying of which by researchers of               appearance or outlook. (for example: an agricultural
        regional economics is promoted with research supportation ...”                area without a central settlement).
        (Hoover, 1987)                                                              • nodal region: the area appears as a field of force,
    –   „ Region is geographic territory forming an entity, which                     characterized by growing density of economic activities
        provides opportunity not only to describe human and natural                   in some parts of it, and these activities are concentrated
        phenomena, but to analyse social and economic data, and to                    into centres. Typically it contains a big city as a territorial
        apply common policies as well at the same time. It is                         point of junction (centre) and its attraction zone.
        characterized by lhomogenity, functional integration, feeling of
        solidarity and moreover, mutual effect, interaction (inter-                 • planning or programming region: It reflects the public
        relation) with other regions (Benko)                                          administrative territorial (sub)division, administrative
                                                                                      units of a country (counties, statistical and planning
                                                                                      regions according to the NUTS level)

        Basic reasons of differences
                                                                                                      Location Theory
            among the regions
                                                                                    The location decision of the decision-maker (the fundamental unit of the
• Advantages originated from being well provided with natural resources               economy, e.g. companies, consumers – employees, public
  – which is based on the imperfect mobility of some particular factors of            institutions):
  production, that is, on their localization, fixation to a place.                  • Accessibility, easy (or difficult) reach of certain kinds of resources,
• Economic efficiency of localization, concentration to a place                       and its costs:
  – As a result of the imperfect divisibility of natural resources, some of the         – Transportation possibilities, road network influencing the delivery costs.
  resources can be delivered to their place of utilization only in rather big
  units. Owing to the advantages of economies of scale, it makes the                    – Size of the city/settlement, that influences the volume or extent of the
  utilization in a big volume more advantageous.                                          possible markets, the competitive position in the market, and moreover,
                                                                                          the accessibility of the inputs (materials, input services to be purchased)
• Costs of transportation and communication                                               required for that oarticular service or production.
  – As for the imperfect mobility of goods and services, territorial localization       – Labour costs, qualification and mobility of employees.
  greatly influences the level of accessibility to the goods, and therefore its
  profitability and costs.                                                          That is, in other words:
Two types of reasons:                                                               • Purchase of inputs, delivery of outputs to the market (producer)
• Different natural endowments, and                                                 • Choice and price level of accessible goods, possibilities of work,
• Effects of the economic activities.                                                 incomes (consumer, employee)

        Indicators for assessing the value of the
     location, spatial connections of settlements                                                                       Accessibility indicator/index
 The so-called simple indicators reflect the state or condition of the                                       The ”closeness” (or nearness) of settlement „i” to all the other settlements / points of
   transportation infrastructure:                                                                               junction:)
                                                                                                                                               Ai = Σ j g(Wj)⋅ f(cij)
 • Length of the motorways (in kilometres) in the settlement (or in the
   territorial unit)                                                                                         where: i: stands for the settlement, j: stands for the other settlement to be reached
                                                                                                                  –   Wj : factors or possibilities available in the settlement j
 • Number of the railway stations                                                                                 –   cij : distance between the settlements i and j
 • Time required for getting to the nearest point of junction                                                     –   g(Wj ): value of the available factors / possibilities (activity function) - an increasing function
                                                                                                                      of the factors
 The complex (or combined) indicators analyse the simultaneous                                                    –   f(cij ): the „cost” of covering/overcoming the distance between the settlements i and j , that is,
   effect of more (usually two) factors. They are:                                                                    the valuation of the cij distance (impedance function) – Mind that this value decreases if the
                                                                                                                      distance increases!
 • The „value” of possibilities, which may be utilized in a given place,                                                   – The high value of Ai means that the local position of the given settlement (i) is
   spot (point of junction)                                                                                                                      advantageous, its accessibility is favourable.
 • The necessary „cost” required for reaching the above mentioned                                                 –   Examples:
   place (point of junction) from the settlement. It can also be                                             •   Notations:         Wj : number of inhabitants or consumers, or the GDP of the area
   measured in time (hours), distance (kilometres), or even in money
                                                                                                                                    cij = distance in kilometres


 •   notations: Wj : number of the inhabitants or consumers, or the GDP of the area cij =
     distance in kilometres (Schürmann et al., 1997, Wegener et al, 2002)                                                                 Peripheriality
Index          Activity function                              Impedance function
Index of       g(Wj ) = Wj (or =1) if Wj ≥Wmin                f(cij ) = cij here we count with the
ation cost            = 0 if Wj <Wmin
                                                              costs increasing proportionally with
                                                              the distance                                   Two basic factors:
               the attractiveness of the given place (spot)
               should be taken into account if only it
               extends a certain lower limit (that may be
               the desirable minimal market size, or
                                                                                                             • Increase of costs caused by the significant
               purchasing power)
                                                                                                               distances (in case of delivering raw
Index of       g(Wj ) = Wj (or =1) if Wj ≥Wmin                f(cij ) = 1/ (cij )2
ation cost            = 0 if Wj <Wmin                         the transportation cost increases                materials and consumer goods - for
                                                              proportionally with the distance, so
– 2nd
                                                              the value of the indicator decreases             business organizations and inhabitants)
             g(Wj ) = Wj                                      f(cij ) = 1 if cij ≤ cmax and
                                                                                                             • Lack of the agglomerational advantages in
bility index                                                          = 0 if cij > cmax
                                                              (possible daily transportations are
                                                              maximized, which means that a given
                                                                                                               the densely populated areas
                                                              maximum limit of daily transportations
                                                              cannot be extended)
Potential    g(Wj ) = Wj α    ( for example: α = 1)           f(cij ) = e   (- β⋅ Cij)

bility index                                                  or: f(cij ) = cij (- α)

                                                                                                                                   An example for
                  Peripheriality indicators
                                                                                                                               the economic potential
 Two groups:
                                                                                                             • For the first approach a good example could be the
 • The Gravitation Model (according to its methodology) measures the „economic” or                             economic potential of Keeble, which can be calculated
    „market” potential.
       –     The potential of economic activity shows the „closeness” to the economic centres, and the
                                                                                                               by the following formula:
             function of the „economic size or mass/volume” of these economic centres. The economic
             potential of the examined place is calculated by summing up its potentials related to the                            • EPi = Σj ( Wj /cij)
             certain centres.
       –     Relying on the above defined indicators, we can prepare a map of the area that emphasizes       • Where: i is the examined place, spot, j = 1,2,..n are the
             the economic advantages of the agglomeration, and shows steeper gradients near the
             centres, the „seed places”, than we could receive taking into account only the transportation     accessible economic centres, Wj is the economic
     Indicators of „time or cost of transportation”, or indicators of „daily accessibility”
                                                                                                               potential of the economic centre „j” (size of its market,
     (dominant: with the appearance of modern GIS softwares)                                                   value of its GDP, etc.) and cij is the distance between
       Examined issues, aspects of its research:
       – How much is the total sum of the transportation costs of getting from a given place to all the
                                                                                                               the place (settlement, spot) „i” and the centre „j”.
          main economic centres (situated in the given area, for example in Europe)
       – How much people can be reached totally, if we start from a certain point (place, spot) of
                                                                                                             • Keeble announces the map of the Economic Potential
          the map in one day’s travelling (that is, travelling a day towards these centres maximally 3-
          4 hours, and backwards the same)
                                                                                                               values calculated for the largest cities of Europe:
       – How much would be the total cost of reaching a certain market (with a given size, for
          example with the number of inhabitants: n) from a determined, given place (spot)?

          Economic Potentials calculated for
          the largest cities of Europe (Keeble)                                                                 Standardized peripheriality index:
                                                                                                            On the basis of the Economic Potential we can also calculate the
                                                                                                                            standardized peripheriality index (Copus A K, 1999 ):

                                                                                                                                    pi = 100 ⋅ (EPmax – EPi) / (EPmax- EPmin )

                                                                                                            • EPi : the economic potential of the territorial unit „i”
                                                                                                            • EPmax and EPmin the highest and the lowest economic potential values, which can
                                                                                                               be found in the area.

                                                                                                            •   Therefore the index shows in a scale (from 0 to 100), how much the economic
                                                                                                                potential of the given place (spot) „i” falls behind the highest economic potential of
                                                                                                                the area, compared to the maximal difference of the economic potentials in the area.

                                                                                                            •   The lower the index pi is (that is, the closer it is to zero), the closer the potential of
                                                                                                                the area would be to the maximal potential, which means that the peripheriality would
                                                                                                                be less characteristic to the given place (spot).

Peripheriality indexes of Europe in 1996
On the map below you can see the peripheriality indexes of Europe in 1996, calculated for the NUTIII                 DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS
regions as territorial units. The indexes were calculated by the economic potentials counted on the
basis of the GDPs measured in ECU.                                                                                                     A training course
                                                                                                                              supported by the INTERREG project
                                                                                                                           (project number: 4012-106/2004/01/HU-74)

                                                                                                                         Lecture 2: Regional development

                                                                                                           Theoretic approaches
 Neoclassical development theories                                                                     •   Two main schools: the difference between them based on their
                                                                                                           approach to the practical measures and interventions concerning
                                                                                                           convergence and divergence.
                                                                                                       •   One extreme is: the model of neoclassical school:
Aims of the development theories:                                                                           – The market promotes regional convergence,
                                                                                                            – Therefore no need for public political interventions by the state to reduce
• To give an explanation of the economic and                                                                  regional disparities.
                                                                                                       •   At the other end is:
  social processes,                                                                                         – Market processes and forces tend to accentuate and deepen the the
                                                                                                              territorial differences and regional imbalances,
• To direct social and economic policies,                                                                   – Therefore an effective intervention of the state is necessary to reduce
                                                                                                              regional disparities.
• Experience has gone ahead of theory                                                                  •   Intermediate approaches:
                                                                                                            – Suppose: that regional economies are going through a series of phases
  (ex: centre-periphery theory, dependence theory)                                                            during their development,
                                                                                                                 • Each of the phases marks an overcoming of the previous situation, difficulties,
• Theory has gone ahead of experience                                                                            • A relation exists between the evolution of regional disparities and the running of
                                                                                                                   the economic cycles.
   (ex: polarization theory)                                                                                – Other theories: state that capitalist economic systems are not able to
                                                                                                              promote regional convergence, not even with policies aimed at
                                                                                                              strengthening economic, social and territorial cohesion.
                                                                                                            – EU-integration: to promote the economic, social and territorial cohesion,
                                                                                                              Structural Funds, necessity of political intervention –
                                                                                                              Practice of the EU + comparison with the theories: three possible models of
                                                                                                              economic integration:

    Theories of convergence and divergence –
           old and new neoclassicals                                                           Elements of neoclassical theory:
Essence of it:
• If an imbalance occurs in a point of a system (economic, social, etc.),
   the system itself automatically develops neutralizing actions mfor the                      •     Considers the labour and capital to be the productive factors,
   dynamics unleashed, starting a force generating mechanism that tends                        •     The function of production for each good and region are identical, linear,
   to restore a new equilibrium (on a different point than earlier).                                 homogeneous,
• According to it the capital economy is able to automatically correct the                     •     The participation of each productive factor in one unit of the product is
   imbalances ywithout any intervention.                                                             constant, and independent of prices,
• Any exogenous interventions only make the situation worse, they will                         •     Perfect competence exists in the markets,
   increase the imbalancing trends instead of counteracting them.                              •     Transport costs are zero,
• So the state must not promote the elimination of regional disparities with                   •     And the regions reach total productive specialization in the goods for
   exogenous interventions, it should be left to the market forces.                                  which they have comparative advantages.
• The interventions of the state, the financial supportation would only                        •     It disregards: the possibility of increasing economies of scale,
   worsen the possibility of convergence.                                                            segmentation of the labour market, migration costs of labour force and
The close predecessors of neoclassical theory: the international trade                               capital transfer.
   theory in the interregional field: division of labour according to the                      •     It supposes that workers only move due to salary differences
   comparative advantages.                                                                           exclusively, and the capital moves only to seek a greater profitability.

                                                                                                          Criticism of the neoclassical model
      Neoclassical model: expectable results                                              •        Reality, however, does not entirely proves the features set by the neoclassical model.
• The labour force (workers) will emigrate towards the more                               •        Even the basic suppositions of the model can be argued.
  developed regions,                                                                      •        The model is using the comparative statical methods only, and totally forgets about the
                                                                                                   time-factor and dynamics of reality.
• Stopping there the increasing salary trends with it, and eliminates                     •        Corrections by Robert Solow: Incortporates the changes in time and the impacts of
  the invisible unemployment and underemployment in the                                            technological development, but: his model does not contain the following factors:
  underdeveloped regions.                                                                          depletion of resources, changes in the proportion of productive factors, variations of the
                                                                                                   roles of production and demand, generation and dissemination processes of innovations,
• Urban and industrial areas will be disadvantageous for the capital,                              etc
  due to the following factors: elevated labour-force costs, interest-                    •        Effects of the starting suppositions are different in reality than in the model:
  defending labour disputes, greater competition between businesses,                                –   Migration may have cumulative and not balancing effects to the employment,
  diseconomies as a conseqouence of agglomerations („bottleneck”-                                   –   Labour force is not homogeneous, but it is specialized, employees have various degrees,
  effect), disappearance of investment opportunities.                                               –   Information on working conditions is deficient or incorrect,
                                                                                                    –   Labour force mobility may be caused by not only salary/wage differences, but by various other
• A tıCapital will move towards the underdeveloped regions, in view                                     factors as well,
  of the greater expected profits.                                                                  –   Transfer costs of work and capital cannot be considered only zero, etc.,
• With new investments, this capital will create new jobs, and increase                   •        Even in case of accepting the theory and its effects on regional convergence, it does not
                                                                                                   imply levelling of incomes per person in different regions: there are several other
  incomes being generated in the underdeveloped areas.                                             hindering factors like: the relative weight of property income, the proportion of active
Consequently: AThe mobility of productive factors leads, in time, to                               population, degrees of specialization, professional qualifications of the inhabitants, etc.
  the equalization, convergence in income levels, and in development                      •        Regional policy of the EU: Eu shows little faith in the automatic market-correcting
  of the different regions.                                                                        mechanisms implied by the model.

    The endogeneous growth theory                                                         What kind of convergence?
                                                                                      Three types:
                                                                                      1. sigma-convergence:
•   The rebirth, renewal nof the neoclassical model, as a response to the                      – If dispersion (standard deviation) of the sample values of the examined variable (for
    spreading of policies aimed at strengthening social and economic cohesion.                   example: income per person) from the average is reduced in time.
•   Studies examining the evolution of regional convergence and divergence,                    – Its disadvantage is that the dispersion may be reduced even in that case, when the
    relying on the analysis of practice and results of the EU: empirical and                     values close to the average get even closer, while the values far from the average
    theoretical.                                                                                 remain unchanged.
•   Even on the American continent new approaches have been emerged on                2. Absolute beta convergence:
    the basis of empirical experiences.                                                        – When all incomes per person tend towards the same equilibrium value,
•   Fundamental element: they extended the hypothesis of diminishing returns                   – because regions with a lower income per person grow at a much faster rate than the
    to the technological accumulation.                                                           regions with higher income per person.
•   In the more developed regions, where the ability for innovation is greater, its   3. Conditional beta convergence:
    results and the benefits of technological progress can be felt, but they also              – Each regional economy converges towards the equilibrium value of its own particular
    have to run with the costs of the technical development as well.                             stationary state,
•   The less developed regions can also benefit of the advantages of technical                 – However, there is no tendency towards a common equilibrium, which would be the same
    progress by means of the technological dissemination mechanisms, without                     for all the regions.
    having to bear all the development costs of it. Instead, they have to bear                 – This concept allows the levelling inside the region, and the divergences among different
    the costs of absorption and adaptation only.                                                 regions as well.
•   Therefore, the system evolves towards convergence, as a consequence of            •       Relation between the convergence concepts:
    diminishing returns of all factors, including technological progress.                      – Beta convergence is necessary, but not sufficient condition to reach sigma convergence,
                                                                                               – But a beta convergence can exist without sigma convergence at the same time, (weaker
                                                                                                 regions can grow faster than stronger regions, but the differences of incomes remain the

What does each convergence mean?
 • Absolute convergence: used to determine if living and
   welfare standards of inhabitants in less developed
                                                                                                     Polarization theories
   regions evolves towards the higher levels.
                                                                                     Their essence:
 • Conditional convergence: it is worth using to identify
                                                                                     • Instead of convergence, the development disparities of regions will
   structural obstacles that slow down growth.                                         grow and deepen in the long term, divergences and differences
 • Results of the empirical studies examining the existence                            become marked. (F. Perroux, Schumpeter)
   or lack of convergence are contradictory.                                         • It is caused by three factors:
                                                                                          – The differences of the internal growth factors of the regions (amount
 • The theory of absolute convergence is typical of neo-                                    and quality of productive factors, the structure of the regional economy,
                                                                                            the consumption and savings behaviour of the population of the region)
   liberalism, which rejects the intervention of the state, and
                                                                                          – The strong dependence of regions, and
   consequently, the necessity of regional policy as well.                                – Existence of oligopolies and monopolies on the market of the region,
 • However, in the approach of conditional convergence,                                     which make perfect competition impossible.
   regional policy would have a very important role, it would                        These factors give rise to strong cumulative processes, which
                                                                                       lead to the increase and deepening of inequalities and inequilibrium
   remove the obsatcles that stop a less developed region                              whenever these have occurred.
   from carrying out all its growth potential to converge
   towards the highest equilibrium point.

                 Emergence of the                                                         Examples: Cumulative divergence (Myrdal)
                polarization concept                                                 •    The social inequalities, imbalances in a cumulative way show the growing
                                                                                          reproduction of themselves, so the inequalities of the regions are also
                                                                                          growing, and the regional evolution is diverging.
 • Structural/industrial polarization (Schumpeter): the role                         •    The capitalist system and the market institutions are incapable for self-
   of innovation sin economic growth and development.                                     correcting the imbalances.
                                                                                     •    After the actions of the imbalancing forces start, the imbalancing effects
 • Perroux: in an economy just the innovative industries,                                 accumulate and make the divergence from the equlibrium even greater and
   which represent progress, become the engines of                                        worse.
   growth, that is, growth poles.                                                    •    Applying this to regional problems: territorial imbalances, if once started,
                                                                                          would become deeper and stronger, with no exogenous intervention.
 • These growth poles, or growth engines become driving                                   –    Regional imbalances are stronger in poorer countries than in more developed
   forces, or on the contrary, brakes of growth in the                               •    The three components of divergence-processes:
   economic sectors dependent on them, influencing the                                    –    Migration flows from underdeveloped to developed regions. (selective)
   growth or crisis of these dependent sectors.                                           –    Capital moves inter-regionally towards the same direction as the labour force.
                                                                                               (savings from the poorer regions to the rich ones)
 • The theory of growth poles necessarily forced the                                      –    Interregional trade: specialization in primary production (agriculture and mining
                                                                                               industry) that usually accompanies underdevelopment, implies a deterioration in
   emergence of the spatial dimension in the related                                           trade relations in the face of industrial and tertiary production of more developed
   researches.                                                                                 regions.

     Williamson: external intervention may                                                     Examples: Growth in stages (Rostow)
                                                                                 •   Five stages of growth:
   neutralize the effects mentioned earlier and                                      –   Traditional society,

       speed up development processes                                                –
                                                                                         transition: primary conditions for takeoff,
                                                                                         The starting impulse for the boom, the beginning to grow quickly,
                                                                                     –   Walk towards maturity: that is, the mature stage with a stable growth rate,
 • Intervention by the measures of regional policy fits well                         –   The age of large mass consumption.
   to the original model of Myrdal.                                                  –   Later he added a sixth stage, that he called the search for quality.
                                                                                 •   The starting impulse (third stage) marks the dividing line between development and
 • The model by Williamson (1965): (similar to Myrdal’s                              underdevelopment, between tradition and modernity. Growth will continue after surpassing this
   model):                                                                       •
                                                                                     stage, and would become self-sustained, and becomes the normal condition.
    – 4 factors:                                                                     –   Investment efforts in infrastructure are usually not enough,
        • Selective migration of the labour force towards the developed              –   This theory is essentially ideological, and valid only for certain developed western countries.
          regions,                                                                   –   Another problem arises rregarding the regional development: if each region of a country follows the
                                                                                         evolution that corresponds to the theory, then the distance between advanced and backward regions
        • Tendency of flowing savings from the poorer regions towards the                will never disappear, therefore the absolute regional convergence will never be reached.
          richer regions, with the hope of external economies, greater           •   Amendments by Friedmann: during the development process the resources are relocated
          benefits, stronger security, attractive investment possibilities and       between regions, new stages (he redefined the stages of Rostow):
          other factors.                                                             –   1. preindustrial stage (1. and 2. stages of Rostow, the stage of traditional societies and and preparation
        • The placing, direction of public or state investments in developed             for takeoff conditions),
          regions, because there can be reached a greater national growth,           –    2. transitory stage (Rostow’s stage 3, the period of takeoff),
          avoiding the problems caused by the backwardness of the region.            –   3. industrial societies (Rostow’s stage 4, the mature stage of development), and
                                                                                     –   4. postindustrial stage (Rostow’ stage 5, the stage for mass consumption).
        • (Rare) positive inter-regional influences due to the slowing down of   •   Richardson (1980b) improved Friedmann’s system creating the theory of decentralised
          technological and social change dissemination.                             polarization of the territorial structure.
 • According to Williamson the elements that tend to cause
   divergence will decrease as time goes by, and then
   slowly changes into convergence.

                                                                                                                  Variations of the growth pole theory
         The theory of growth                                                                            •   Boudeville (1966): theory of regional polarization.
                poles                                                                                         – The centres concentrating all the sectors with dynamic growth capacities function as
                                                                                                                regional growth centres.
                                                                                                              – The idea of development pole: a central settlement, where the whole complexity of
                                                                                                                industries showing dynamic growth can be found.
                                                                                                              – These poles are located in the centres of regions having high economic potential, and due
     • Paelinck (1965): the leading industries in an economy                                                    to their agglomeration advantages they can broadcast growth enhancing impulses to
       create a network of relationships in the growth centre,                                                  settlements on the lower grades of hierarchy.
       which will initiate growth in the development of other                                            •   Pottier (1963): the impact of the dynamic industries can be felt not only in the
                                                                                                             settlement neighbouring the core settlement, but due to the transport networks it can
       industries,too.                                                                                       have a positive impact on regions situated in longer distance from the centre.
     • Income polarization: the dynamic sectors encourage the                                                 – The transport connections can considerably influence the growth of central areas,
       growth of consumption-oriented industries,                                                             – Central areas can be considered the focal points of development, while these may create
                                                                                                                development axes by the transport networks (for example:spatial planning)
     • In addition, it also creates psychological and behaviourial                                       •   Lasuén (1969) : assessed the relationship between economic growth and
       impacts: an investment made in a dynamic industry                                                     urbanization.
       increases the economic activity of enterprises.                                                        – The regional spreading and adaptation of the innovations is closely linked to the
                                                                                                                development level of the national economy. The urban network with its technical facilities
     • All these impacts have a positive influence on the                                                       has a determining role.
                                                                                                              – The jnnovations start from the highly developed centres of the developed countries, and
       economic development of a given region, that is, speed                                                   then the innovation is adapted by other developed centres.
       up the geographical polarization between centre and                                                    – the diffusion of the innovation to the direction of the peripheries is a much slower process,
       peripheries.                                                                                           – There are two options for developing countries and for countries in transition:
                                                                                                                   • Their centres may absorb any new innovation much earlier than the whole country would be ready
                                                                                                                     for that. This will lead to the division of the economy into a dual system. As a result of it, a dual
                                                                                                                     economy will be created, territorial polarization.
                                                                                                                   • the centres will postpone the adoption of the new innovation until the whole country, including the
                                                                                                                     peripheries, manages to adopt the former innovation, so due to this delay the level of polarization
                                                                                                                     increases between the developed and the underdeveloped country.
                                                                                                              – The empirical research by Lasuén: the developing countries tend to follow the first option.

                                                                                                             The dependence
          The centre-periphery theory                                                                             theory
                                                                                                         •   An exploiting class, living in either develped or underdeveloped region,
     •     Emergence of it: from the late 1940s for Latin-America                                            benefits from the exploitation of workers, even those living in the
     •     Economic Commission for Latin America and the Caribbean, (ECLAC),                                 developed regions (including the immigrants from the poor regions)
           depending on the United Nations and sponsored by R. Presbich.                                 •   More radical version: impute ithe existence of inter-regional differences to
     •     Fundamental argument of the analysis is the confirmation thatareal trade                          the nature of the capitalist system itself.
           relations between Latin American countries and the developed world                            •   According to it the appearance of inequalities is not accidental and can not
           deteriorates in time.                                                                             be corrected, because they are directly linked to the form of production.
     •     Conclusion: the situation of developing countries is determined by their
           economic, political and social dependence on the developed areas.                             •   It is not about the difference in levels or stages reached by some regions,
                                                                                                             but the different roles played by them,
     •     The advantages of agglomeration economies operate in the developed
           central areas, public and private capital is also concentrated there, the                          – In such a way that there would be no other real opportunity for some areas to
           centres of power and decision are found there, the capacity for                                      reach development if not at the expense and underdevelopment of others.
           technological innovation has also developed there. ŐIn short the growth in                    •   Thus, regional underdevelopment would not be an accident, but the other
           income and wealth is much quicker here, than in the periphery.                                    side of the same coin.
     •     According to this share of roles and functions the tasks of the poorer or less                     – So the regional policy and the cohesion policy would make little sense,
           developed areas are:                                                                                 regional imbalances would only disappear when the system that generates
            – to supply the urban and industrial areas with raw material and energy,                            them is surpassed.
            – To supply abundant and cheap labour force to businesses run in the rich regions,           •   Less radical version: Cardoso (1977, ex-President of Brazil): there may be
            – To finance the development processes of the more favoured areas, transferring                  pcertain industrialization even in the peripheric areas, but without reaching
              their own savings and resources of all types.
                                                                                                             the capacity of autonomous growth.
                                                                                                              – Capital would be locatesd here only to seek local raw material and cheap
                                                                                                                labour force, its decisions are determined by external interests, and the
                                                                                                                internal forces of the region are not able to influence them.

           The export base theory (North,1955 )
•        This theory focuses mainly on the internal capacities of the region, instead of the                 Competitive development theory
         external factors influencing the region.
•        The development of a region depends mainly on the development of its exporting                       •   It considers the strategies of companies and the competitive advantages of the
         sectors.                                                                                                 business environment to be the main sources of developments.
•        The export revenue facilitates the development of the infrastructure together with                   •   Porter: besides technology and economies of scale emphasizes the importance of
         the development of export base.                                                                          permanent regional characteristics, such as dynamic agglomerational advantages.
                                                                                                              •   He developed the theory of comparative advantages, explaining international
•        For the development the region has to purchase investment goods from outside,                            specialization, into the theory of competitive advantages: the specialisation of a
     –       Meanwhile demand grows within the region as well:                                                    country is determined by not only its comparative advantages, but also the
     –       Because the production for export increases demand for the local input suppliers,                    lcompetition strategies and cost expectations of globalised companies, competitive
     –       Thus generates income within the region,                                                             advantage!
     –       Which at the same time leads to increase in demand of consumer goods as well.                    •   He divides competitive development into three stages.
                                                                                                                   –   Stage of factor-driven economy: competitive advantages are the results of the
•        This latter factor makes the region more attractive for businesses coming from                                characteristics of the production factors (labour force with low levels of qualifications and low
         outside, so new companies and industries will choose the region for their location.                           wages, accessibility of natural endowments). It is typival for regions with low income.
                                                                                                                   –   Stage of investment-driven economy: investments are directed to the developed factors of
These processes will, in the long term, lead to territorial convergence.                                               production,competitive advantages come from improving the efficiency of mass production.
•        Core component: distinction between basic and non-basic activities.                                           (modern technology, foreign direct investments and working capital, economies of scale) . It
                                                                                                                       is typical for the medium-income countries on medium level of development.
     –       Basic activity: the industries producing mainly for export, bringing income from outside,             –   Stage of innovation-driven economy: creation of developed and highly specialized production
     –       Non-basic activity: the industries producing for the internal markets, redistributing the                 factors, internal demand has a segment sensitive for quality (brand names), expansion of
             incomes brought into the region by the basic activities.                                                  international markets, new, innovative products and services, vertical relationships between
                                                                                                                       companies, and then the horizontal relationships lead to the emergence of clusters. This
Criticism raised against the export base theory:                                                                       stage is typical for the highly developed countries.
1.       It does not take into account the internal processes of the region (internal market, ,               •   These stages follow each other in a logical way,describing the development path of a
         local investments, local consumption structure, government expenditure), eand considers                  region, but the classification of countries according to the above categories is not
         only the export activities to be the sole source of economic growth.                                     always straightforward, because they can have various sectors being at different
                                                                                                                  development stages.
2.       The distinction of the basic and non-basic activities has many problems, (for
         example, distinguishing by the higher export rate than the national average)
3.       Considers only the categories of the region and the external world, does not count
         with the advantageous impacts of interregional cooperation possibilities,

                                                                                                 The spatial distribution of
                            A training course
                   supported by the INTERREG project
                                                                                                    production factors
                (project number: 4012-106/2004/01/HU-74)

                                                                                       The choice of location is influenced by:
                                                                                       • Needs of inputs, various resources, and
                                                                                         their accessibility,
            Lecture 3: Regional differences in the
                                                                                       • Amount and transferability of outputs.
               factors of production, the regional
                        competitiveness                                                Factor forming the spatial specialisation.

         Categories of goods:                                                              Basic types of the factors grouped
    •    Non-transferable (local) inputs and outputs
    •    Transferable (mobile, transportable) inputs and outputs.
    Transferable: it means that these factors can be transported to any place, moved
                                                                                           according to their spatial scarcity:
       from one location to the other.
    According to the above concept four categories of goods can be defined:
                                                                                       • ubiquity:      factors    available       pracrically
                                                                                         everywhere without limitation (e.g. air),
•       Local input (immobile input): input-oriented (otherwise: activities are        • commonality: factors available in most of the
        based on the immobile raw materials or labour force).
•       Local output (immobile output, local demand): the factory should be
                                                                                         locations, but not everywhere (e.g. water,
        located to the local consumers, that is, based to the local market: market-      drainage, electricity),
        oriented activities.
•       Transferable input (mobile input): location of the company can be settled
                                                                                       • Rare goods: available only in a few places (e.g.
        anywhere, because the input can be transferred, transported anywhere.            specific ores, minerals),
        (obviously costs of transfer will emerge).
                                                                                       • Unique goods: very rare and specific
•       Transferable output (mobile output, external demand): the product can
        be transferred to external markets, to the distant consumers (in this case       resources, available only in a few specific places
        the costs of transportation should be added as well).                            (e.g. uranium).

                                                                                            Labour force, human resource
                    Natural resources                                                  Role of human beings in the economy:
                                                                                       •   Labour force
                                                                                       •   Consumer
    • The least mobile factors among the productive inputs,                            •   Owners of lands, houses, flats, possible locations of businesses.
    • Some types of them are absolutely immobile, not                                  Reasons for the interregional migration of the labour force:
      transferable at all, available at their original location,                       •   Non-economic reasons:
                                                                                            – Natural catastrophies, war conflicts, family reasons, seeking adventure,
    • Their quantity cannot be increased, but their exhaustion                         •   Economic reasons:
      or pollution is a great danger in their utilisation.                                  –   Unemployment
                                                                                            –   Wage differences
                                                                                            –   Possibility of seasonal work,
    Their mobility:                                                                         –   Working conditions, better working conditions in the destination region,
                                                                                            –   Prestige.
    • Transportation of the excavated resource                                         Who are involved in migration?
    • The location of the company should be settled or moved                           • Very highly qualified workers
                                                                                       • Workers without any training or qualification.
      close to the resource (to the location of the input, or to the area
         suitable to dispose of the waste material or a by-product)

                                                                                          The process of the mobility of
Highly qualified labour force -reasons
                                                                                           non-qualified labour force
• Learning for qualification (returns home!)                                         • Good conjunctural situation, favourable expansive state
                                                                                       in the developed region,
• Maintenance and updating of qualification,
                                                                                     • Lack of labour force at the home region, rise in the wage
  research work (returns home!)                                                        levels,
• Better utilisation of the qualification (working                                   • From external regions labour force immigration,
  conditions) - a natural feature!                                                     seasonal workers
• For differences in wages or salaries – brain                                       • Example: France, Great Britain: immigration of guest-
  drain                                                                                workers from the former colonies, later Turkish and
                                                                                       South Slovenian guest-workers,
• The qualified labour force trained in the                                          • Seasonal workers: towards the underdeveloped
  underdeveloped region will work and increase                                         countries/regions as well (to harvest cotton, tea, coffee)
  production value in the developed regions!                                         • Illegal work (especially near the borders).

    Regional income disparities                                                        Characteristic income tendencies
To be examined:                                                                        WAGES ARE HIGHER                        COSTS OF LIVING
• The average incomes of a                                                                                                       ARE HIGHER
  family/household within a region,                                                  In metropolitan areas than in      In metropolitan areas and large cities
                                                                                     nonmetropolitan ones, in larger    than in non-metropolitan areas or
• The average real wage paid for a specific                                          cities than in smaller ones        smaller towns
  job in the region (real earnings: nominal                                          off the city/town centre than in   In places where land and food are
  incomes minus the average costs of living)                                         the centre                         more expensive
                                                                                     In non-agricultural areas than in In places where housing costs are
• Total costs of employing the worker for the                                        agricultural regions              higher (higher rent in large cities, or
  employers (wage + fringe benefits)                                                                                   under severe climatic conditions)

               Differences between regions

   Possible reasons of the spatial                                                                  Reasons of differences
   differences in the costs of living                                                               in wages and incomes
                                                                                     • The supply of labour in the region, and the flexibility of it:
                                                                                        – It is rather inflexible in a given settlement (the basis of labour
   • Composition of the population (age, incomes, earnings,                               force is given, determined, + migration)
     liquidity)                                                                         – It is more flexible or elastic in a specific vocation or profession
   • Income state, situation of the neighbouring regions,                                 (possibility of training, learning a new vocation/profession)
   • Spatial expansion of the town, topographical possibilities or                      – The labour supply for a given business enterprise is even more
                                                                                          elastic (because the employer may attract labour not only from
     constraints,                                                                         other industries,but from other enterprises in the same industry)
   • Non-quantifiable factors, that can be hardly measured:                          • The willingness for migration of the labour:
       o Psychic attractivity of the area (some of them have a cost impact              – Difference between migration and commuting
         as well)                                                                       – Costs and benefits of migration
       o Extra costs associated with living in a metropolis or in great cities          – Differences in the incomes, revenues (considering not only the
         (e.g: the cost of everyday travelling, transport, or the public security)        wages/salaries, but other kinds of benefits as well) and in the
       o The vicinity of some environmental risk factor (e.g: air pollution               costs of living
         caused by an industrial plant, the resulting health problems etc.)             – The working conditions, the job security, opportunities for the
                                                                                          spouse and other members of the family of the migrant worker
                                                                                        – Desirability of the host community.

                     Characteristics of the                                                           The impacts of migration on regional
                     migration processes                                                            development: the external region (origin)
  •    Origin and destination of migration:                                                         • Migration from a peripheric region:
        – Attractiveness of the destination (income, environment)- „pull” effect –
          mainly economic                                                                              – Emigration of unemployed population: it will reduce the local
        – The „push” effect of the origin (starting point) – mainly social,                              social expenditures, and the demand for unemployment benefits,
          demographic                                                                                  – Emigration of the labour with higher qualification: the capacity of
  •    Difficulties and barriers of migration:                                                           human resources gets worse, unfavourable for the future
        – Distance (physical, geographical distance, and cultural, social as well)                       developments, investments, it may frighten away even the
        – „Costs” of moving                                                                              already operating businesses,
        – Use of the „tread paths”                                                                     – Providing financial support for the members of the family
  •    The personal characteristics of the migrant:                                                      remaining at the original place – inflow of incomes,
        –   Age, stage of life                                                                         – Information effects coming from the external regions
        –   Qualification, level of schooling,                                                           (consumable goods, technology)
        –   Job status,
                                                                                                       – Migrated labour often returns for holidays, the retired migrants
        –   Personal traits depending on the character of the migrant.
                                                                                                         may move back to the region of origin, – tourism, inflow of
      Decrasing differences, equalization between the regions reduces the                                incomes.
                             willingness for migration!

   Effects of migration to the development
      of regions: the destination region
                                                                                                                       Capital goods
  • Immigration into a metropolitan centre:                                                         • They are the most mobile productive factors
        – Increases the productive capacity of the destination region,                              Forms of mobilization of capital goods:
        – It may increase the level of qualification in the destination region
        – It improves the productivity, efficiency, if, owing to the qualified                      • International/ interregional flow of real
          labour, a more developed technology can be also adapted,
        – New market possibilities (in the region of origin) for the products                         capital: Foreign Direct Investments - FDI
          of the destination region,
        – The unemployment rate may increase,                                                       • International/ interregional flow of money
        – The average level of wages/salaries may decrerase („pushing                                 capital:
          out” effect)
        – The age structure of immigrants is typically young, therefore it                             – Foreign portfolio investments (FPI) - acquiring
          will create demand for widening the capacity of the social                                     share in a foreign business
          services of the destination region (nurseries, schools)
        – Cultural conflicts if the process of assimilation, integration is slow                       – Loans, aids, subventions.

Differences between the Foreign Direct Investment
 (FDI) and the Foreign Portfolio Investment (FPI)
FDI: an international investment when a business unit of one country gains long-                        FOREIGN DIRECT INVESTMENT (FDI)
   term shares (business interests)in the operation of a business located in
   another country.It is a long-term relationship between company and investor.                     Various definitions:
 It influences the management of the company at a determining rate (share of ownership is
      over 10 %!)                                                                                   - Target: the company of the basic country (sender) could
FPI: purchasing securities, sold in international stock exchanges (bonds, stocks,
     derivatives, options....)                                                                        gain control over the working capital of the receptive
It does not mean a direct decision-making power in the everyday management of the                     country, or the management of the receptive company –
     ainvestment-receiving firm of the destination country, and does not lead to restricted
     decision-making capacities of the management of the firm.
                                                                                                      an approach considering ownership structure
Differences between the effects of FDI and FPI:                                                     - To offer the savings of one country mto the disposal of
1, Contribution to the development:                                                                   the other country (Inversen, Danish economist, 1936)
                                FDI – new technology, FPI – raises the required funding for it.
2, Difference in time horizon:                                                                      - a worldwide distribution of the production factors, capital
                                              FDI – for a longer period, FPI – may be shorter,        moves from the area of surpluses to the regions of
3, Motivation:                                                                                        capital shortages, - equalization (general theory of
                      FDI: gaining high profits, extending market share, improving efficiency,        equalization)
                                                    FPI: earn high profits (interests, dividends)
4, Instability:                                                                                     - It strengthens the co-dependence of countries, improves
                         FDI: more stable, reacts only to the changes of the business cycle,          the international system of relations (an approach
                              FPI: more sensitive to the psychological impacts of the markets.        considering globalization).
Drawing a line between FDI and FPI is not always unambiguous in practice!

                             Technology-transfer                                                                               Motivations of the foreign direct investments
                                                                                                                               -     Utilization of varied production factors – differences of natural
       A key factor for the development of world economy, a form                                                               -     Cheap labour force is available – if it is not only cheap, but qualified
         of the flow of working capital.                                                                                             as well,
      Components, elements of it:                                                                                              -     Differences of professional, vocational qualifications of labour,
                                                                                                                               -     Strategic reason – avoid the presence of competitors, access to new
      • Diffusion of technology                                                                                                      technologies, purchase markets,
      • Absorption, adaptation of technology                                                                                   -     Utilise favourable business environments provided by the local
      • Actual transfer of technology (as transport of machinery,                                                                    governments, municipalities,
           equipment, licences, standards from one country to the other)                                                       -     Need to follow the business partners,
            Types of it:                                                                                                       -     Fulfilment of the requirements of the local markets by local
            – Material,                                                                                                              production,
            – Immaterial (know-how, licences…),                                                                                -     Providing the local market by cheaper local production,
            – Investment of working capital.                                                                                   -     Presence in the local market owing to the global competitive position,
                                                                                                                                     and avoiding the protectionist trade regulations.
            Forms of it:
            – Commercial,
            – Non-commercial (technical assistance).

                    IMPACTS OF FDI ON THE                                                                                                  IMPACTS OF FDI ON THE
                    NATIONAL ECONOMY / 1                                                                                                   NATIONAL ECONOMY / 2
                                           Positive:                                                                                               Negative: - mainly in the smaller countries!
      Measurable:                                                                                                              1.       Only a low proportion of the new outputs produced by the TNCs are left in the
      1.    Capital surplus of the balance of payments, decrease of the foreign trade                                                   country received the FDI
            deficit,                                                                                                           2.       Increased dependence of the country on the world market, the country becomes
                                                                                                                                        vulnerable towards the TNCs (for the balance of payments, exports, etc.), the
      2.    Increase of the net exports, decrease or spare of imports,                                                                  TNCs’ change in strategy will have impact on the whole country.
      3.    Growth of sales, business activities and turnover, increase of collected                                           3.       It may distort the production and consumption structure (e.g. by encouraging
            taxes, inner employment and the incomes of inhabitants                                                                      luxury consumption)
      4.    Growth of local purchases, local expenditures, growth of sales by local                                            4.       Need for imports may also grow, which may lead to problems with foreign trade
            subcontractors, increasing contribution to the research and development,                                                    balance. (to the imbalance of foreign trade),
            growth of the GDP,                                                                                                 5.       Monopolistic position, freely chosen transfer prices ⇒ actual GDP may be drained!
      Not measurable:                                                                                                          6.       It may limit the possibilities of the local enterprises (better technology,
                                                                                                                                        creditworthiness, inputs purchased from abroad, pollution of environment)
      1.    Technological level is increasing,
                                                                                                                               7.       After the aquisitions employees are frequently dismissed, unemployment, social
      2.    Increase in the qualifications and experiences of labour and management                                                     tensions in the host country.
      3.    Improvement of the quality of products and services.                                                                           NOW: The TNCs are not interested in weakening the receptive country,
         These positive effects do not appear simultaneously,that is, together at the                                                                   but they are still in more advantageous position!
                  same time, and can be enjoyed only with careful and conscious                                                                               Globalisation: problems for the FDIs
                                economic policy of the government!                                                                              Only less than 1% of them has significant international activity,
                                                                                                                                                       they operate isolatedly, mostly in regional markets.

                                     Features of capital markets                                                                       Relationship of the production factors
Neoclassical theory:
• The flow of capital is explained by economic reasons – maximizing profits/returns,                                       Affects regional development in different ways:
• The capital market is actually a perfect market - efficient banking system.                                              • The capital factor, the labour factor
• Due to the above mentioned features the supply of capital is equalized, capital is                                                – The movements of capital and labour decrease the production capacities in the region of
   available practically for any businesses (it flows towards the regions with high income level, then increases outputs              origin, so create a constrictive impact on the economy in the destination region.
    in these regions, reduces prices, and finally it lowers the rate of return on capital investments,…)
•   The capital supply will also determine the structure of economy, the rate of employment                                •       The export of the technology, technical development has complex effects:
    and the technological level as well.                                                                                            – The export of technology in the region of origin may give rise to new incomes, which can
•   A rWithin the region the capital stock is determined by: its own accumulation, (or                                                generate further developments, innovation processes.
    amortization), export and import of the capital,                                                                                – The export of technology may also have negative effects on the external regions: The
In reality: capital is not absolutely mobile!                                                                                         receiving region might become a competitor.
• E.g. investments connected with lands are immobile!                                                                               – Technological development may lead to savings in the amount of utilized labour and
                                                                                                                                      capital, output may be increased.
• Viewpoints, considerations of a new investment: besides profit maximization may be
    other objectives (extension of the own enterprise, communicational, infrastructural and institutional                           – Under unfavourable market conditions the amount of unsold commodities increases,
    bacground, labour supply, legal system, corruption, boureaucratic administration, approach of the                                 followed by dismissal of workers and loss of jobs.
    state, national government to investors)                                                                               •       The renewal of the regional economy is highly influenced by integrating and
•   Investments are concentrated in central regions,                                                                               utilizing the technological knowledge,
•   Their effects in the destination region: extension of capacity, expansive; in the region of                            •       For this sufficient numbers of well-trained labour force and capital investments are
    origin: restrictive, reducing capacity,                                                                                        necessary.
•   According to the neoclassical theory: equalization process,                                                            •       In the more developed regions: Sufficient levels of capital, shortage of labour are
•   According to the polarization theory: in the destination region the increased amounts of                                       typical,
    accumulated capital create agglomerational economies, which increases the rate of
    profitability, has a cumulative effect, attracts other investors to the region.                                        •       In the less developed regions: lack or shortage of capital, excess labour,
                                                                                                                           •       In the mostly underdeveloped regions: the adoption of labour intensive and capital-
                                                                                                                                   saving technologies should be imported.

                                                                                          Assisting the development and growth of regions,
                                                                                                   its target areas and measures /1
                    A training programme
             supported by the INTERREG project                                        i) Population and demographic trends in the region
          (project number: 4012-106/2004/01/HU-74)                                    – the main factor in not the absolute number of inhabitants, but the speed,
                                                                                      rate, of population growth,
                                                                                      – large differences among regions,
                                                                                      – in developed countries: increase of the average age of population,
                                                                                       • Decrease in the number of births, stagnation, or even slight decrease of the
                                                                                         whole population,
                                                                                       • In the long term: a considerable decrease in the active population, shortage in
                                                                                         labour, immigration of labour from peripherical regions.
           Lecture 4: Assisting the development                                        • In developed countries: the growth rates of population tend to be equalized.
                                                                                      – in developing countries:
                    and growth of regions,                                             • High number of births, age structure is younger,
                                                                                       • Due to the worse health conditions: average age of population is lower,
               its target areas and measures                                           • Main problem: very fast increase of population, the expected number is higher
                                                                                         than the capacities of the region to maintain population, threatening with
                                                                                         demographic crisis.

    Assisting the development and growth of regions,                                      Assisting the development and growth of regions,
            its target areas and measures / 2                                                     its target areas and measures / 3
    ii) Regional trends in the incomes per person
• Describing the incomes as a percentage of the national
  average: different amounts and permanent differences,                              iii) Structural changes in the regional
• Large income disparities within the same region itself,                               economy
• Convergence processes within the regions, without the slighest
  convergences between the regions (beta-convergence).                               • how much is the share of various industries,
• Is there a relationship with the income levels and the size of                        sectors in the:
  the region?                                                                           –output,
  – Generally: larger regions are richer, more attractive (larger                       –employment structure, etc. of the region.
    agglomerational advantages and cumulative impacts, more varied resources,
    larger market sizes)                                                             • Compared to the national averages: which are the
  – Counterexample: one of the richest regions in the EU is                            leading industries of the region?
    Luxempourgh, being one of the smallest regarding population and
    area.                                                                                –Definition of it: a leading industry or sector is a sector, the
• Theory of North-South polarisation                                                      share of which is higher than the national average…
• Comparisons between the regions in the USA and the EU
 (American and European wage costs are close to each other, rather
 similar, but the productivity of labour is lower in Europe).

               The four key questions of
                 regional development                                                                  A) Causes initiating
   • What are the causes of growth?
                                                                                                          regional growth:
   • What is the relationship between economic structure and growth?                  Export base theory:
     o   Which industries and sectors are best fit to the characteristics of the      • The main driving force for regional development is the export of the region.
         region – driving forces of development (export base theory)                  • The incomes will grow as a result of growing export (sales) revenues its
   • Are there signs of convergence? If there are, can they be                          crucial element: the increase of the volume of export.
   considered permanent or long-term trends?                                          • Two components:
     o   Are the development indicators of the region, compared to those of               – the demand for the exported products of the region,
         developed regions, likely to converge towards the latter?                        – The capacity to produce the exported products in good quality and adequate
     o   Is there a convergence of inequalities between the smaller territorial             quantity, at favourable cost levels (key role in it: availability of the productive
                                                                                            factors, resources in the region.)
         units whithin the region? Are the differences decreasing?
                                                                                      Economic activities of the region – divided into two groups:
   • What can be the role of economic policy in regional development?                 • Basic activities, export base sectors, industries (bring external incomes into
     o   What kinds of possible measures, external, governmental or                      the region)
         institutional interventions financial or technical actions may contribute    • The non basic, supplementary sectors or industries
         to the balanced development of the region?
                                                                                      They are serving the internal demands of the region (they participate in the
                                                                                         internal income flows and redistribution of the region).

    B) The economic structure of the region/1                                                                B) The economic structure of the region/2
                                                                                                            Steps of analyzing the economic structure (Hoover-Giarrattani and the
The economic structure is determined by:                                                                       export base theory)
• The available resources, comparative and competitive advantages,                                          1. Identify the industries, sectors capable for exporting, that is, the
        – The development of industries (sectors) best fitted to the available                                 basic activities/sectors. (using, for example, the location quotient)
          resources leads to the exploitation of comparative advantages                                     2. Determine the growth rate of the basic sectors
          (labour-intensive sectors should be developed, where capital is the                               3. Determine the impacts of the growth in basic sectors to the growth
          scarce resource, and capital intensive sectors, where the labour is                                  of non-basic sectors (employment, incomes, sales revenues)
          the scarce resource.)
        – The capital and labour can substitute each other to a certain extent:                             Substitution of imports by home production, own products.
          equalizing effect.                                                                                    Target: To become capable of fulfilling the demands of not only
• The market demand for the products and services (determining the incomes                                          the home market, but of several markets at the same time.
  generated by the economic activity) – e.g. crisis of the agricultural regions,                            A disadvantage of export oriented production of the region: the export of
  coal and iron mining industries because of the great surpluses.                                              its own, home resources, decreasing possibilities for domestic
Modifying effect: trade relationships and movements of productive factors                                      consumption, growing necessity to import raw materials or other
  among the regions:                                                                                           resousces from other regions.
                                                                                                            Imperfection of the export base theory: neglects the fact that growth may be
        – allow access to inputs, resources and incomes from outside,                                          initiated by internal trade flows as well, not only by the export.
        – it may enhance economies of scale and agglomeration.

        C) Convergence among regions                                                                             D) The role of economic policy
    What kinds of factors can induce or cause the speeding-up of the growth
      and the convergence?                                                                                    Some of the earlier discussed regional growth theories deny the possibilities of
    Experiences (EU) (surveys, studies, reports of the EU):
                                                                                                                 economic policy to enhance regional convergence
    •    Thew development of transportation and communication networks is a crucial                           The empirical evidence found in the EU so far: target-oriented economic policy
         precondition,                                                                                           may initiate and speed up growth processes, convergence may take place.
    •    Mobility of capital and labour (it decreases the dependence of regions from the location of
         natural resources.)
    •    Improvement of interregional trade also helps convergence.                                           Actually: contemporary economic policy – either on national or supranational levels –
                                                                                                                 endeavours to help the catching up of underdeveloped regions by initiating and
                                                                                                                 fulfilling development projects to support their convergence. For example:
    Reasons for polarisation:                                                                                 • National Development Plans,
    •    Unfavourable economic structures of several underdeveloped, declining regions, and their strong
         dependence on agriculture,                                                                           • Structural and Regional Programmes of the EU, the development programmes of the
    •    In the disadvantaged regions suffer from difficulties of communication and transportation,              United Nations, the World Bank and other international organizations.
    •    Agglomerational effects, agglomerational advantages of the developed regions.                                                                                       contradictory results
                                                                                                              European Union: supports coming from central development programmes
    Similarities between the development of the regions and the                                                  complementing the local initiatives and local resources has a crucial role in the spatial
      national economies:                                                                                        equalization and convergence of regions (the programme for the period 2007-
    •    At the beginning of the development path of a country, the speedy development is started only in        2013 gives priority to the economic policy measures aimed at territorial equalization.)
         a few regions of excellent preconditions and resources.
    •    Owing to the quick starting boom may spread to the neighbouring regions, and then to even more
         distant regions.
    •    (the above mentioned could be applied in the same way to the development and
         convergence problems of local territorial units and settlements.s )

               REGIONAL COMPETITIVENESS                                                                                 REGIONAL COMPETITIVENESS
    Standard definition of competitiveness – according to the Sixth Regional
       Periodic Report of the EU: ”The ability of companies, industries,
       regions, nations and supra-national regions to generate, while                                         Indicators used to measure regional
       being exposed to international competition, relatively high
       income and employment levels. ”                                                                          competitiveness (Imre Lengyel):
    The concept of competitiveness cannot be restricted to the high values
       of economic growth and of macroeconomic indicators describing the                                      1, Income: regional GDP/person („Gross
       performance of economy,                                                                                  Regional Product – GRP”)
    but its similarly important elements, fundamentally influencing the quality
       of living, are the following:                                                                             The measurement of regional GDP is frequently
    •    the high level of employment, that is,                                                                   ambiguous - commuters, activities done over
    •    High levels of household incomes, which are generally accessible for all the
         inhabitants.                                                                                             the border
    Characteristics of the competitiveness of countries, regions,
      towns:                                                                                                  2, Regional NDI (net disposable income)
    • Open economy,                                                                                              Shows the proportion of incomes generated
    • The income per capita is steadily high and increasing, and                                                  within the region, and those flown into the
    • High and not decreasing rate of employment.
                                                                                                                  region from outside, that the local inhabitants
                                                                                                                  can use for their own purposes.

                          Characteristic indicators for                                                                                                           Components of competitiveness
                              competitiveness                                                                                                                       in the regions of Hungary
        GDP                      GDP                                   number of employees                      working age population -
        ------       =           -----------------------     x         ------------------------------------ x ----------------------------------
    Total population             number of                             working age population                   Total population                                 Region                                      GDP per head                                GDP /              Share
                                 employees                                                                                                                                                                                                               employee,         in GDP,
                                                                                                                                                                                       Thousand          As a of the        As a % of        As a %
                                                                                                                                                                                                                                                         Thousand             %
                                                                                                                                                                                          HUF               country            1994           of EU-
                 GDP                                                                                                                                                                                       average                              25

     ---------------------------- = GDP value for one employed person = the productivity of                                                            Central Hungary                    2927             161,0               472,9           96,5          6863,5          44,9
     number of employess                                                labour (T)
                                                                                                                                                       Central Transdanubia               1679              92,3               460,0           55,4          3928,1          10,2
     number of employees                                                                                                                               West Transdanubia                  1955             107,6               461,0           64,4          4606,6          10,7
     ------------------------------- = rate of employment (related to the level of unemployment) (F)                                                   South Trasdanubia                  1301              71,6               368,6           42,9          3585,9          7,0
     Working age population
                                                                                                                                                       North Hungary                      1162              64,0               397,9           38,3          3414,3          8,0
     Working age population                                                                                                                            North Alföld                       1187              65,3               381,7           39,1          3447,9          10,0
     ------------------------------ = proportion of working age population,represents the age                                                          South Alföld                       1236              68,0               353,1           40,7          3472,4          9,2
          Total population            structure (K )
                                                                                                                                                       Hungary Total                      1817                -                430,6           59,0          4693,9         100,0

  Regional competitiveness may be measured by the so-called: unit regional
     income                                                                                                                                         GDP                    GDP                                    number of employees                      working age population -
                                                                                                                                                       ------       =      -----------------------   x            ------------------------------------ x ----------------------------------
  unit regional income = labour productivity x rate of employment ,                                                                                Total population        number of                              working age population                   Total population
  (labour productivity is meant the value of : GDP / one member of the working age                                                                                         employees

                   Components of competitiveness                                                                                                                       The model of regional competitiveness
                     in the regions of Hungary
     The economic activity of         Number of            Number of        Number of        Rate of        Rate of          Unemploy-
    the population of the ages          active             employees       unemployed       activity, %   employ-ment,      ment rate, %
       15 to 74 years, 2004           population                                                               %
   Central Hungary                     1284,6               1226,3             58,3            59,0           56,3               4,5
   Central Transdanubia                 482,3               455,3              27,0            56,9           53,7               5,6
   West Transdanubia                    445,2               424,6              20,6            57,2           54,5               4,6
   South Trasdanubia                    378,4               350,9              27,5            50,1           46,4               7,3
   North Hungary                        477,3               431,1              46,2            49,3           44,6               9,7
   North Alföld                         564,1               523,5              40,6            48,5           45,0               7,2
   South Alföld                         521,4               488,7              32,7            50,5           47,3               6.3
   Hungary Total                       4153,3               3900,4            252,9            53,8           50,5               6,1

    GDP                   GDP                                    number of employees                      working age population -
    ------       =        -----------------------    x           ------------------------------------ x ----------------------------------
Total population          number of                              working age population                   Total population

                                                                                                                                                     Spatial indicators of regional development/1

            DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS                                                                                           Demographic indicators:
                              A training course                                                                                                    -number of total population, population change %, population density
                                                                                                                                                      (person/km2), natural growth or decrease of population, net
                     supported by the INTERREG project                                                                                                migration, age groups, age structure (proportion of population in age
                  (project number: 4012-106/2004/01/HU-74)                                                                                            groups of 0-14, 15-59, 60- years), life expectancy at birth, etc..
                                                                                                                                                   Economic indicators: -
                                                                                                                                                              - - GDP per region, GDP/head, GDP/head as the proportion of national
                                                                                                                                                                  average, GDP in PPS as a proportion of the average of the EU, GDP
                                                                                                                                                                  growth in current prices %, GDP growth compared to the national average
                                                                                                                                                              Economic development: GDP/head produced in the industrial sector and in the
                                                                                                                                                                  agricultural sector by regions,
                                                                                                                                                              regional competitivenes: GDP/head, GDP/ employee (labour productivity),
                                                                                                                                                        – Sales
                       Lecture 5. - Indicators for                                                                                                      – Business organisations: number of businesses / 1000 inhabitants,
                                                                                                                                                           number of sole proprietorships / 1000 inhabitants, number of
                        assessing and comparing                                                                                                            partnerships / 1000 inhabitants, number of limited liability companies,
                                                                                                                                                           public partnerships, shareholders companies, cooperatives
                       the development of regions                                                                                                       Capital
                                                                                                                                                           total capital in the regions, in counties, proportion of foreign capital in
                                                                                                                                                           regions/counties %, proportion of private property and proportion of
                                                                                                                                                           public property in businesses
                                                                                                                                                           investments / head in regions, total industrial investments/ head, share
                                                                                                                                                           of sectors in total invesments

 Spatial indicators of regional development /2
                                                                                                                           Spatial indicators of regional development /3
Economic indicators: - cont’d
Structure of the economy
      Industrial production –and its sub-sectors                                                                          • Infrastructure
             its share in the GDP of the region                                                                             – motorways in km/ 100 km2, density of secondary
             territorial distribution, proportion in value added, share of family farms in production, area of farmland
                 by region and by agricultural activities in hectares
                                                                                                                              road network,
             fixed assets (machinery capacity / 1000 hectares)                                                              – length of newly constructed roads, railways, border
             yields, livestock numbers, numbers of agricultural enterprises, farms
             sole owners and companies, cooperatives, full time farmers and part-time farmers, their share in the             crossings,
                 arable land
             distribution of farms by area (smaller than 20 ha, above 1000 ha), average farm size                           – amount of cars, motorbikes, lorries and other
      Tertiary sector – and sub-sector                                                                                        vehicles
      the share of the sector in the GDP
                   business activity                                                                                        – new flats /1000 inhabitants, average size of a flat,
Indicators of tourism: number of accommodation available, number of nights spent in the                                       house
    region, number of tourists, average length of stay, average spending
      Other economic indicators                                                                                             – proportion of flats connected to the public gas, water,
      local tax revenues,                                                                                                     sewage network,
      local tax revenues/person,
      various local taxes,                                                                                                  – telephone lines and mobile phones / 1000 inhabitants
      income tax, corporate tax,
      direct support for businesses in the region as the % of the total value -for the country,
      revenues of the local government/inhabitants, non-profit corporations / 1000 inhabitants.

  Spatial indicators of regional development /4                                                                             Spatial indicators of regional development /5
 •     Social indicators
        – Employment - by sectors, by education level, by age structure                                                      • Environment
        – Unemployment
            • unemployment rate, proportion of unemployed compared to the
                                                                                                                                  – Geography - altitude, relief, climate,
              working age population.                                                                                               waters, plants, distance from borders, from
            • registered number of unemployed, total and long-term                                                                  the capital or other major towns, cities
        – Incomes
            • number of taxpayers, incomes before taxation, proportion of
              taxpayers to the total population                                                                                   – The quality of the environment
            • annual income per head
                                                                                                                                       • Water quality, air pollution, soil quality
            • average wages and salaries as the proportion of national wage
              levels.                                                                                                                  • Protected areas, nature reserves
            • -number of people living on grants and other forms of support                                                            • Biodiversity, specific flora and fauna
        –    Schooling, level of edication, stucture of the education system
             Health level
             Public safety and the crime situation
                                                                                                                                  – Region-specific characteristics
        –    Social services                                                                                                           • Specific natural endowments
        –    Social participation                                                                                                      • Special historic heritage, statues, buildings

               Indicators for assessing regional
                                                                                                                            Indicators for assessing regional differences and changes/2
                     differences and changes
            Statistical measures of ranges and dispersion:                                                                 Éltetı-Frigyes index (index of duality):
     Range indeces:                                                                                                                                        D = xm / xa , where
             K = xmax - xmin           for various areas and various indicators (K ≥1)
                                                                                                                           xm xi denotes the mean of all xi values above the average of the whole data set,
     Relative range:                                                                                                           and
          Q = (xmax - xmin ) / xátlag for various areas and various indicators (Q ≥0)                                      xa xi denotes the mean of all xi values below the average of the whole data set

                                                                                                                           This index compares the mean of the above – average values to the mean of
     Proportion of the upper and the lower deciles:                                L = q10/q1                                   the below average values.
     Interquartile range:       TQ = Q3 – Q1                                                                               If the incomes of the regions do not differ, then the index value equals 1, while
                                                                                                                                a value much higher than 1 indicates the existence of a wide income gap
                                                                                                                                between the rich and the poor.
     Standard deviation: σ = √ (Σ i=1…n (xi – xátlag)2 / n)
                                                                                                                           Robin Hood index:
                                                                                                                           the proportion of total income needed to be transferred from the rich to the poor
     Coefficient of variation: V = 100 · σ / xatlag                                                                             to achieve equality ,
                                                                                                                                                            RH = ( Σi=1..nxi – fi ) / 2
     Variance or square of the standard deviation: σ2 = (Σ i=1…n (xi – xátlag)2 / n                                        xi = the share of region i in the total income of the country (Σ i=1…n xi = 100),
     Average distance δ= (Σ i=1…n |xi – xátlag | ) / n
                                                                                                                           fi = the share of region i in the total population of the county (Σ i=1…n fi = 100).

                                                                                                Indicators for assessing regional differences and changes/4
   Indicators for assessing regional differences and changes/3
                                                                                                Krugman’s index of regional specialization:
                                                                                                The similarity of industrial specialisation structures across country/region pairs can be captured with the following simple index,
 Hoover’s index of inequality:                                                                       due to Krugman:
                                                                                                                                                        SHF = Σi=1..n siH – siF 
 the same computation is used for variables other than income and population (e.g. x            where H and F denote the two countries (regions), i refers to sectors, and s is the share of a particular sector in total
     denotes the proportion of industry and f the proportion of labour force )                       manufacturing or employment of that country. This measure varies between 0 and 2; a value of 0 obtained if the two
                                      H = ( Σi=1..nxi – fi ) / 2                                   economies have identical sector compositions, and 2 indicating perfect dissimilarity of sectoral structures
                                                                                                A somewhat more detailed formula of the same index is defined as follows:
 xi = az i. területegység részesedése (%) az egyik változó értékeibıl
                                                                                                                                                       SIjk = Σi=1..n( Eij / Ej ) – (Eik / Ek )
 fi = az i. területegység részesedése (%) a másik változó értékeibıl                                                                                                                       where j and k denote regions, and i denotes sectors.
 (itt Σ i=1..n xi = 100 és Σ i=1..n fi = 100 )                                                                                                                            Eij is the level of employment in sectors i=1,.....,n in region j, and
 xi = the share of region i in the total value of the first variable (Σ i=1…n xi = 100),                                                      Ej is the total employment for region j (thus Σ i=1…n Eij = Ej ), and similarly for region k.
 fi = the share of region i in the total value of the second variable (Σ i=1…n fi =             Localion quotient
     100).                                                                                                                                             Lij = ( Eij / Eim ) / (Ej / Em )
                                                                                                where Eij and Ej are defined as before, that is,
                                                                                                  Eij is the level of employment in sector i=1,.....,n in region j, and Ej is the total employment for region j (thus Σ i=1…n Eij = Ej ),
 Another version of the Hoover-index can be used to measure temporal changes of                  Eim is total employment in sector i in the whole country, and Em is total employment in the whole country ( Σ i=1…n Eim = Em ),.
    inequality:                                                                                 if the location quotient is greater (smaller) than 1, region j has a higher (smaller) share of employment in sector i relative to its share of the total
                                                                                                       employment in the country.

                                    hd =( Σi=1..na1i – a2i ) / 2                              Balassa’s index
                                                                                                analogous to the location quotient, but instead of employment levels it compares output levels (or export levels, etc.), that is,
 where:                                                                                              total production (or export) of various sectors in the country and a particular region.
 a1i denotes the percentage share of region i in the total value of variable a in the first
      time period, and
 a2i denotes the percentage share of region i in the total value of variable a in the second
                                                                                                                                                              B = (qij/ qj ) / ( q i /Q)
      time period.
                                                                                                Where: qij notes the output (or the exported output) by sector i in region j ; qj the total output in region j (thus Σ i=1…n qij = qj ),
 The higher the resulting hd value the more marked changes can be observed in the
      spatial distribution of the assessed variable.                                            q i : the total output of industry i for the assessed country (macroregion, larger unit, which includes region j)
                                                                                                Q denotes the total industrial output for the assessed country/macroregion (thus Σ j=1…n qj = Q ),.

                                                           The Lorenz curve:
It is used to describe and assess the level of concentration.                                               Gini coefficient:
•     Plots the cumulated relative frequencies (gi) against the cumilated relative
      distribution of the values of the assessed variable (yi).
•     If the territorial units have the same share of the value of the assessed                                                              G = (ΣiΣjyi - yj) / (2 ·y· n 2)
      variable, then the cumulated relative frequencies and the cumulated values
      of the variable give the same percentages (gi= yi) (no concentration)
•     In the extreme situation the Lorenz curve is the same as the horizontal and                The Gini coefficient equals the area between the Lorenz curve and the 45
      vertical axes.                                                                                – degree equality line (the green area in the Figure below) divided by
Example:                                                                                            the total area below the 45 –degree line (that is, half of the square).
•  Vertical axis: distribution of the consumption expenditure of population,         Total       The minimum value of the coefficient is 0, the maximum is 1.
•  Horizontal axis: distribution of the population                                   equality
•  40 % of the population spends the 20 % of total consumption expenditure
•  60 % of the population spends the 35 % of total consumption expenditure
                                                                                                 •     The coefficient is 0 when
                                                                                                       the Lorenz-curve is the
                                                                                                       diagonal line of the square ,
                                                                                                       that is, the distribution of the
                                                                                                       variable is uniform, even.
                                                                                                 •     The coefficient is 1 when
                                                                                                       the Lorenz-curve is the line
                                                                                                       of the vertical and the
                                                                                                       hirizontal axis, that is, the
                                                                                                       total value of the variable
                                                                                                       belongs to one territorial
                                                                                                       unit. .

                       Total inequality

               Hirschman – Herfindhal – index or
                                                                                                 Suitable for assessing various aspects of low incomes and income inequalities
                    Index of Concentration:                                                      Complex indicator,
                                                                                                 Calculated relying on the weighted averages of the low income gaps of the poor.
                                                                                                 •    Minimum value S=0, if none of the incomes are lower than the low income threshold
                                                                                                     value z
                                               K =Σ(yi /y) 2 =                                   • And it is S = 1, if every observable unit (person) has 0 (zero) income.
                                               = Σ[(yi /Σyi) 2]                                  Computation:
                                                                                                 S = LIR · { ALG + [yq/z] · Gp} = LIR · ( ALG + (1-ALG)· Gp) where
                                                                                                                    LIR = q/n and ALG = (z- yq) / z = [ Σ i=1..q (z - yi) / z] / q
  where yi denotes the share of the assessed variable in region i and                            Where n: the number of assessed units (population, settlements, regions);
  y the total value of the variable in the whole area ( y = Σyi )                                     z: income threshold (the income level below which the person or region is considered
  This index is one of the most widely used indices of spatial concentration,                         q: the number of assessed units below the threshold value z ;
  - minimum: 1/n (n is the number of regions analysed and the assessed                                LIR: the low-income rate, that is, the proportion of assessed units falling below the
      variable is equally distributed among the regions)                                                  income threshold z;
  - Maximum: 1, when the total value of the assessed variable is concentrated                         ALG: the average low-income gap, the difference between the income threshold z
      into one region.                                                                                    and the average income of the poor (the low income group);
  Note that the value of this index strongly depend on the number of spatial units                    yq: the average income of the poor; yi: the income of unit i in the low-income group
      (regions), so results of differently structured areas may not be comparable.                    Gp: the Gini coefficient for the income inequality of the low-income group.
                                                                                                 n = 100000 persons, poor: q=25000 persons, LIR = q/n =0,25, Gini coefficient for the poor G = 0,6
                                                                                                 Low income threshold: z = 50000 HUF, average income level for the poor v =40000 HUF
                                                                                                 •   ALG = (z-v)/z = (50000-40000)/50000 = 10000/50000 =0,2
                                                                                                 •    S = LIR · { ALG + [yq/z] · Gp} = 0,25 · { 0,2 + [40000/50000] · 0,6} = 0,25 · { 0,2 + 0,8 · 0,6} = 0,25 ·
                                                                                                     { 0,2 + 0,48) =0,25 · 0,68 = 0,17
                                                                                                 •   If q =50000 persons, then S = 0,34

Complex indicators - Human Development Index (HDI)
                                                                                                                                     The values of HDI
  DEfined in 1990, used by the UNO since 1993
  What does it measure? :
  • Low income levels,
  • Level of illiteracy and education, and
  • Health status measured by the life expectations of the population

 Life expectation index =                                                        • LE: expected life
 Education index =

                                                                                 • ALR: Adult literacy
      Adult literacy index (ALI) =

     Gross education index(GEI) =
                                                                                 • CGER: Complex
                                                                                   gross enrollment ratio

 GDP index =                                                                     • GDPpc: GDP/head in
                                                                                   PPS in USD
                                     (life expectation index + education
           HDI =                     index + GDP index) / 3
                                                                                                                               Source: Human Development Report, 2005

                                                                           Unemployment rate    Unemployment rate                                GDP P
                                                                                                                                                 G D% %         industrialG D % % ikülönbségG D P
                                                                                                                                                                i p a r i GDP P     p a ri
                                              counties                        1993                 2004             B   u   dapest                   3 6 ,1          2 3 ,2            12,9
  Examples for                                Budapest                             6,6                   2,8        B   a   ra n y a                   3              2 ,6              0,4
                                              Baranya                              13,2                  12         B   á   c s – K is k u n          3 ,6            3 ,6                0     - index
                                              Bács –Kiskun                         16                    10,2       B   é   kés                       2 ,4            2 ,3              0,1
     some                                     Békés
                                                                                                                    B o r s o d - A b a ú j-
                                                                                                                    C s o n g rá d
                                                                                                                                                       4 ,6
                                                                                                                                                       3 ,2
                                                                                                                                                                      6 ,1
   indicators                                 Csongrád                             11,7                  9,9        F e jé r                            4             6 ,2             -2,2
                                              Fejér                                12,5                  7,5        G y ı r-M o s o n -S .             5 ,1           8 ,3             -3,2
Index of Duality:                             Gyır-Moson-S.                        8,2                   4,8        H a jd ú - B ih a r                 4             4 ,1             -0,1
                                              Hajdú-Bihar                          16,6                  13,4       H eves                             2 ,4           3 ,3             -0,9
Xa          10,61          6,222
                                              Heves                                15,2                  10,9       J á s z -N a g y k u n -           2 ,8           3 ,5             -0,7
Xm          17,24          13,720             Jász-Nagykun-Sz.                     17,1                  11,4
                                                                                                                    S z .m á r o m - E .
                                                                                                                    K o                                2   ,9          5               -2,1
                                              Komárom-E.                           14,4                  5,8        N ó g rá d                         1   ,2         1 ,3             -0,1
D=          1,625          2,205
                                              Nógrád                               21,3                  15
                                                                                                                    P est
                                                                                                                    S om ogy
                                                                                                                                                                      9 ,8
                                                                                                                                                                      1 ,7
                                              Pest                                 11                    3,9
                                              Somogy                               11,6                  13,7       S z a b o lc s - S z - B .        3 ,1            2,9               0,2   Meaning: the
                                              Szabolcs-Sz-B.                       20,6                  17,8       T o ln a                          1 ,9            2,5              -0,6   14,25 % of the
                                                                                                                    V as                              2 ,6            3,9              -1,3   industrial GDP
                                              Tolna                                14,7                  11,9
                                                                                                                    V e s z p ré m                    2 ,9            3,6              -0,7   should be
                                              Vas                                  9,1                   5,9
                                                                                                                    Z a la                            2 ,5             3               -0,5
                                              Veszprém                             11,9                  7,7                                                                                  redistributed
                                                                                                                    M a g y a ro rs z á g             100             100
                                              Zala                                 10,3                  7,7                                                                                  between the
                                                      average                    13,925                10,17                                                                                  counties…

               Counties GDP industrial GDP                         Cumulated
                                                                                               Lorenz -

                                          ipariGDP% GDP % ipariGDP GDP%
                                                                                                curve                             DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS
                                                                                                                                                    A training course
  Tolna                      1,9               2,5            3,1      3,8                                                                 supported by the INTERREG project
  Somogy                     2,2               1,7            5,3      5,5                                                              (project number: 4012-106/2004/01/HU-74)
  Békés                      2,4               2,3            7,7      7,8
  Heves                      2,4               3,3         10,1       11,1
  Zala                       2,5                3          12,6       14,1
  Vas                        2,6               3,9         15,2         18
  Jász-Nagykun-Sz.           2,8               3,5             18     21,5
  Komárom-E.                 2,9                5          20,9       26,5
  Veszprém                   2,9               3,6         23,8       30,1
                                                                                                                                        Lecture 6: Regionalism and
                                                           33,1       38,6
  Bács –Kiskun
                                               3,6         36,7       42,2
                                                                                                                                            regional policy in the
  Fejér                       4                6,2         40,7       48,4                                                                      European Union
  Hajdú-Bihar                 4                4,1         44,7       52,5
  Borsod-Abaúj-Z.            4,6               6,1         49,3       58,6
  Gyır-Moson-S.              5,1               8,3         54,4       66,9
  Pest                       9,5               9,8         63,9       76,7
  Budapest                   36,1              23,2          100      99,9

                    Regionalism in the EU                                                                     The administrative structure of Europe
    What is Europe?
    Heterogeneity                                                                                             The administrative structure of Europe: four types (historical background)
                                                           Terry Jordan (Univ of Texas,1996) : 11 features    Based on the relationship of the state and the admin level directly below
    •    1, religion (at least 80 % of the population is of the Christian religion)
    •    2, language (at least 80 % speaks and indoeuropean language as mother tongue)                          Federalist states: e.g Germany, Austria, Belgium, Switzerland – the
    •    3, anthropological features ( at least 90 % is europid)                                                autonomy of provinces, cantons is wide, they have state-level institutions
    •    4, health (infant mortality is lower than 1 for a thousand births)                                     and functions in many respects, they have parliament and government of
    •    5, developed economy (GDP/head is at least 10 000 USD)                                                 their own. Autonomy is the decisive historical tradition..
    •    6, education (the proportion of analphabetic population is at most 10 %)                               Regionalised countries: Italy, Spain – the autonomy of the middle level
    •    7, developed transportation infrastructure (road density is at least 400 km/100 km2)                   governance is limited, the central administration decides about division of
    •    8, high employment in the secondary and tertiary sectors (the proportion of wage earners in            financial resources. The regions are defined by the central government, the
         agriculture is not more than 15 %)                                                                     legislative, and budgetary authority of the regions is rather limited.
    •    9, high level of urbanisation (the proportion of urban population is at least 50 % )
    •    10, stable population (natural growth rate is not more than 1 %)
                                                                                                                Decentralised states: France, Prortugal – the regional administration is
    •    11, parliamentary democracy since at least 1980.
                                                                                                                placed between the local governments and the central authorities, the role of
    •    In the European Continent: 0 - 11 features hold
                                                                                                                the regions is wider than that of the local level and narrower that that of the
    •    West Europe: more than 8
                                                                                                                central level. This type is rather similar to the former one.
    •    Portugal, Spain, Greece, Central and Eastern Europe: 5-7                                               Unitary states: Greece, Finland, Denmark, The Netherlands, Ireland, the
    •    Balkans, Serbia, Montenegro: 4,                                                                        United Kingdom – the middle level administrative units are strictly directed
    •    Albania, Turkey: not more than 3                                                                       by the central administration, their budget and financial resources, as well as
                                                                                                                legislation is determined by the central goverment. This heavily centralised
                                                                                                                administration is typical also for Central and Eastern Europe, and for the
                                                                                                                majority of the Southern European countries.

            The regional structure of Europe                                                                             Regional policy in the EU
•       Large differences of the development level in
        Western Europe, too                                   •Blue Banana: from South East England,
                                                               to Northern Italy through the Benelux            •   Disparities: from the mid-1990-ies income and employment disparities decreased in the EU
•       Economic core region: high population                  states, and the Rhine valley: high
        density, high incomes, concentration of the                                                             •   But: After the accession of the ten new members disparities have increased again. In new
                                                               population density, great industrial zones,          member states: GDP/head < EU average, only 56% of the working age population have
        productive factors and business activities             nowadays less industry and more services,            jobs, (EU-15: 64%)
•       The central (core) regions in Europe:                  financial centres (banks, transnational          •   For the whole area nd 98 % of the population of the new member states GDP/head < 75% of
                                                               companies, traffic nodes, airports,                  the EU average
                                                               international political decision making          •   2/3 of the population of the new member states live in regions where the GDP/head < 50% of
                                                               centres.                                             the EU average
                                                              •Within this area: Central Triangle, the area     •   The rate of unemployment is very different: 2% in Tirol (Austria) and 3,3% in Cyprus, but
                                                               of London- Paris – Ruhr – area, traditional          29% in Réunion Island (France) and 26,3% in Lubuskie region (Poland).
                                                               centre, core zone of the continent.
                                                              • The Mediterranean shores, the sunbelt,
                                                               the triangle of Barcelona-Lyon-Bologna:
                                                               services, tourism, creative sectors, eg.
                                                               Design, SMEs focusing on individual
                                                               demand instead of fordist mass industry
                                                              •Axes of development: by the main traffic
                                                               corridors, the diffusion path of innovation
                                                               and economic dynamism.
                                                              •Since the transition of 1990, dynamic
                                                               progress in the western borderline of the
                                                               former socialist countries, itowns and
                                                               cities equipped with modern
                                                               infrastructure - „yellow boomerang”
                                                               Gdansk – Prága- Pozsony-Gyır-Budapest
                                                               development axis.

          The reason for the regional policy: solidarity                                                                                             Priorities
         Aim:                                                                                                       Structural funds are used for the following three
                                                                                                                      objectives in the period 2000 to 2006:
         • not simply to redistribute resources but rather to create                                                • Objective 1: Helping regions whose development is
           new ones by investing in the potential of the regions and                                                  lagging behind to catch up.
           their communities.                                                                                       • Objective 2: Supporting economic and social
         • It also seeks to bring ‘added value’ to development                                                        conversion in industrial, rural, urban or fisheries
           activities, more specifically, the European dimension.                                                     dependent areas facing structural difficulties.
                                                                                                                    • Objective 3: Modernising systems of training and
                                                                                                                      promoting employment
                                                                                                                       Measures funded under Objective 3: for the whole area of the
                                                                                                                        Union except for Objective 1 regions
                                                                                                                    The disadvantaged regions
                                                                                                                    Taken together, the disadvantaged regions (Objectives 1
                                                                                                                      and 2) are home to some 225 million inhabitants, or
                                                                                                                      almost 50 % of the population of the Union of the Twenty-

          Financing the regional policy                                                     The least developed regions (Objective 1)
More than a third of the budget of the
                                                          • 2000 - 2006 : 213 billion
 Union is devoted to regional                               EUR for structural           • Regions where GDP/headı < the 75% of the EU average
 development and economic and                               measures (EU-15).            • the formerly eligible regions in the EU-15 – who are over the 75
 social cohesion through a series of                        Besides, t 2004 – 2006:        % of the average GDP/head of the EU-25 (remain eligible till
 European funds.                                            22 billion EUR for pre-        2006)
                                                            accession aid                • Objective 1 is valid for:    the whole area of the new member
                                                                                           states except Bratislava, Prague and Cyprus, which are eligible
                                                          • And further 22 billion         under Objectives 2 and 3.
                                                            EUR structural aid for the   • Regions of very low population density ( < 8 inhabitants /km2)
                                                            new member states              (Overseas regions of Finland, Sweden, and France, the Canary
                                                                                           Islands, Madeira)
                                                          • (Total: 257 billion EUR,
                                                            that is, 37% of the total    • Some specific areas of Sweden for specific projects
  European Regional Development Fund
                                                            budget of the EU for         • (borderline counties of Northern Ireland and the Republic of
                                                            2000- 2006 )                   Ireland for promoting peace and reconciliation – up to 2003)
                                                                                         Development barriers in Objective 1 regions:
     European Social Fund                                 • Method: multiannual             •   The   generally low level of inverstments;
                                                            development                     •   The   above-average level of unemployment;
European Agric.l Guidance and Guarantee Fund – Guidance     programmes,                     •   The    lack of services offered to enterprises and communities;
                                                          • Supplemented by                 •   The   lack of basic infrastructure needed for economic activity.
                                                            national aid.
      Financial Instrument for Fisheries Orientation

  The areas undergoing economic and social                                                       Individuals in difficulty on the
          restructuring (Objective 2)                                                           employment market (Objective 3)
The four types of area in Objective 2 are facing                                         European aid to deal with employment and human resources.
  the following difficulties:                                                            Eligible:
• changes in the key sectors and decline of                                              •    unemployed young people,
  employment in the areas of industrial activity                                         •    underqualified workers,
  and services;                                                                          •    the long-term unemployed,
• economic and social crisis and deterioration                                           •    all those individuals facing inequalities of access to
  of neighbourhoods in the urban areas;                                                       employment and vocational training.
                                                                                         (involving discrimination associated with gender, race or
• a decline of traditional activities and                                                     ethnic origin, religion, a physical or mental disability, age
  depopulation of rural areas;                                                                or sexual orientation )
• a crisis due to the decline of employment in                                                      Both in disadvantaged or prosperous regions
  the fisheries sector in areas that depend
  economically on fishing.

      Community initiatives and                                                             The Cohesion Fund
         innovative actions
                                                                                          The aim of the Cohesion Fund: to help the poorest
  Four Community initiatives are aimed at finding solutions to                               member states:
    problems common to a number of or all Member States and
    regions:                                                                              • The 10 new member states
  Interreg III: for the development of crossborder, interregional                         • Ireland (till the end of 2003),
    and transnational cooperation ;                                                       • Greece, Portugal, Spain.
  URBAN II: to support innovative strategies in cities and urban                          Initial condition: the Gross National Product of the country
                                                                                             (GNP) is not higher than 90% of the EU average
  LEADER+:        to promote rural development initiatives;
                                                                                          • The Cohesion Fund covers the whole area of the
    EQUAL: to combat discrimination in the labour market ;                                   country,
      The Community initiatives absorb 5.35 % of the                                      • Supports large investments related to environmental
               Structural Funds budget                                                       protection and transeuropean transport networks
                                                                                          • Between 2004 and 2006 one third of the total budget of
                                                                                             the Cohesion Fund is allocated to the new member

                            Pre-accession aid                                                                                                 Results
For the 10 Central and Eastern European countries (CEEs) – 8 of them accessed
    the EU in 2004, the Aid remains available for Bulgaria and Romania.                                          •    In the least prosperous countries and regions :
                                                                                                                       – During the period 2000–06, the amounts transferred to the regions in
Instruments:                                                                                                             Objective 1 come to 0.8 % of GDP in Spain and more than 2.5 % of GDP in
• PHARE programme (1989)                                                                                                 Greece and Portugal.
     • to strengthen institutions, administrations and public organs to ensure the application of                      – these transfers increase investment by about 3 % in Spain, 8 to 9 % in Greece
       Community legislation                                                                                             and Portugal, 7 % in the Italian Mezzogiorno and 4 % in the new German
     • to support investment in the areas most in need (infrastructure, fi rms, social measures).                        Länder.
     • A PHARE CBC (cross-border cooperation) complements the action of Interreg by financing cross-                   – During the 1994–99 programming period and in the regions of Objective 1, the
       border actions on the territory of the candidate countries.                                                       construction or renovation of 4 100 km of highways and 32 000 km of roads,
•    Special Accession Programme for Agriculture and Rural Development (SAPARD,                                        – reorganisation of 3 800 ha of industrial areas, assistance to 214 000 firms,
                                                                                                                         training of 8.15 million people and creation of some 800 000 jobs.
                                                                                                                       – improve the quality of teaching and training in Portugal in particular.
     • for the common agricultural policy of the Union, including the adaptation of agricultural structures
       and rural development, consumer and environmental protection and technical assistance.                          – Environmental infrastructure projects: notable effects have been observed in
                                                                                                                         this area in Spain, Portugal and Greece.
• Instrument for Structural Programmes for Pre-Accession (ISPA,1999)
                                                                                                                 •    In the areas of Objective 2 undergoing restructuring
     • on the model of the Cohesion Fund to fi nance important projects for the protection of the
       environment and trans-European transportation networks                                                          – the average unemployment rate in the areas of Objective 2 decreased by 4 %
                                                                                                                         between 1995 and 2001 (EU 15: 3% decline )
     • + prepare the national bodies responsible for the administration of the Structural Funds
       and the Cohesion Fund.                                                                                          – treating urban wastelands made it possible to reconvert 115 million square
                                                                                                                         metres of ground to improve the environment and arrange new productive
Following the accession                                                                                                  spaces.
• The ERDF and ESF takes over the PHARE measures,                                                                      – assisted more than 300 000 SMEs, contributed to the creation of 300 000 jobs.
• The Cohesion Fund takes over ISPA activities                                                                         – significant impulse to research and development, innovation, and the
• and EAGGF-Guidance takes over SAPARD.                                                                                  promotion of the information society.

    The future                                                                                                  Priorities for the future: convergence, competitiveness, cooperation
                                                                                                              18 February 2004, European Commission: ‘A new partnership for cohesion in the enlarged
                                                                                                                Union: convergence, competitiveness cooperation’,
Four challenges of regional and cohesion policy 2007- 2013:                                                   vision of the cohesion policy for the period 2007–13. Budget more than EUR 336 billion to the
1. Increase cohesion in an enlarged Union - The enlargement of the Union to 25 Member                           cohesion policy
   States 27 : socioeconomic disparities will double and the average GDP of the Union will decrease by        Priorities :
    12.5 %.                                                                                                    Convergence: support employment growth and job creation in the Member States and least developed
     – The problem of inequalities shifts to the East
                                                                                                              • In regions where the GDP per inhabitant is less than 75% of the EU average (+ temporary support for areas
     – Worsening of the employment situation                                                                    affected by the statistical effects of enlargement)
( phenomena:acceleration in economic restructuring, trade opening, the technological                          • Principal themes: The modernisation and diversification of the economic structure, development and modernisation
    revolution, the development of the knowledge economy and society, an ageing population                      of basic infrastructure, environmental protection, strengthening of administrative capacity, improvement of the quality
                                                                                                                of labour market institutions and of education and training systems and development of human resources.
    and a growth in immigration )                                                                             • In areas with GNP < 90% of the EU average: from the Cohesion Fund, for transportation and environment.
2. Strengthen the Union’s priorities Heads of State or Government of the Union meeting ,                      2. Regional competitiveness and employment: anticipate and encourage the change
    Lisbon in March 2000, Lisbon Strategy: to make Europe the most successful and                             • to assist regions and regional authorities to anticipate and promote economic change in industrial, urban and rural
    competitive knowledge-based economy in the world by 2010, poverty reduction,                                areas and to strengthen their competitiveness and attractiveness, taking existing economic, social and territorial
    environmental protection, sustainable development                                                           disparities into account.
                                                                                                              • Together with national programmes, targeting full employment, the quality and productivity of work and social
3. Improve quality to promote sustainable and more balanced development                                         integration
    well targeted investment throughout the Union providing economic opportunities which                      3.European territorial cooperation: ensure harmonious and balanced development throughout the entire
    help people fulfil their capabilities will thus underpin the growth potential of the EU                     Union
    economy                                                                                                   • Supporting cross-border and transnational cooperation
                                                                                                                 (by the internal and external, continental of maritime borders).
4. Create a new partnership for cohesion                                                                         Cooperation of responsible authorities, strengthening economic connections, networking for SMEs
    greater efficiency, transparency and political accountability, reinforce institutional                       Basic principles: strategic planning, decentralised administration, continuous monitoring and evaluation)
    capacities, coordination with the system of economic and social governance

        Cohesion 2007–13: the objectives and instruments proposed by the                                               The main development stages of the European regional policy:
                                                                                                                     1957 The Treaty of Rome zerzıdés: ‘to strengthen the unity of their economies and to ensure
                                                                                                                        their harmonious development by reducing the diff erences existing among the various
                                                                                                                        regions and the backwardness of the less-favoured regions’.
                                                                                                                     1958 Setting-up of two sector-based funds: the European Social Fund (ESF) and the European
                                                                                                                        Agricultural Guidance and Guarantee Fund (EAGGF).
                                                                                                                     1975 Creation of the European Regional Development Fund (ERDF) to redistribute part of the
                                                                                                                        Member States’ budget contributions to the poorest regions
                                                                                                                     1986 The Single European Act lays the basis for a genuine cohesion policy designed to off set
                                                                                                                        the burden of the single market for the southern countries and other less-favoured regions.
                                                                                                                     1989–1993 The European Council in Brussels establishes the Solidarity Funds (now referred to
                                                                                                                        as the Structural Funds) and allocates ECU 68 billion to them (at 1997 prices).
                                                                                                                     1992 The Treaty of the European Union designates cohesion as one of the main objectives of the
                                                                                                                        Union, economic and monetary union and the single market, establishing the Cohesion Fund
                                                                                                                     1994–1999 Decision: One third of the Community budget (1999 price level) approx 177 billion
                                                                                                                        ECU for cohesion policy. Creation of the Financial Instrument for Fisheries Guidance (FIFG),
                                                                                                                        the reform of the structural funds, adjustment of the Cohesion Fund operations, (for these
                                                                                                                        more than 30 billion EUR per year between 2000 and 2006) Besides PHARE, the ISPA,
                                                                                                                        SAPARD for candidate countries
                                                                                                                     2000–2001 The European Council in Lisbon (March 2000) adopts a strategy focused on
                                                                                                                        employment and competitiveness. The Gothenburg Council (June 2001) completed this
                                                                                                                        strategy by linking it with sustainable development
                                                                                                                     2002 The European Council in Copenhagen (December 2002) leads to an agreement on the
                                                                                                                        conditions for the accesion of 10 new Member States to the Union.
                                                                                                                     2004 European Commission proposal for the reform of cohesion policy for the period 2007–13
                                                                                                                         ‘1 May: enlargement of EU

The system of territorial classification for regions in the EU
     NUTS (Nomenclature of Territorial Units for Statistics) 3 + 2 categories:
                                                                                                        The components of the Cohesion Policy
    NUTS 0 : countries
    NUTS 1: supraregions
                                                                                                                  for 2007-2013
 •  NUTS 2: regions (autonomous provinces, group of counties) – generally this is the level             14 July, 2004, European Commission: Altogether 336,1 billion EUR (1/3 of
    eligible for financial aid in the framework of the Structural Funds.                                   Common Budget ) for cohesion purposes
 • NUTS 3: county level, subregional level                                                              The characteristics of the structural measures:
 Local level:
 • LAU1 : „district”, microregion, local level                                                          • More focused on the strategic directions of the EU (Lisbon and Gothenburgh
 • LAU2: level of settlements (towns, villages), local level                                              requirements for competitive and sustainable knowledge based economy and
                                                                                                          European employment strategy),
                                                  Number of
                                                                     Inhabitants                        • More focus on the disadvantaged regions, and development in the whole territory
                                                    regions                                               of the EU
NUTS 0                   Countries             25                                                       • More decentralised, simpler, more transparent and more efficient implementation
NUTS 1                   Supraregions          89                    3-7 million inhabitants                  Proposals and recommendations include:
                                                                     800 thousand – 3 million           •     The financial resources for the structural measures for 2007 to 2013: European
NUTS 2                   Regional level        255                                                            Regional Development Fund (ERDF), European Social Fund (ESF), Cohesion
                                                                       inhabitants                            Fund
                         Subregional                                 150 thousand – 800                 •     And a completely new regulation to establish cross border cooperation structures
NUTS 3                                         1221
                           level                                       thousand inhabitants

        Objectives, eligibility, resources/1-2                                                                     Objectives, eligibility, resources/3
„Convergence” objective: (ERDF, ESF, Cohesion Fund). To speed up the convergence of less                    European territorial cooperation: (ERDF). Based on the experiences of INTERREG
   developed regions: the modernisation and diversification of the economic structure, development
   and modernisation of basic infrastructure, environmental protection, strengthening of                        Community Initiative
   administrative capacity, improvement of the quality of labour market institutions and of education       Aim: to enhance cooperation in three levels:
   and training systems and development of human resources – especially in new member states
                                                                                                            • Cross-border cooperation;
   264 billion EUR, that is, instead of the former 75% it is 78,54% of the Structural Funds:                • transnational areas;
           •67,34% for regions where the GDP/head is less than 75% of the EU average                        • Cooperation networks and exchange of experience for the whole Union
           •8,38% for regions affected by the ,,statistical effect”,                                        Eligibility: At the beginning of the programme the Commission accepts
           •23,86% for the countries eligible for Cohesion Fund                                                 – The list of eligible cross-border regions
           •0,42% for the remote (outermost) regions and areas.                                                 – The list of eligible transnational cooperation areas
„Competitiveness and employment ” objective: (ERDF, ESF). The strengthening of the                              – The whole area of the Union is eligible for support for European cooperation and
   competitive capacity of regions by regional development programmes (ERDF), and by                              exchange networks.
   the funding available from ESF and national and regional programmes, giving priority to                  Resources: 13,2 billion EUR ( 3,94% of the total ) for the following:
   the adaptability and competitiveness of employees and enterprises.
                                                                                                            • Altogether 47,73% for cross-border and transnational cooperation:
   57,9 billion EUR, (17,22% of the total ) for the following:                                                  • Of which 35,61% for cross-border cooperation within the boundaries of the EU,
     • 83,44% for regions remaining within the scope of the current Objective 1                                 • 12,1 2% for the Financial Instrument for Neighbourhood and Partnership and the cross-
                                                                                                                  border component of the Pre-accession Financial Instrument
     • 16,56% for the regions ,,phasing-in” for the support.                                                    • 47,73% for areas involved in transnational cooperation,
                                                                                                            • 4,54% for the European cooperation and exchange networks.

           Cohesion policy 2007–13: breakdown by objectives (billion EUR)
                              Total: 336,1 billion EUR                                                                     Cohesion policy 2007–13 (EUR 336.1 billion)

                      A training course
                                                                               Types of border regions
             supported by the INTERREG project
          (project number: 4012-106/2004/01/HU-74)                      • Alienated border regions: no interaction, tensions
                                                                        • Co-existing border regions: neutral towards each
                                                                          other, acceptance, little cooperation
                                                                        • Mutually cooperative border regions: stable
                                                                          neighbourhood relations, cooperation, helping the
                                                                          development of each other
                                                                        • Integrated border regions: functional integration,
        Lecture 7: Problems of borderline                                 transparent and easily penetrable borders for people
           location, its natural and social                               and products
             features, and importance in                                Separation or connection depends on the historical and
                                                                          geographical differences as well as the political
                 spatial development                                      situation.
                                                                        Mental border: considering and treating the area over
                                                                          the border as alien (slow to disappear!)

                                                                        Characteristics and factors typical
Territories of specific conditions
                                                                        for territories of specific conditions
• Development tends to be uneven in space                              • Spatial changes are slow to develop, react with delay to
• Reason: uneven distribution of development factors                     changing condition – the factors of development have
                                                                         long life span (houses, infrastructure…)
• Underdevelopment is relative (e.g..Western Hungary in                • Spatial structure is not changeable, the speed of change
  EU or in Hungary)                                                      in various componens also differs
• Special territories: differ not only from the average, but           • Changes in the economic structure are followed by c
  also have some specific endowment, feature (positive or                changes in the territorial structure only rather slowly, with
  negative) not found elsewhere                                          delay (e.g. changes in the settlement structure, village
    – E.g. agglomeration round a city, borderline area, resort area,     sizes, town development)
      mountain region                                                  • Concentration and deconcentration cycles of territorial
• Research of territories of specific conditions is a                    processes are longer than business cycles
  multidisciplinary science                                            • A specific feature of borderline location: the situation of
                                                                         the region is determined by interstate relationships

    The concept and types of cross-                                          The theory of transboundary
          border cooperation                                                    regionalism (J. Scott)
•    Borderline region (definition): NUTS3 level                       • Transboundary regionalism: coordinated
     territorial units which have borders that                           action crossing (state) borders, between
                                                                         communities having common interests
     are at the same time borders of the state,
                                                                       • The character of the border: filter,
     too (EU)
                                                                         gateway, zone of integration
•    Borderline cooperation – two criteria:
    1. Relationships are not on the level of the nations
                                                                       • The actors of cooperation: regional actors
       (states), but are established on a lower level                    and the role of the nation state – differing
    2. The cooperating actors live/work in spatially                     interests and strategic aspects
       connected areas, borderline regions (the vicinity of            • Multidiszciplinary character
       the border influences their everyday life)

       Key elements of integration                                                                Main questions to analyse:
 • Internal integration: strengthening cohesion within the                              • Who interacts and why?
 • External integration: strengthening the connections of                               • How does interaction take place (form and
   the region to the other regions in the neighbourhood,                                  structure of co-operation)
   interstate relations
 • The aim of both: create common strategies for utilising                              • To what extent is this interaction
   opportunities and endowments, resources
 • Possible actors: individual, civilian (non governmental)
                                                                                          embedded within larger
   organisations, actors of the local administration,                                     (political/economic/social) contexts?
   business organisations, or mixed organisations of the
   above                                                                                • What does this interaction produce in
 • The areas of cooperation:                                                              terms of tangible/intangible products
      – Informal interactions,                                                            (results)
      – Joint strategic programmes

 Groups of actors involved in transboundary cooperations/1                               Groups of actors involved in transboundary cooperations/2
A. Actor-specific organisation characteristics
1. Local and regional governments
       i. forms of co-operation established and leve/s of formalisation               B. Interdependence of Local Markets and Services
       ii. resources dedicated to co-operation networks                                1. cross-border commuting (intensity of day-to-day interaction)
       iii. jurisdictions and level/s of autonomy                                      2. numbers of people crossing borders for work, shopping, entertainment, family
2. Senior Governments                                                                  3. the degree oftransboundary utilisation of public/private schools
       i. relative role with respect to local and regional governments                 4. the degree of transboundary utilisation of other public facilities and
       ii. jurisdictions                                                               institutions
       iii. resources dedicated to support of co-operation networks (if applicable)   C. Types of local policy framework
3. Local official or non-o fficial transboundary co-operation organizations            5. the existence of special co-operative agreements and their importance;
       i. relative role with respect to local and regional governments                 6. the existence of special economic zone and tax regimes;
       ii. forms of co-operation established and level of formalization                7. the structure and degrees of integration of public transportation networks
       iii. resources dedicated to co-operation networks                               8. national policies affecting border regions and transboundary co-operation; and
       iv. jurisdictíons and level of autonomy                                         9. European polices affecting border regons and transboundary co-operation
4. Local and regional enterprises                                                     D. Strategic Orientations in Transboundary Networking
       i. generation of employment across borders                                      10. co-operation Priorities
                                                                                       11. sectoral orientations of co-operative projects
       ii. generation offlows of commodities crossing borders                          12. time frames
       iii. local producer/suppIier/retal networks as measurements of market          E. Co-operation Experiences
                                                                                       13. issues promoting consensus/conflict
       iv. regional transboundary investment patterns                                  14. stability of co-operation
       v. interfirm co-operation patterns                                              15. perceived obstacles to co-operation
       vi. co-operation with private-sector interest groups                            16. actual co-operation results
5. Non-governmental organisations with specific co-operation interests
                                                                                      These indicators should help us uncover transboundary interaction patterns (including intensity) within
       i. relative role with respect to locai and regional governments                  specific contexts. Once having done this, comparative analyses can help establish relationships and allow
       ii. resources                                                                    generalisations.
       iii. areas of competence and/or expertise

   Bordeline location and peripheral
               character                                                                 Specific problems of border regions
• The factors of underdevelopment: one-sided                                            First, the border breaks the continuity of space:
  economy, settlement structure of mainly micro                                         • The connections are built only towards the inlands of the
  villages, low level of urbanisation, unfavourable                                        country
  natural conditions and resources, lack of developed                                   • Borders between hostile states are impenetrable
  transport infrastructure                                                              • The possibilities of ethnic and political conflicts frighten
                                                                                           away development projects and potential investors,
• Many underdeveloped regions are also peripheral                                          businesses
  (lying by the borders of the county, region or state )                                      – E.g: the French –German border, West Poland, the South West
                                                                                                border of the Czech Republic (Sudetas)
• BUT: borderline areas may be gateway regions,                                               – In other continents: Russian – Chinese border, India- Pakistan,
  too!!!                                                                                        Sudan and Ethiopia, Israel and its neighbours...
                                                                                        Border regions: meeting points of different cultures,
• Specific features of border regions: not only                                           languages, ethnics, that can help to establish trust
  peripheral location, but also dependent on interstate                                   between nations

The role of borderline location in spatial                                          Transboundary cooperation in
             development                                                                Europe - examples
Main problems:                                                               Euroregions:
                                                                             •   Organisations at the internal or external borders of the EU
• Ethnic, linguistic, cultural                                               •   Institutions: Directing council, working organisation
• Quality of life, employment situation                                      •   Deal with economic, social, environmental and institutional problems
• Conditions natural resources and environment                               •   Aim: strengthen the cohesion of borderline regions, attract private investors
                                                                                 and intstitutions
• Free movement of capital, services, commodities and                        •   Initiated by: Madrid Convention, and PHARE CBC programme (Cross-
  people (EU)                                                                    Border Cooperation)
                                                                             •   Problem:
                                                                                  – Framework agreements are difficult to fill with real contents
             In Hungary: 14 of the 19 counties are border counties!
                                                                                  – At the beginnings, large sizes difficult to handle (no common interests, difficult to
Spatial development:                                                                manage and maintain contact) (e.g. Carpathian Euroregion)
• Economic structure, sectors, labour supply, mental (entrepreneurial             – Different competence levels of the partners at the two sides of the border
   mentality) and cultural development                                            – Different election cycles
• The role of the local society                                                   – Resources and organisation: needed for success (e.g. Austrian-Slovakian-
• Traffic and transport                                                             Hungarian Centropa project)

                                                                          Typical features of cross-border cooperation in North America and Europe

   Experiences in North America
USA - Mexico border
• Importance of interovernmental connections: NAFTA – leading to
  the enhancement of cross border cooperations
• But: less freedom of activity than in Europe (sovereignty, not
  complete opening of borders, worries about interfering with decision-
  making authorities and about loss of jobs in the more prosperous
• The American-Mexican borderline is a border between the First and
  the Third World
• The areas of cooperation: trade and commerce, foreign direct
  investments, environmental cooperation (fast growth of cities, water
  supply, pollution…),
• More cooperation between the business and the civilian (NGO)
  spheres, with limited institutionalised connections

                                                                                 The forms of transboundary cooperation in
                      A training course                                                            Europe
             supported by the INTERREG project
          (project number: 4012-106/2004/01/HU-74)
                                                                             The forms of international relations:
                                                                             • Traditionally: in nation state level
                                                                             • Now: also decentralised, with participation of:
                                                                                  – The borderline, local regions,
                                                                                  – The central regions.
           Lecture 8: Interregional and                                      • Problems:
           transboundary cooperation in                                           – Borderline location: social and economic problems
                        the EU                                                      (dependence on the centre)
                                                                                  – Historical and ethnical conflicts.

    Contents of the cooperations                                               History of cross-border cooperations
• Establishing an institutional framework for solving the                  • After the Second World War, in the 1960s – Western borders of the
  common problems,                                                           German Federal Republic, Dutch- German cooperation (with the
                                                                             centre: Gronau).
• The institutions are established paralell wtih each other                  The name of it: EUROREGION (1965)
  in both sides of the border, according to the domestic                   • Regio Basiliensis (1963): French-German-Swiss border zone
  legislation                                                              • 1980 Madrid, Council of Europe: ” European Framework Convention
• Occassionally common institution, as an international                      on Cross-Border Cooperation of local municipalities and
  legal entity (rare)                                                        administrative institutions, organisations”,
• Basic principles:                                                          Modification in 1995: acknowledged the right of sub-state
                                                                             administrative units to conclude legally binding cross-border
    –   Partnership relation, subsidiarity,                                  cooperation agreements (within the scope of national law).
    –   Giving comprehensive information to the citizens,                  • Hungary, Romania and Slovakia have also ratified.
    –   Participation of enthusiastic individuals,
    –   Drawing politicians into the activities,
    –   Equality, equal representation in both sides of the border.

            Examples from Europe -                                             Areas of cross-border cooperation in
           transnational cooperation                                               the neighbouring countries
• Structural Funds of the EU: strategic guidance (several                  Levels of cooperation:
  programmes financing territorial, regional cooperations,                 • State or federal level,
                                                                           • Regional level (federal state, canton, departement)
  development)                                                             • Local community level (towns and their suburbs)
• Transnational networks, „europeaning” of local policies,                 • Enterprise level.
                                                                           The main fields of cooperation:
• The regional policy supports the development initiatives                 • Production and product chains, joint manegement of energy supplies,
  fitting to each other,                                                   • Joint utilisation if infrastructure, international use of airports, maintaining conditions of
                                                                              water transport, joint water management, joint organization of water supplies,
• INTERREG programmes, PHARE, TACIS, CARDS                                 • Protection of environment, maintaining the cleanliness of border rivers, protection
• CEMAT (European Conference of Ministers Responsible                         against air pollution,
  for Spatial Planning), AEBR (Association of European                     • Cultural and educational cooperation.
                                                                           Main forms of cooperation:
  Border Regions)                                                          • Formal cooperation, based on state level agreements, (recommendations from
• Examples: EU -15 near the Eastern borders of the EU                         governmental organization sand agencies)
  (e.g. Polish-German towns, Polish, Czech, Hungarian                      • Informal cooperation not supported by state level agreements (e.g. conferences or
                                                                              cultural events organised by the initiative of local and regional planners, etc.).
  regions) – development of infrastructure and transport,
  cultural exchange programmes, and those organized for
  the youth.

                  Borderline processes
              in Central and Eastern Europe
                                                                           The types of the borders and their impact
Border: breaks the spatial continuity of society and economy - barrier          on transboundary cooperation
          It was true typically for Central and South-East Europe.
         small, landlocked countries with long continental borders
From the Baltics to the Northern borders of Greece:
  18 countries altogether
                                                                           The types of the borders in Central and South-Eastern
                                                                              Europe are:
• 13,8 % of the territory of Europe, with 18 % of European population,
   the length of their borders is almost 60 % of the total length of the          not homogeneous, but rather differentiated.
   continental borders in Europe.
• Almost 60% of their area is of borderline locations, and 60 % of the     Differences can be made according to the following
   local population lives in these areas.                                     aspects:
• (The average of the same proportions in the EU: 21,5 % - for                  1.   geography,
   territory, and 15,2 % - for population)
                                                                                2.   transport,
Specific characteristics of the borders:
• extreme changeability,                                                        3.   history,
• the character of borders: the former „Iron Curtain", the Western              4.   ethnic and sociological character,
   borders of the former Soviet Union were impenetrable and                     5.   economy,
   impassable.                                                                  6.   by the access to the financial resources of the EU.

                                                                                                               Transportation aspects
            Geographical aspect:                                                             Characteristic features of the borders:
                                                                                                    The number (density) of border crossing points, and their facilities,
A considerable proportion of the state borders (16000 km) is also a                                                       level of development.
    division by geographical sense, a geographical barrier.                                  •     On the borderline with the length of 16000 km there are
Its components:                                                                              •     215 international road crossings altogether, that is
• 27 % of it (3900 km) are: rivers,
                                                                                             •     One crossing point in every 75 kms, as average.
• 18 % of it (2700 km) are: mountain tops,
• 55 % of it have no natural, geographical barriers at all.                                  Differences in the density:
                                                                                             •     In the Czech-Slovak border: average distance of crossings: 15 km,
The natural barriers also have some other importance:                                        •     in the Bulgarian-Greek,
• valuable natural ecosystems                                                                •     in the Romanian-Ukrainian, and
     – The borderline location for these ecosystems meant protection and                     •     in the Moldovan-Ukrainian border the average distance of them: 250-300
       promoted the development of these systems (national parks, nature                           km.
       reserve areas)
     – Force and oblige the involved countries to cooperate.                                 •     The minimum requirement at least one crossing should be in every 50 km.
•   By the Hungarian-Austrian border: „trans-cultivation” and „pocket                        Now only 40 % of the roads crossing the borders are actually used as
    contracts”.                                                                                international border crossing points in the 18 countries of the region.
                                                                                             Regarding railway crossings, 70 % of the rail lines leading through the borders
                                                                                               are actually used as border crossings,
                                                                                                                   the development of border crossings: a priority

                                                                                                  Ethnic and sociological aspects
                 Historical aspects                                                      From the above aspects several border types exist:
                                                                                         „Classical" type:
                                                                                         •       On the two sides of the border two nations of different landuages and different ethnic traits live,
• In the 20th century: extensive change of                                               •       for several centuries, with strong economic and other ties established between them.
                  borderline                                                             •       The „least problematic” type,
• Among the borders: 2,6 % of them was always a                                          •       E.g.: the Slovakian-Polish, the Hungarian-Croatian, Hungarian-Austrian borders.
  historical border (with historical roots)                                              ”Settled-in” border:
                                                                                         •       The present population was settled only about 50 years ago,
• One part of the rest was also border in the past (between
                                                                                         •       It had no connections to the people living over the border,
  Bosnia-Hercegovina and Croatia, and between the                                        •       Looking at the neighbour people with suspicion, fear, and prejudices,
  Czech Republic and Poland)                                                             •       It is slow and difficult to develop cooperation,
• The other part of them: has never been international                                   •       E.g.: the German-Polish, German-Czech, Czech-Austrian and the Polish-Russian borders.
  border                                                                                 „Divided” border:
                                                                                         •       The same ethnic popuulation lives at both sides of the border, and the areas formerly belonged to
     – It causes several border disputes, arguments nowadays (e.g.                               the same state,
       between the former Soviet member states, or the Slovenian-                        •       sometimes even strong family ties exist between them,
                                                                                         •       The local population would like to strengthen connections with cooperation,
       Croatian, Croatian-Yugoslavian and Yugoslavian-Macedonian                         •       Nationalistic policies often prevent the establishment of successful cooperation.

              Economic aspects                                                                    The access to financial support
Considering the level of economic development, the differences of the
                                                                                                           from the EU
  economic development at the two sides of the border.                                       Regarding this aspect the following three categories may be defined for the borderline regions:

• Easiest to establish a cooperation between similarly                                       1. Regions at the borders of the EU:

  developed regions.                                                                         •     Cooperation is financed for the EU-neighbouring countries: from the Structural Funds (including the INTERREG )
                                                                                             •     For the areas of the associated countries: the PHARE Cross Border Cooperation programme (CBC)
• The larger the difference in the levels of development: the                                •     Many uncoordinated actions and decisions, differences (scheduling, acceptance criteries, way of financing etc.)
  more chances of tension occur.
                                                                                             2. Borders between associated countries
         • Illegal labour migration, black labour markets,                                   •     Supportation from PHARE-CBC funding,
         • Spreading of half-legal and illegal activities based on the exploitation of       •     A problem is that the EU encourages mainly the development of the border regions by its own boundaries,
           existing price and wage differences,
                                                                                             •     while the associated countries wish to direct their development priorities to their Eastern borders being nost
         • Different environmental requirements, norms and expectations.                           underdeveloped.
                                                                                             3. Borders which cannot expect any EU supportation resources
The traditional large development gaps: at the external Eastern                              •      Often these are the most underdeveloped areas, most in need of development resources.
  borders of the EU-15
                                                                                             •      With regard to Hungary this is the case with the Yugoslavian (Serbian), the Croatian and the Ukrainian border.
     – This gap is still great, although decreasing.
     – E.g: Western Hungary is at about 55 %, and Burgenland is at the 75 %
       of the development level of the EU now.

                                                                                                                              Potential and existing transboundary cooperations
    Cross-border cooperations in Hungary
                                                                                                                               by the Hungarian border (Source:: Hardi, 2004)
•   For Hungary cross-border cooperation is of strategic importance.
•   The length of our borders id large, a large proportion of our population lives in
    borderline regions, 14 of our 19 counties have common borders to some of our
    neighbour countries.
•   Several euroregions were initiated by Hungarian participation,
•   Declaration of Madrid Convention (1997)
•   Borderline EU-programmes
•   Phare CBC programme has been running by the Austrian-Hungarian border since
•   Up to now several cross-border cooperations,
•   The operation of these organizations is rather contradictory. – After the initial
    enthusiasm they are typically slowing down.
•  Participants usually take part in these activities voluntarily, without any fees or payments.
•  The majority of these organisations was created as a result of political will.
•  At first it was an objective to cover the largest possible areas (e.g. the Carpathian Euroregion)
     –   Not much common interest among members living far away from each other,
     –   Organization of a meeting or other programmes needs very long time, costs a lot of money and causes other
         organisational difficulties.

     Transboundary euroregional cooperations with the participation of
                     Hungary (Source: Hardi, 2004)                                                                                        Examples of Euroregions and
                                                                                           Without the Ister-Granum
                                                                                                                                             working communities
                                                                                           Euroregion with the centre
                                                                                           Esztergom, and the Duna
                                                                                                                            The Alpine-Adriatic Working Community: Italian,
                                                                                           (Danube) Euroregion with the
                                                                                           centre of Nyergesújfalu)
                                                                                                                              Austrian, South-German, Hungarian and
                                                                                                                              Croatian regions
                                                                                                                                    •   Friuli-Venezia, Veneto
                                                                                                                                    •   Karinthia, Styria, Upper-Austria,Salzburg
                                                                                                                                    •   Trentino-Alto Adige, Lombardy
                                                                                                                                    •   Burgenland
                                                                                                                                    •   Gyır-Moson-Sopron, Vas, Zala, Somogy, Baranya counties
                                                                                                                                    •   Ticino (Switzerland), Croatian regions, Bavaria
                                                                                                                                    •   Change of information, infrastructure, culture,
                                                                                                                                    •   Economy, innovation,
                                                                                                                                    •   Gradual extension, market interests
                                                                                                                                    •   Centre-periphery features
                                                                                                                            WEST-PANNONIA EUROREGION: Gyır, Vas, Zala,
                                                                                                                               Burgenland – Austrian periphery + Hungarian development axis
                                                                                                                            CARPATHIA EUROREGION: it has an entirely
                                                                                                                             peripheric character, too large, almost a giant
                                                                                                                             euroregion (contains 5 countries)!

                                                                                                                               The development of borderline regions before
                       A training course                                                                                                 and during the transition
              supported by the INTERREG project                                                                           Geographical position of Hungary                                                       137
                                                                                                                             within Europe:                                                      679 km          km
           (project number: 4012-106/2004/01/HU-74)
                                                                                                                          Situated in the centre of the
                                                                                                                             Carpathian Basin                              365
                                                                                                                          • Neighbours seven countries (3                  km
                                                                                                                             are members of the EU, 2 will                                                      453 km
                                                                                                                             access to the EU soon).
                                                                                                                          • Internal borders of EU:1137 km,
                                                                                                                          • „Gateway country” of the EU                    102
                                                                                                                             towards South and East Europe,                km                             164
            Lecture 9: Peripheral regions,                                                                                • Over the neighbouring borders 3,6                      355
                                                                                                                             million Hungarian minorities live.
             and cross-border cooperation                                                                                       Importance of the cross-border cooperation projects
                                                                                                                                • Improvement of the situation of minorities living in the border regions,
                programmes in Hungary                                                                                           • Improve the relationship between the hostile and unfriendly political and
                                                                                                                                  state organizations, stabilization,
                                                                                                                                • Cooperation between borderline regions by the Hungarian borders has dual
                                                                                                                                     •It strengthens the European integration between the EU-member and
                                                                                                                                     non-EU-member regions,
                                                                                                                                     •It establishes forms of cooperation for Central-Europe.

    The border regions, peripheries
                                                                                                                      Characteristics of borderline areas
                                                                                                                  Peripheral character:
                                                                                                                  •   Transport connections break at the border,
Hungary                                                                                                           •   rather large distances from the centres, and
• has 7 neighbour counrties with common border,                                                                   •   Lack of transit traffic, limitations of trade,
• Out of its19 counties                                                                                                    „cul-de-sac” settlements, developments are delayed or cancelled, unadvaadvantageous job opprtunities and
                                                                                                                           income conditions, population tends to emigrate, the area is depopulated.
• only 5 have no common borders with other countries.                                                             Exception: regions where the cross-border traffic is dynamic, or transit roads cross the
                                                                                                                  During the period of the socialist state the borderline regions of Hungary were
                                                                                                                     typically peripheral.
                                                                                                                  • By the Western borders: Iron Curtain
                                                                                                                  • Centralized leadership: it was not possible to establish spontaneous cross-border
Border regions:                                                                                                      cooperations with the socialist countries either.
                                                                                                                  • The maintenance of cooperations depended on the state-level relationships of the
• Statistical microregions (NUTS4 level!),                                                                           two neighbouring countries.
• They have some direct conection to the state border,                                                            • Barrier: large Hungarian minorities living by the opposite sides of the border -
                                                                                                                     question of minorities.
• They have (or had earlier) a permanently or temporarily                                                         • Existing connections: cultural, town twins (no market-oriented or business
  operating border station.                                                                                          relationships!)

                 Borderlines before the transition                                                                               Borderlines before the transition/2
Hungarian-Austrian border:                                                                                    Hungarian - Ukrainian (Soviet) border:
• Up to the 1960-ies for years: a ”dead border” practically,                                                  • It was practically a closed border before the transition.
• In the 1970-ies: tourism, shopping tourism, establishment of institutionalised                              • The Eastern Carpathians were outstanding strategic and military zone.
                                                                                                              • Worries about the Hungarian influence, agitation towards the Hungarian
• In the 1980-ies: dynamic cooperation, production relationships,                                               minorities living over the border,
  connections in the level of households, illegal labour migration.
                                                                                                              • Only one border crossing station by Záhony, which was a road and rail border
• After 1989: demolition of the Iron Curtain, introduction of the world passport for                            dtation as well, and a switchpoint between wide gauge rail and narrow gauge rail
  Hungarian citiens, a new period started,                                                                      systems.
• Losing peripheral character and getting closer to the most developed territories.                           Hungarian – Romanian border:
Hungarian-Slovakian (Czechoslovakian) border:                                                                 • Continuous quarrels between the two countries, permanent restrictions of
• The longest foreign bordeline of Hungary. It has been corrected several times                                 minority rights,
  since the end of World War II.                                                                              • Cross-border cooperation was impossible.
• A lot of Hungarian people were expatriated from Felvidék,                                                   • Areas of Hungarian minority: instead of being the base of cooperation, it became
• The civilian rights of the Hungarian nationalities were severely restricted by the                            the main barrier to it.
  Czechoslovakian authorities, preventing any kinds of connections.                                           • The Romanian government made great efforts to hinder civilian connections and
• After the 1960-ies slow progress was experienced.                                                             made strict administrative measures to prevent them.
• The Western (Danube) borderline:                                                                            Hungarian – Serbian, Croatian, Slovenian (Yugoslavian) border:
     – Emergence and development of a potential transportation and industrial zone,                           • Due to the political conflicts the border was practically a closed, dead one.
     – Free movement of labour,cooperation between agricultural cooperatives (e.g.                            • From the 1970-ies - improvement: agricultural cooperation (e.g. food
       during harvest)
                                                                                                                processing), shopping tourism in the borderline towns of both sides,
     – Shopping tourism in the borderline towns,
     – Progress of general tourism (towards Balaton, High Tatras)
                                                                                                              • Dynamic cooperation was established between county Zala and Slovenia,
                                                                                                              • the Croatian borderline is characterized by cooperation between towns,
     – Gabcsikovó-Nagymaros hydropower station – conflicts.                                                   • In Vojvodina, Serbia the institutional linkages develop most.
•   The Eastern-Slovakian borderline: is a typically peripheral agricultural
    region, heavy industry (steel industry and machinery manufacturing),

                                                                                                                           The problems of transition in the border regions:
             The border regions after the transition                                                          Austrian-Slovenian border region: a winner of the transition
•   After the transition the role and situation of the border regions have changed.                           • The income generating capacity of the region increases,
•   Some of the borderline areas lost their importance, others started to develop at a high
    speed.                                                                                                    • Shopping tourism and tourism coming for consuming services,
•   Regions could grow out of the former peripheral situation only if their location was close to             • In 1998: establishment of the West Pannonia Euroregion.
    great development centres.                                                                                The Slovakian border region: show considerable differences within the
•   Advantageous position: border regions being less underdeveloped in their own countries,                     region- see below:
    could receive energy for development from each other.
•   Border regions being underdeveloped even in their own country: remained the „peripheries                  The Danube area:
    of peripheries”.                                                                                          • The Vienna-Bratislava-Gyır-Budapest innovational axis,
•   In the years of transition the differences became strongly marked among the various
    borderline areas.                                                                                         • Intensive relationships mainly in the household sphere, and at the
•   Austrian-Hungarian borderline: outstanding with its very favourable development                             border crossing points (Komárom, Esztergom)
    parameters, being higher than the overall Hungarian average                                               • Construction of the brodge Maria-Valeria in Esztergom,
•   Slovenian borderline: positive                                                                            • Petrol tourism.
•   Romanian, Ukrainian, Eastern-Slovakian borderline: remained peripheral.
     –   At both sides: labour is available, but no job opportunities,                                        Eastern Slovakian border region:
     –   There are production resources, but: lack of capital, so the natural resources cannot be utilised,   • Permnent employment tensions and problems.
     –   Capacity of communication network is insufficient, narrow (transport, border crossings)
     –   different legislative and institutional systems, economic instability (currencies, inflation)        • The process of the economic restructuring is slow,
                                                                                                              • Ageing, out-migration, high proportion of uneducated, unemployed
                                                                                                                Roma population live on state grants,
                                                                                                              • Danube-Ipoly nature conservation area: Ipoly Euroregion

     The problems of transition in the border regions:/2
Ukrainian border region:
•   Its situation is similar to the Eastern Slovakian border region
• Necessary: to open new border crossing stations, or to increase the capacities of the existing
•   Cross-border movements of the population is dynamic, due to shopping tourism,
•   Affected by illegal activities (smuggling of cars and persons, petrol tourism, organised crimes).
Romanian border region:
•  Peripheral character,
• Large numbers of Hungarian minorities: very colourful economic relationships, cooperation of
   settlements as well,
•  In the future several large centres may be competitors to each other: Szeged – Timisoara, Békéscsaba –
• 1998: Danube-Körös-Maros-Tisza Regional Cooperation.
Serbian border region:
•  Gradually becomes more and more dynamic.
• Szeged is a major centre, Baja is a secondary centre, several rapidly developing smaller towns,
•  Private travels of the inhabitants, but the „grey economy” along the border is also remarkable,
•   Its accessibility and the transportation network is satisfactory.
Croatian border region:
•  Two peripheries in it: Southern Transdanubia in Hungary + another periphery without centre in the
   Croatian side,
•  Geographical border is the river Drava, with very few bridges,
•  Private connections: shopping tourism to Zalaegerszeg, Nagykanizsa, Barcs, Csurgó,
•  The institutional initiatives, connections are are still in initial stage.
•  Development of transport (Rijeka-Zagreb-Budapest), but only very few crossing stations!

    Cross-border cooperation since 1995                                                                        Neighbourhood Programmes
• EU- since 1990: cross-border developments: INTERREG IIIA                                                   The Hungary-Slovakia-Ukraina Neighbourhood Programme 2004-2006
  programmes, Phare CBC (Cross-border Co-operation)
• In Hungary: first cross-border cooperation started in 1995, at the                                         The territory of the border region
  Hungarian-Austrian border.                                                                                 • In Hungary: the counties of Gyõr–Moson–Sopron, Komárom–Esztergom
• Cooperation projects also at the Romanian, Slovenian and                                                      Pest, Nógrád, Heves, Borsod–Abaúj–Zemplén, Szabolcs–Szatmár–
  Slovakian borderlines,                                                                                        Bereg, and Budapest capital;
• the INTERREG Community Initiative: supports transboundary                                                  • In Slovakia: the counties of Bratislava (Bratislavský kraj), Trnava
  cooperation between EU-member states and non-EU countries.                                                    (Trnavský kraj), Nitra (Nitriansky kraj), Banska Bistrica (Banskobystrický
• INTERREG III aims: to increase the institutional and economic                                                 kraj), Kosice (Košický kraj) and Presov (Prešovský kraj);
  capacities and the economic potentials of the border regions.                                              • In Ukraine: county Kárpátalja (Zakarpatia oblast).
• Three basic forms of INTERREG III programmes:
     – cross-border cooperation (INTERREG IIIA),                                                             Action priorities, objectives:
     – transnational cooperation (INTERREG IIIB) and                                                          supportation of the cross-border business cooperations,
     – interregional cooperation (INTERREG IIIC).                                                             institutional cooperation
• 2007-2013: independent objective: „European Territorial                                                     Micro Project Fundings (cooperation of local communities, cultural
                                         Cooperation”                                                           cooperation)
     – The main direction of cooperation: development of small and medium-size
       enterprises, tourism, cross-border commerce, culture, joint environmental                              cross-border coordination of environment-protection policies and small-
       actions, access to transboundary transport and information networks,                                     scale investments
       transboundary water and waste treatment actions, joint health care, cultural
       and educational structures.                                                                            cross-border cooperation for environmental protection
                                                                                                              small-scale transportation and telecommunication infrastructure.

         Neighbourhood Programmes /2                                                                            Neighbourhood Programmes/3
   Austria - Hungary INTERREG IIIA Community Initiative Programme                                           Slovenia - Hungary - Croatia Neighbourhood Programme
   Its territory:                                                                                           Its territory:
    Counties: Gyır-Moson-Sopron, Vas and Zala,                                                             - On the Slovenian side: statistical regions of Pomurje, Podravje,
                                                                                                               Savinjska, Spodnjeposavska, Jugovzhodna Slovenija, Notranjsko-
    Burgenland and Vienna, the connected NUTS III-level regions, the                                          kraka, Obalno-kraka;
       South of Lower Austria and the South of Vienna.
                                                                                                            - On the Hungarian side: counties Vas, Zala, Baranya and Somogy;
   Action priorities:
                                                                                                            - On the Croatian side: counties Osijeko-baranjska, Virovitiko-
    cross-border economic cooperation,                                                                        podravska,      Koprivniko-krievaka,   Meimurska,     Varadinska,
    improvement of accessibility, the infrastructure,                                                         Krapinsko-zagorska, Zagrebaka (except Zagreb, the capital),
    development of cross-border organizational structures and networks                                        Karlovaka, Primorsko-goranska, Istarska.
       for cooperation,                                                                                     Action priorities:
    development of human resources,                                                                        • Economic-social cohesion and human resources development:
    sustainable cross-border evironmental and spatial development.                                            common economic area, common development of human resource,
                                                                                                               common touristic and cultural area.
                                                                                                            • Sustainable development: sustainable utilization of environmental
                                                                                                               resources, protection of nature and environment, accessibility.

                                                                                                       The INTERREG IIIB CADSES programme
         Neighbourhood Programmes /4
                                                                                                      Essence of it: the territories consisting of several countries that can be
     Hungary-Romania,    and    Hungary-Serbia   &                                                        considered as one unit, try to find jointly solutions for the problems of the
     Montenegro Cross-Border Cooperation Programme                                                        territory.
     Action priorities:                                                                               EU and its neighbour territoriesi: 13 macro-areas which can be considered as
                                                                                                          a homogeneous unit with economic, geographical and social respects.
      physical development of the transportation infrastructures of                                  Hungary in the Central Adriatic Danubian South-Eastern European Space - CADSES
     border crossing stations, common protection of water base and                                    CADSES: 18 countries
     water systems, common activities to prevent floods, and
      development of business infrastructure and business services                                   1. Promoting spatial development approaches and actions for social and
     for the small and medium-size enterprises of the area, R+D                                           economic cohesion.
     (research and development) and the improvement, training of
     human resources.                                                                                 2. Efficient and sustainable transport systems and access to the information
     Territories:                                                                                     3. Promotion and management of landscape, natural and cultural heritage.
     In Hungary: the counties Szabolcs-Szatmár-Bereg, Hajdú-Bihar,                                    4. Environment protection, resource management and risk prevention.
     Békés, Csongrád and Bács-Kiskun,
     In Romania: the counties Szatmár (Satu Mare), Bihar (Bihor),

                                                                                                       The INTERREG IIIC programme
     Arad és Temes (Timis).                                                                           The INTERREG IIIC programme facilitates the efficiency of the supportation
     In Serbia & Montenegro: West-Bácska, North-Bácska, North-                                           programmes of Structural Funds with promoting the exchange of

     Bánát, South-Bácska, Central-Bánát, Szerémség, South-Bánát
     and Beograd.

                                                                                                         The border regions
                                                                                                            in our days
                                                                                                      Central Hungary
                                                                                                      •  The most developed region, determined by the capital, Budepest
                                                                                                      •  Leading position in the following indicators: GDP, proportion of services, density of enterprises, enterprises
                                                                                                         with foreign direct investments, employment, investments, rate of population with higher qualification.
                                                                                                      •  Good geographical situation, good accessibility, touristic scenics, sights, high density of road networks,
                                                                                                         provided with airport, high level of education, research-development activities.
                                                                                                      Western Transdanubia
                                                                                                      •  The second most developed region of Hungary.
                                                                                                      •  Its geographic location is extremely advantageous.
                                                                                                      •  Share of the service sector and processing industry is very significant.
                                                                                                      •  Important factors: investments directed to the industry, number of enterprises with foreign direct investments,
                                                                                                         willingness to establish enterprises, touristic attractions, much frequented border crossing stations.
                                                                                                      Central Transdanubia
                                                                                                      •  The third most developed region.
                                                                                                      •  Industry has a significant role, automotive industry and related components, manufacturing, electronics,
                                                                                                         telecommunicational industry,wood and furniture, chemicals etc.
                                                                                                      •  Enterprises operated with foreign direct investments, industrial parks, investments,
                                                                                                      •  Infrastructure, touristic attractions.

                                                                                                         Gross Domestic                                   GDP per head                             GDP /        Share in
                                                                                                                                                                                                  employee,     GDP, %
The border regions in our days /2                                                                      Product (GDP), 2003
                                                                                                                                                     As a of the
                                                                                                                                                                      As a % of
                                                                                                                                                                                    As a % of
Southern Transdanubia
• Average development level, high proportion of services, agriculture is above the average,
                                                                                                      Central Hungary                   2927            161,0           472,9         96,5         6863,5         44,9
• Its geographical, natural endowments are very advantageous for viticulture and vine-growing, and
    for the food industry.                                                                            Central Transdanubia              1679            92,3            460,0         55,4         3928,1         10,2
• The development of the industry is slower than the national average.
                                                                                                      West Transdanubia                 1955            107,6           461,0         64,4         4606,6         10,7
• Electric power production is outrageous due to the nuclear power station in Paks.
• Willingness to invest is low, alien companies,                                                      South Trasdanubia                 1301            71,6            368,6         42,9         3585,9          7,0
• Difficult to access either by railways or by roads,                                                 North Hungary                     1162            64,0            397,9         38,3         3414,3          8,0
• Dual tourism potential: most attractive is the Balaton, and then Mecsek-Villány Hills.
Southern Great Plain                                                                                  North Alföld                      1187            65,3            381,7         39,1         3447,9         10,0
• The fifth most developed region of Hungary. Geographical endowments for agricultural production,    South Alföld                      1236            68,0            353,1         40,7         3472,4          9,2
• Food industry, provides inner markets,
                                                                                                      Hungary Total                     1817              -            430,6          59,0         4693,9        100,0
• Level of investments is low, infrastructural disadvantages,
• Significant in higher education and research-development activities.
                                                                                                          The share of            Agriculture,         Industry       Building,              Services          Total
Northern Great Plain
                                                                                                      economic sectors in           forestry                         construction
The second largest, but one of the most underdeveloped, disadvantageous regions.
Agricultural activity, food industry, low productivity.                                               the value added, %,
Foreign capital is very few, high unemployment rate, but significant higher education and research-           2003
Northern Hungary                                                                                      Central Hungary                   0,7              18,5                4,4                76,3          100,0
• In the most backward situation, disadvantageous, the significance of industry is more than the
    national average, chemical industry, electricity, engineering industry,                           Central Transdanubia              3,6              40,3                5,1                51,0          100,0
• Low density of enterprises, lack of foreign capital,
• High unemployment rate, low level of qualification.                                                 West Transdanubia                 3,8              39,6                4,8                51,9          100,0
                                                                                                      South Trasdanubia                 7,2              21,9                5,6                65,2          100,0
                                                                                                      North Hungary                     4,1              31,6                5,4                58,9          100,0
                                                                                                      North Alföld                      6,2              26,8                5,5                61,5          100,0

                                                                                              Road network             National roads, km                   Of which             National roads, km by
      Region          Register Active      Of which:     Active         Busine    Busine
                                                         busine         sses of   sses of        Region                                                    motorways,                  100 km2
                        ed     busin
                      busines esses partners              sses/         foreign   foreign                                                                   highways
                                                   sole   1000          owner-    owner-
                        ses           hips,      traders                                                                1990           2003          1990          2003             1990             2003
                                                              inhabit     ship     ship/
                                         compani     , %        ants       a)      1000
                                         es, %                                    inhabit   Central Hungary            2468            2606          140           159              35,7             37,7
Central Hungary       484112    342511     61,8      38,2     120,6     16292      57,6     Central                    4041            3938          137           151              35,7             35,4
Central               121935     89124     39,8      60,2      80,2       1736     15,6
                                                                                            West Transdanubia          4669            4883           18            71              41,9             43,1
West Transdanubia     116854     85149     38,4      61,6      85,1       2557     25,5
                                                                                            South Trasdanubia          4288            4366           18            53              30,1             30,8
South Trasdanubia     111817     75764     39,6      60,4      77,5       1339     13,0
                                                                                            North Hungary              4501            4764           20           130              33,5             35,5
North Hungary         101248     77632     38,2      61,8      61,1       775       6,1
                                                                                            North Alföld               4865            4954            0             7              27,4             27,9
North Alföld          130759    102199     39,2      60,8      66,3       2606     10,8

South Alföld           13098     99216     36,6      63,4      73,2       1488     10,9     South Alföld               4909            5025           16            61              26,9             27,4
Hungary Total         1197723   871956    47,7 b)   52,3 b)   86,4 b)     26793    26,5     Hungary Total             29741           30536          348           632              32,0             32,8

                                                                                                    Institutions and instruments of Hungarian rural
                                                                                                   development, the EU-membership of the country
                                                                                                 Rural development policy of the EU:
                             A training course                                                   •    Within the frames of the regional and agricultural policies, from the late 1980s.
                    supported by the INTERREG project                                            In Hungary: rural development policy beginning from 1989.
                 (project number: 4012-106/2004/01/HU-74)                                        Its reasons::
                                                                                                 •    Backwardness compared to Western-Europe, integration to the EU.
                                                                                                 •    Rural areas of Hungary:
                                                                                                 •    Signs of crisis in the local communities.
                                                                                                 •    Migration out of the small settlements to the regional centres.
                                                                                                 Basic challenge of rural development:to preserve the population of rural regions,
                                                                                                 Attractive living space and working conditions.
                                                                                                 Its source: utilization of the local resources + healthy, spontaneous, self-organized local community.
                                                                                                 Rural development in the EU: second pillar of the Common Agricultural Policy
                                                                                                 •    Competitiveness of agriculture + environmental, employment and social objectives
                                                                                                 •    Improve the profitability of agriculture + alternative incomes
                     Lecture 10:                                                                 •
                                                                                                      Economic diversification
                                                                                                      Enterprise development
    History of Hungarian rural development,                                                      •    Preserve the environment and landscapes, improve the attractiveness of rural environs,
                                                                                                 Objectives and tools of rural development: integration among the sectors of economy,
                                                                                                       developments interlaced one to the other,cooperation of the local enterprise and civilian sectors
       experiences of the Hungarian border areas                                                       and the municipalities, active rural society,
                                                                                                 in Hungary: measurements from 1998
                                                                                                 •    In the period of 1999-2000: national, county-level and microregional rural development programs,
                                                                                                 •    Preparations to be able to receive the dommestic and EU supportation resources.

     Hungary: Agriculture and rural development                                               I. „Decentralized” financial funds:
                                                                                                                                                          Other forms of
               supportation system:                                                                 –   Target allocations for territory development (TFC)supporting the
                                                                                                   – Supportations for compensating and equalizing territorial differences (TEKI)
  1. Supports financed by the EU:                                                                  – Decentralized supportations for specific objectives development of

       1.1. Supportation directly to the primary producers, farmers (25% EU,
       30% national);
                                                                                                                                                           rural regions
                                                                                                   – Regional allocations for determined objectices, programmes of action
                                                                                              II. Central supportation systems:
                                                                                                    –   Supportation for entitled and specific objectives (CCT)
       1.2. Measurements affecting the market (supportation of exports,                             –   Széchenyi-plan:
                                                                                                    –   Allocations, commitments for Economic Development (GFC)
  2. Supports financed jointly (from EU- and domestic resources):                                   –   Allocations, commitments for Tourism Turisztikai Célelıirányzat (TURC)
                                                                                                    –   Labour Market Funds (MPA)
       2.1. SAPARD,
                                                                                                    –   Supports for agriculture (AGR)
       2.2. Agrár és Vidékfejlesztési Operatív Program (AVOP), (Operative                           –   Objectives of the Environment Protection Funds (KAC)
       Programme for Agricultural and Rural Development),                                           –   Objectives and allocations for Maintenance and Development of Roads (ÚTC)
                                                                                                    –   Objectives and allocations for Water Conservancy
       2.3. Nemzeti Vidékfejlesztési Terv (NVT) (National Plan of Rural
       Development);                                                                          III. PHARE CBC and PHARE mirror programmes tükörprogramok
                                                                                              IV. ISPA programmes
       2.4. Supplementary national direct supports (KNKT)
                                                                                              V. INTERREG III/A, B, C programmes
  3. Supportations financed exclusively from national resources                               VI. Other EU-programmes of action (ex: LIFE programme)

       Objects/targets/directions of the
      agricultural and rural development                                                         The rural microregions
           policy set for 2007-2013
II. Within the frames of the National Development Plan (Europe Plan):
                                 Based on the National Development Conception
Sectoral planning of agricultural and rural development:
     – Expectations of the national economic policy,
     – + the CAP (Common Agricultural Programme) reform of the EU
CAP reform: a new, universal European Fund for Agriculture and Rural
  Development (EMVA)

Priorities of agricultural and rural development for the period of 2007-2013:
• Improve the competitiveness of agricultural and forestry sectors,
• Protection of environment, preservation of the productivity of agricultural
• Economical environment management,
• Diversification of rural economy,
• Improve the quality of living in the rural areas,
• Encouragement, promotion of the local communal programmess (LEADER

    Rural society and economy of Baranya, Somogy and                                   Rural society and economy of Baranya, Somogy and
     Zala counties – the South-Western borderland /1                                     Zala counties – the South-Western borderland/2

Somogy county:                                                                     Baranya county:
                                                                                   •  Its settlement structure is characterized by several very small villages,
•   The fifth biggest county in Hungary                                            •  In two-third of its settlemnts the number of inhabitants is less than 500 persons,
•   Only 49,1% of the whole population lives in the towns,                         •  Accessibility is difficult, a lot of cul-de-sac settlements,
•   The towns are small except Kaposvár,                                           •  Falling behind the central areas of the country,
•   Structure of settlements: small villages are typical, 45% of the               •  Almost 5 % of the enterprises operate in the agriculture and forestry sector,
    settlements has less than 1000 inhabitants,                                         – 22% of them in the industry,
                                                                                        – 73% of them in the tertiary sector.
•   Natural decrease of population,                                                • The development of the county depends on the future of Pécs.
•   Ratio of older inhabitants is increasing,                                      Outstanding natural endowments:
•   The county is weaker in human resources than the national average,             • The climate, the relief, features of the ground, the good quality of soils make good
•   The county has a strong agricultural character – its agricultural                 opportunities for agriculture,
    output is 2/3 of that was before 1990!                                         • The average yields of the wheat, corn, sunflower and sugar-beet are in the front-rank
                                                                                      of the whole country,
•   The production of stock-breeding fell to its half (in spite of the natural     • The viticulture and wine-production have remarkable traditions in the county.
    endowments, possibilities),
•   The artio of forests is greater than the national average by 22 % (it is
    32,9% of all the agricultural lands).

                                                                                                                                In Zala there are a lot of succesful applications, although their
                                                                                    Participation in                             volume is rather small,
                                                                                                                                In Somogy the number of applications are less,
    Rural society and economy of Baranya, Somogy and
      Zala counties – the South-Western borderland/3
                                                                                        AVOP                                    In Baranya: the number of applications is average, while their
                                                                                                                                 volume is medium-size or large.

                                                                                                County:    number of pieces:   percentage:    weighted percentage (with
                                                                                                                                                the supported amount)
Zala county:                                                                                Bács-Kiskun                 278            8,9               9,5
•   Network of settlements: dwarf-size and very small villages                                  Baranya                 159            5,1              5,8
                                                                                                  Békés                 179            5,7               5,4
•   In 80 % of the settlements number of population is less than 1000 persons,    Borsod-Abaúj-Zemplén                  262            8,4               7,8
•   Shortage of towns,                                                                         Budapest                  28             ,9               1,7
•   It is running out of oil springs,                                                          Csongrád                 174            5,6               5,6
                                                                                                   Fejér                146            4,7               4,5
•   The establishment of the international companies in the county has only a        Gyır-Moson-Sopron                  151            4,8               4,9
    scattered, dispersed impact on the employment,                                          Hajdú-Bihar                 271            8,7               8,4
                                                                                                  Heves                 120            3,9               3,8
•   Its main natural wealth is the stock of thermal and mineral waters,           Jász-Nagykun-Szolnok                  175            5,6               5,5
•   Tourism is significant,                                                         Komárom-Esztergom                    42            1,3               1,5
•   The number of employees in agriculture has decreased for the past 11                         Nógrád                  37            1,2               1,0
                                                                                                    Pest                131            4,2               5,2
    years by 70 %!                                                                              Somogy                  136            4,4              4,0
•   Cultivation of plants on plough-lands: cereals: wheat, corn and barley.      Szabolcs-Szatmár-Bereg                 303            9,7              10,0
•   Turfing and fruit-growing,                                                                    Tolna                 149            4,8               4,9
                                                                                                     Vas                128            4,1               3,8
•   We can find here the biggest contiguous fruit-garden of pears in Hungary,                 Veszprém                   67            2,2               2,1
•   Apple-bearing gardens are more and more in growing lands,                                       Zala                178            5,7              4,6
                                                                                                  Total:               3114          100,0             100,0
•   The environs of Lake Balaton are famous for its viticulture and wine

         Barcs, Siklós, Keszthely-Hévíz                                                                                    Results of rural development
                                                                                                                           in three border microregions
                                                                                                          Microregion of Barcs:
                                                                                                          •   It is in the immediate vicinity of the Croatian border counties involved in the project,
                                                                                                          •   It is a backward, underdeveloped area compared to either the whole country or the Southern-
                                                                                                              Transdanubian Region,
                                                                                                          •   Its applying activity is low.
                                                                                                          •   It hardly deals with rural development activities (ex: arrangement of LEADER projects, etc.)
                                                                                                          •   Owing to its closeness to the Croatian border counties, social and economic similarities are
                                                                                                              characteristic, and experiences can be used mutually.
                                                                                                           Microregion of Siklós:
                                                                                                          •   It is situated close to the border,
                                                                                                          •   This microregion is exemplary, successful and well-known all over the country.
                                                                                                          •   Its applying activity is very high,
                                                                                                          •   Owing to its advantageous natural endowments and the collaboration of rural participants,
                                                                                                          •   It has exemplary economic development activities and rural development projects.
                                                                                                          •   Its income-earning capacity, profitability, and the living standards of local inhabitants have improved
                                                                                                          Keszthely-Hévíz Microregion:
                                                                                                          •   Average situation, its applying and rural development activity is also average,
                                                                                                          •   Unique touristic facilities (tourism around the Balaton, thermal-tourism)
                                                                                                          •   It can be a beraking-out point for the Croatian border regions as well,
                                                                                                          •   Valuable lessons could be drawn from the relationship of the small settlements lying along the banks
                                                                                                              and living of tourism, and of the background settlements lying behind.

   Introducing the rural development programmes                                                                     Introduction of the rural development programmes
       implemented in the Microregion of Barcs                                                                           implemented in the Microregion of Siklós
Analysis of the VFC applications in the Microregion of Barcs:                                                The VFC supportation system:
For 4 years only 2 applications have won a supportation in the Microregion.                                  •  At the beginning (in 2000) rather the entrepreneurs, and later, in 2002 the municipalities and
                                                                                                                the civil organizations were involved as well.
(however, for example in the Microregion of Siklós 38 of them have won)
                                                                                                             • In the period 2000-2001: enterprises: the village tourism exclusively, and only from the
Ok-applications received 170 M HUF supportation altogether!                                                     central settlements of the Villány-Siklós wine-way,
There were no application-writer firms, offices available,                                                   • In 2002: agricultural investments, infrastructure for production,
Organizations entitled for applying were uninformed.                                                         • Outstanding applying activity of the microregion.
The winner SAPARD applications in the Microregion of Barcs:                                                  • Its reason: significant activity and cooperation of the public, civilian organizations,
                                                                                                             • The extremely high level and efficiency of their cooperation appears in the great number of
Only a few and very badly prepared applications were submitted, therefore only 7 from the                       applications accomplished by cooperating partners.
submitted 22 applications had won (31,8%), and only 5 were accomplished finally (22,7 %).                    Activity of applying for SAPARD supportations in the Microregion of Siklós:
The DRÁVA-COOP Rt. won 3 of them for: machinery investments, construction of a hay-                          • From the 85 submitted applications only 19 became winner, the allocated sum for them was
storer, construction of social premises.                                                                        totally 620 M HUF.
                                                                                                             • 11 of the winners was allotted for purchasing general machinery, the further 4 of them for
The Tele-house program of the municipality of Babócsa is the only initiation that is significant                the development of agricultural road network, significant part of the applicants for the
for rural development.                                                                                          viticultural, wine-growing sector.
                                                                                                             Evaluation of the AVOP applications:
Success of the AVOP applications in the microregion:
                                                                                                             Further resources – in smaller proportion:
22 AVOP applications were submitted, however only 11 of them (50%) won the support.                          -  Committment to Territorial Development, Committment for Closing Up Settlements and
Various developments with the total amount of 400 M HUF were completed in the territory.                        Regions – to stimulate investments preserving and creating jobs.
The micro-enterprises won 6 applications (from the above mentioned 11),                                      -  Microregional Supportation Funds – to support the developments of disadvantageous
the medium-size enterprises won 4 of them, and                                                               -  Applying possibilities offered by the Ministry of Economy and Transport,
a natural person won one of them.                                                                            -  „Green Funds” supportations for the environment-protecting objectives of small settlements,
From all the settlements of the microregion only 7 settlements have received                                 -  Regional Tourism Funds
supportation altogether, and only 3 of them have been allocated to the central town,                         -  Ministry of Informatics and Telecommunication: the „tele-house”, applications of e-Hungary,
Barcs.                                                                                                       -  ISM – GYISM - Mobilitas
                                                                                                             -  ESZA – information-technology in the primary schools,
                                                                                                             -  PEA, FMM – programmes of communal works.

    Introducing the rural development programmes
   implemented in the Keszthely-Hévíz Microregion
       The effect of the VFC supportation system in the Microregion:                                                  DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS
• 8 applications during 4 years
• Reason: the rural development managerial network has been formed very slowly.                                                         A training course
• Altogether less than 74 M HUF supportation resources, allotted tor the following objectives:                                 supported by the INTERREG project
• Renovation of the Hertelendy and the Petı Mansions,
• Applications connected with viticulture and wine-selling.
                                                                                                                            (project number: 4012-106/2004/01/HU-74)
Activity of applying for SAPARD supportations in the Keszthely-Hévíz Microregion:
• The SAPARD programme is exceptionally successful:
• 21 projects have won, total sum allocated for investments: 1,164 M HUF,
• Objectives: improvement of rural infrastructure, purchase of agricultural machinery, development of
  agricultural premises, processing and finishing production, and marketing.
• Improvement of the agricultural road system, modernization of technology for renovation of buildings.
• Utilization of solar energy as an alternative source of energy.
Evaluation of the AVOP applications:
• The Microregion has won 16 AVOP applications altogether, the total sum received: 317 M HUF.
• Objectives of winner applications: formation of agricultural road system, renovation of buildings and
  purchase of machinery.
Other kinds of support:
• The supportation system of the Balaton Development Council, as part of the Balaton Region,
                                                                                                               Lecture 11:Introduction of the Hungarian–
• 33 applications won the support, the supportation sum was altogether: 114,2 M HUF,
• GVOP: 25 applicants received 259 M HUF altogether,                                                               Croatian border area - the Croatian
• HEFOP: 2 applications won 11,8 M HUF support,
• IHM ITPV application: only one project was successful, and received 30 M HUF,
• KIOP : Hévíz received 130,4 M HUF support.
                                                                                                                              border counties
• PHARE programme: 2 applications won 59,5 M HUF support; 1 INTERREG application,
• ROP: 3 applications won 835,8 M HUF support altogether, (for the HELIKON Castle Museum,
  „developing the Festetics-heritages….”)

       Natural endowments, rural and territorial development
        experiences of the Croatian border counties, lying                                                                  Features of the three counties:
                   along the Hungarian border
                                                                             Public administration of the                       County:             Number of        Number of        Centre of county
                                                                                Croatian Republic:                                                    towns           districts
                                                                             • local (town and district-size)
                                                                                                                       Koprivničko-križevačka              3              22          Koprivnica
                                                                             • regional (county-size)
                                                                             • 20 counties                             Meñimurska                          3              22          Čakovec
                                                                             • 123 towns and
                                                                             • 426 districts.                          Virovitičko-podravska               3              13          Virovitica
                                                                             Examined area:
                                                                                                                                                 Koprivničko-        Meñimurska            Virovitičko-
                                                                           Three border counties:                                                 križevačka                               podravska
                                                                           • Koprivničko-križevačka – its
                                                                                                                                                 ðurñevac           Čakovec           Orahovica
                                                                             centre: Koprivnica;
                                                                                                                                                 Koprivnica         Mursko Središće   Slatina
                                                                           • Meñimurska – its centre:                  Towns                     Križevci           Prelog            Virovitica
                                                                           • Virovitičko-podravska – its
                                                                             centre: Virovitica                        Population number            124.427            126.500               93.389

                                                                                                                       Population density
                                                                                                                                                          71             164                    45

          History of the border region
  •   Formation of the present Croatian-Hungarian borderline: after the First World War,
      along the river Drava.                                                                                           Demography and population dynamics
  •   Neighbouring mutually national minorities in each other’s territories, most of them are
      bilingual and well entrenched in local society.
                                                                                                                COUNTY              POPULATION       POPULATION        BIRTHS         DEATHS          NET
  •   Relations between the two countries are exemplary.                                                                            (Census 1991)    (Census 2001)                                    BIRTHS
  •   After the Second World War: the border served as a strong line of separation between
      the two counties (political tensions),                                                                    Somogy                 344 708             331802          3038           4778            -1740
  •   The border strip: remained a no man’s land, train and road connections were severed,                      Baranya                417 400             400313          3579           5083            -1504
      and neighbouring settlements were cut off from one another.                                               Zala                   306 398             295197          2309           3987            -1678
  •   After 1990: new border crossings were established, transit was eased up.                                  Koprivnicko-            129397             124467          1104           1708            -604
  •   During the Yugoslav wars: Croatian side was affected by armed conflicts.                                  krizevacka
  •   On the Hungarian side: market economy, impoverishment of microregions,                                    Viroviticko-            104625             93389            843           1273            -430
  •   Considerable shopping tourism from Croatia to Hungary in other areas.                                     podravska
  •   Hungarian and Slovak mass tourism towards the Adriatic Sea –                                              Medijimurska            119886             118426          1249           1272             -23
       – Construction of Budapest-Zagreb-Rijeka/Split highway system (for 2007)
       – Completion of a new and modern crossing point on the river Drava (used only as a
           thorougfare, not for stopping and visiting the vicinity of it).                                      •    Slow net natural population decrease on both sides
  •   The EU-accession of Hungary (2004): its effect is not significant on border,                              •    Migration from the region
  •   Hungary is set to accede to the Schengen area in October 2007: Croatian-Hungarian                         •    Age structure: similar to the national average, problem of ageing…
      border will be an external Schengen borderline (?)
  •   Croatia enters the EU at about 2009: by the end of 2007-2013 there will be a completely                   •    However: on the Croatian side the proportion of young people is
      border-free transitory region along the Drava.                                                                 higher than the national average.
                                                                                                                •    The demographic difference of certain rural microregions is markedly
                                                                                                                     different from the entire region.

   County:                                Zala             Somogy          Baranya          Hungary (total):
   GDP/capita 2001 (€)                             4929            3984             4196               5717          Main thoroughways passing through the region
   GDP/capita 2003 (€)                             6568            4850             5309               7125
                                                                                                                    • Budapest-Zagreb-Rijeka/Split
   GDP Index 2003/2001                             133,2           121,7        126,5                 124,6
                                                                                                                      highway system (for 2007)
   Number of sole proprietors                      15651         16763          18307                 49721                 •    new crossing point on
   Number of partnerships, companies               13695         13072          20753                 47520                      the Drava
                                                                                                                            •    Zagreb-Maribor, and
   Unemployment rate in the county (%)                8              4,7             6,1                 7,3                •    Nagykanizsa-Maribor
                                                                                                                                 highway sections are
                                                                                                                                 also crucially needed
      Economy:                                                                                                      • Zagreb-Belgrade highway runs
                                                                                                                      south of the eligible border area
                                                                                                                    • Budapest-Osijek-Sarajevo
                                                                                                                      Trans-European ”corridor”.
                                                                                                                            •    Highway Budapest-
County:                                Viroviticko- Medimurska       Koprivnicko-     Croatia                                    Dunaújváros is ready.
                                       podravska                     krizevacka       (total):                              •    Dunaújváros - Pécs
GDP/capita 2001 (€)                         6875           7146             8893           8597                                  express road is planned
GDP/capita 2003 (€)                         7356           7699             9595           9684
                                                                                                                    Intraregional thoroughways:
GDP Index 2003/2001                          107           107,7           107,9           112,6                    • Depreciated quality of the system
Number of crafts                            4840           4047             6020           91781                    • In Baranya 96 , in Somogy 74
                                                                                                                      settlements are cul-de-sac ones.
Number of partnerships, companies            581           1787             1080           16821
                                                                                                                    • Scarcity of international border
Unemployment rate in the county %           29,6            15,5            16,8            17,1                      crossings.

                                                                                                     N a t u r e c o n s e r v a t io n a r e a s w i t h n a ti o n a l im p o r t a n c e , N a t u r a 2 0 0 0 s i t e s a n d R a m s a r a re a s

                  Railways, airports, river traffic                                                                                          İ rs ég i
                                                                                                                                                         B a la t o n - f e lv i d é k i
                                                                                                                                                                                                               B a la t o n

                                                                                                                                                                         K i s - B a la t o n
                                                                                                                                                                                                      B o ro n k a -m e ll é k i

Main railways passing through the region:
                                                                                                                                                                                                             Z s e lic s é g

Main international railway lines converge on the northern                                                                                                                               D u n a - D r á va
                                                                                                                                                                                                                                    K e le t- M e c s e k

   part of the border region.                                                                                                                                                                                                      D u n a -D r á v a

• Nagykanizsa-Murakeresztúr/Kotoriba-Cakovec
• Kaposvár-Gyékényes /Gotalovo-Koprivnica lines.                                                                                                                                                                                                                               L egen d
                                                                                                                                                                                                                                                               S p e c i a l a r e a f o r c o n s e r v a t io n
• The major metropolitan centre, Pécs is connected                                                                                                                                                                                                             S p e c i a l ( b i r d ) p r o t e c t io n a r e a
                                                                                                                                                                                                                                                               R a m s a r a re a
   towards the South on non-electrified lines only.                                                                                                                                                                                                            N a t io n a l p a r k
                                                                                                                                                                                                                                                               L a n d s c a p e p r o te c ti o n d is t r ic t
                                                                                                                                                                                                                                                               N a t u r e p ro t e c ti o n a r e a

Airports:                                                                                                                                                                                                                                                      D r á v a r iv e r
                                                                                                                                                                                                                                                               B o rd e r
                                                                                                                                                                                                                                                               E li g i b le a r e a
Airport in Sármellék serves international destinations.
• An airport at Pécs-Pogány opened up in March of 2006,
    serving the Pécs-Vienna route.                                                                      •         Natural reserve areas and areas with lower protection status:
• Regional airport in Osijek.                                                                           •         Danube-Drava National Park is protected,
• Former American military base in Taszár might also be                                                 •         Ecosystem of river Mura,
    used, but it is currently out of function.                                                          •         There are a number of protected areas on the Croatian side of the region,
River traffic:                                                                                                    for example:
•   River ports exist on the river Drava, but the amount of                                                           –       Nature Park Medvednica,
    river transport traffic is insignificant on it.                                                                   –       Nature Park Papuk,
•   Reason of it: the lack of demand and efforts to                                                                   –       Nature Park Kopački Rit,
    preserve the natural heritage of the area.                                                                        –       Special botanic reserve of ðurñevači pijesci,
•   The river Danube has international significance, but                                                              –       Ornithology reserves Kopački rit and Podpanj,
    underutilized due to problems of its transfer capacity.
                                                                                                                      –       Water landscapes along river Mura.
                                                                                                                      –       Establishment of the regional park along rivers Mura and Drava is under way.

          Possibilities of development, cross-border                                                                Rural development in Croatia
                                                                                                     On the rural areas:
                           cooperation                                                               • OECD: density of population is below 150
                                                                             Cultural cooperation:      persons /km2
     Touristical endowments:
                                                                                                     • EU: density of population is below 100
                                                                                                                                                                                                                                                            Population                                     OECD- EU - %
     • Natural environment,                                      • Theatres                             persons/km2                                                                                                                                                                                          %
     • Architectural and cultural,
                                                                 • Archives                          • Practically, in fact: on rural areas:
     • Thermal tourism                                                                                                                                                                                                                                      Rural                                            47,6   36,3
                                                                                                                 – Density of population is low, small
     • Wine district
                                                                 • Museums                                         settlements, decrease of population, ageing
     Thermal tourism is strongly present on both sides of the border
                                                                                                                 – Use of lands – agriculture + forestry                                                                                                    Urban                                            52,4   63,7
     •   They are competitors of each other.
                                                                             • Universities                      – Identity of the communities
     •   Possibility for joint marketing.                                                                                                                                                                                                                   Total                                           100,0 100,0
     Main tourist attractions:                                               • Publishing            Rural areas in Croatia:
     •   The Drava area is characterized by water and environmentally oriented tourísm,
     •   Architectural heritage of Pécs,                                                                                                                    OECD criterion                                                                                  EU criterion
     •   The Harkány-Siklós-Villány area is the centre of wine and thermal-tourism.
     •   Also in Kaposvár d Szekszárd.
     •   In Zala county: Hévíz and Zalakaros are also important destinations.
     •   In county Medimurska the Saint Martin Spa is also an important destination.                  Number of                                                                       Km2                                                             %        Km2                                                     %
     •   In county Osjecko-baranjska : the Bizovacke Spa,                                             settlements:
     •   In county Varazdinska the Varazdinske Spa,                                                   Rural area:                                                               51872                                                           91,6          47895                                                   84,6
     •   The town of Osijek has significant built heritage,
     •   In county Varazdinska: Castle of Trakoscan, town of Varazdin.                                Urban area:                                                                  4731                                                            8,4         8708                                                   15,4
                                                                                                      Total:                                                                    56603                                                        100,0            56603                                                   100,0

       Income sources of the rural population                                                                                                                    Regional disparities
     At the most backward rural areas:                                                                      •         In Zagreb : 27.5%,
     • 37% of the population earns no income at                                                                           –
                                                                                                                                  It is three times larger than the national average of Croatia,
                                                                                                                                  Six times larger than all the other parts of the country,
        all                                                                                                               –       14 times larger than that of the poorest county (Lika),
                                                                                                                          –       EU-level.
     Rural areas (on the average):                                                                          •         In Zagreb: GDP per capita = 19,125 USD
                                                                                                            •         Croatian average = 6,484 USD.
     • People earning wages or salaries: 29 %                                                               •         Croatian average without Zagreb = 3,345 USD
     • Dependents: 31-36%                                                                                   Unemployment rate:
                                                                                                            •         13% in Krapina-Zagorje county, 31% Šibenik-Knin county.
     Urban population, urban area:                                                                          •         25% or higher: in Vukovar-Srijem, Zadar, Brod-Posavina, Split-
                                                                                                                      Dalmatia and Sisak-Moslavina counties,
     • Group of people earning wages or                                                                     •         Particularly high relative increase: in Virovitica-Podravina (27.3%)
                                                                                                                      and Sisak-Moslavina (29.1%) counties (1999-2002)
        salaries: 38 %                                                                                      •         For three years (1999-2002) it has decreased by 10 % in Istria and
                                                                                                                      Primorje-Gorski Kotar counties.
     • Dependents: 27-32 %                                                                                  Education rate:
                                                                                                            •         In Zagreb the rate of highly educated persons is 16.6 %,
                                                                                                            •         It is the lowest in Krapina-Zagorje county: 3.2%.

         Rural-urban disparities in the economy                                                                   Structure of education
Contribution of the branches of economy to the GDP:
In each region:
    Great importance of non-agricultural sectors,                                                            • In the rural areas: the percentage of those who
    Rather low significance of agricultural sector (only 2-7 % of GDB)
    The manufacturing sector, with the wholesale, retail trade and repair sectors
                                                                                                               have finished basic school only varies as follows:
    contribute to 63-70% of total regional revenues.                                                              – It is almost twice of that in the urban areas,
    Significance of manufacturing sector was much greater for extreme rural
    areas (47%) than in urban areas (31%).                                                                        - In Meñimurje county: it is 1/3 of the adult population living
In terms of employment:                                                                                              in rural areas.
•   Agriculture:contributed on average 10,76% of total employment in all regions,
•   Manufacturing sector:                                                                                    • Rate of population without any education in rural
         In the extreme rural areas contributed to 34% of total employment,
         In urban regions its contribution: only 27%.
                                                                                                               areas is 3-4 times higher that the same ratio in
•   The contribution of the health and social sectors, education and other public                              urban areas of the same county.
    administration is much higher in extreme rural areas than in urban regions.
•   Investments:                                                                                             • Share of persons with medium or higher education
     –   In rural regions a much lower proportion of investments was directed to service providers,
         service sectors,
                                                                                                               (secondary level of vocational education, high
     –   Much more proportion of investments was directed to infrastructure development (electricity,
         gas and water supply), construction sector, education and agriculture than the urban regions.
                                                                                                               school or university degree):
                                                                                                                  – Coefficients showing the proportion of population of rural
                                                                                                                    areas with a higher level of education is only one quarter
                                                                                                                    of those living in urban areas.

                                                                                                                      Neighbourhood Programme
                           A training course                                                             Within the frames of INTERREG III - in Hungary, Slovenia and Croatia.
                  supported by the INTERREG project                                                      Two priorities:
               (project number: 4012-106/2004/01/HU-74)                                                  Formation /creation of the required economic nad social
                                                                                                           conditions to establish an integrated regional area:
                                                                                                                         • Developing economic structure, technology and innovation,
                                                                                                                         • Creating the basic delivery, technical and other infrastructure,
                                                                                                                         • Sustainable regional development, put a stop to causing
                                                                                                                           environmental damages,
                                                                                                                         • Education, employment, improvement of human resources.
                                                                                                         Strengthening cross-border connections of inhabitants,
                                                                                                           organizations and institutions
          Lecture 12: The Hungarian-Croatian                                                                      • Improvement of cross-border economic cooperation,
                                                                                                                  • Decrease barriers during border-crossing and in transport,
            border area – actual state of rural                                                                   • Cross-border coordination of the exploitation of resources and the
                                                                                                                    protection of environment,
                  development in Croatia                                                                          • Change of social and cultural values - extending over the borders.
                                                                                                                  • Communical networks, deepening identity of the cross-border region.
                                                                                                         Determine the priorities jointly:
                                                                                                         Concerning: Economic development, improvement of infrastructure, development of
                                                                                                            tourism, participation of inhabitants, human resources and education, etc.
                                                                                                               First step: inform each other, giving the necessary information mutually,
                                                                                                           Second step: determine common interests versus conflicting, opposite interests.
                                                                                                                    Third step: common strategy, objectives, targets, programmes.

                                                                                                         General objectives of the SAPARD Programme
     Preparing for the EU-accession                                                                      SAPARD Programme : Basic principles of advance-/pre-accession to the EU
                                                                                                         •   Priority: effectiveness of the market, improvement of the quality and the level of public health care,
Lessons to be drawn so far:                                                                                  creation of new job possibilities, workplaces in the rural areas,
Preparation and appropriation of the supportation funds of EU and other organizations:                   •   Taking over the legal rules, codification of the EU (Acquis Communautaire), the coomon
   new challenges                                                                                            agricultural policy and other policies in connection with it,
                                                                                                         •   Sustainable solutions for the adaptation problems of the agricultural sector and the rural areas.
Specific limits:
                                                                                                         Priorities of the SAPARD Programme:
•   Low competitiveness of the main rural branches of economy (agriculture, food                                 - 1st priority: Development of the rural economy,
    processing, forestry),                                                                                       - 2nd priority: Promotion of coming into market, entering the markets,
•   Under-developed state of rural infrastructure,                                                               - 3rd priority: Improvement of the rural infrastructure.
•   Access to the public benefits, common goods is insufficient for the rural inhabitants.               For each priority you can find below a specific objective and the measurement
•   Damages caused by the war, stagnant and backward rural areas.                                           attached and adjusted to it:
•   Low educational level of the rural population,
•   Problems of the rural environment and natural resources,                                                 Priority:                    Specific objective:                             Attached measurement:
•   Vertical connections between ministries and institutions of local municipality of the                    1. Development of the        To develop and strengthen the                   Investments in the agricultural
    county/settlement are weak.
                                                                                                             rural economy                productive capacity of agriculture.             properties, lands
•   Horizontal institutional connections between ministries and other state-organizations.
•   Lack of coordination among the authorities responsible for agricultural and rural                        2. Promotion of              To improve and strengthen the                   Improving the processing and
    policies, sectors.                                                                                       entering the markets         processing and marketing capacities             marketing activities of agricultural
                                                                                                                                          of agricultural and fishery products.           and fishery products.
•   Lack of professionalism in the work of specialized agencies.
•   Supportation is highly required for improving the level of activity of rural development
    institutions, for adopting, taking over the EU-legislation.                                              3. Improvement of            To create better living conditions in           Developing the infrasructure of
                                                                                                             rural infrastructure         the rural areas with the help of                rural areas striving with special
                                                                                                                                          improving the rural infrasturcture.             backwards, disadvantages.

                                                                                                             Supplementary promoting measurement: Technical help, informational and publicity campaigns.

       Analysing the situation – SWOT
                                                                                                                   SWOT /2 Hungarian-Croatian border area
       South-Transdanubia analysis
                               Hongarian-Croatian border area                                South-Transdanubia

                               Erısségek                                                                              Weaknesses
 The existence of geographically       TOURISM                                          Only casual links and                     TRANSPORT
                                                                                        communication between the actors            Non-electrified international railways,
 broad international relations           Siklós-Harkány-Villány wine and
                                                                                                                                    Bad state of internal road network,
 The key actors of the region are        thermal tourism,                               active in the international relations.
                                                                                                                                    Scarcity of international border crossings
 committed and active in                 Pécs, Osijek,Varazdin urban tourism,           Lack of financing for the development       (their average distance: 62km)
 international relations                 Ethno-tourism of Mohács,                       of international relations.               DEMOGRAPHY
 Tourism has great significance          Thermal-tourism on both sides of the           Too many actors in the regional             Rural populations and border microregions
 Many tourism attractions (ex:           border (Hévíz, Zalakaros, St.Martin,           marketing. Moreover, therir work is         with dramatically different age structures.
 Lake Balaton) well-known abroad.        Bizovacke, Varazdinske)                        not coordinated and not partnership-      EDUCATION
                                                                                        based.                                      Low ratio of higher education qualifications
 The South-Transdanubian Region        EDUCATION
                                                                                                                                    ( nation. average)
 has a river (Danube) qualified as       Major university in Pécs and in                Outdated transportation network as
                                                                                                                                    Low level and efficiency of using mutual
 an internatiuonal waterway.             Osijek,                                        a whole, inadequate international           language skills
 Ethnic diversity, living links with     Developing university institutions in          accessibility.                              Inflexible labour market
 the mother countries,                   Varazdin,Krizevci,Keszthely,Kaposvár           Not enough foreign capital                LABOUR MARKET
 High proportion of the                ENVIRONMENT                                      investments.                                Critically high unemployment rate on both
 inhabitants speaks foreign              Existence of an extensive cross-border         Weak industrial export capacity.            sides of the border, especially on Croatian
                                                                                        The region is a relatively closed           side,
 languages,                              natural preservation area (Danube-
                                                                                                                                    Mismatch between supply and demand.
 Ewll developed institutional            Drava National Park), together with            social-economic unit.
                                                                                                                                  NATURE AND ENVIRONMENT
 structure of higher education.          the river Mura.                                                                            Insufficient flood system, waste water and
 A rich intercultural and                Rich water resources(surface,thermal)                                                      solid    waste    management,      undetonated
 historical heritage,                  CULTURE                                                                                      landmines.
 Rich wine regions.                      Several multiethnic communities.

                              SWOT/3                                                                                 SWOT/4
     South Transdanubia          Hungarian-Croatian border area                             South Transdanubia                     Hungarian-Croatian border area
 Active and successful participation   TOURISM
 in the EU’s international              The Danube –Drava natural reserve area          Deteriorating cooperation between the     DEMOGRAPHY
 cooperation programmes.                is a new potential target for tourism.          actors of the region involved in the         high    degree    of     mobility and
 Extra EU support for the              ENVIRONMENT                                      development of international                 emigration away from region,
 development of transport routes in     Reforestation of areas unsuitable for high      relations.                                   continued depopulation in rural
 the region to eliminate its            value added agricultural production.            Maintaining the lack of financing            pockets.
 geographical/transport isolation,     BORDER CONTROL                                   needed for the cultivation of             NATURE AND ENVIRONMENT
 Enhanced cross-border (Croatian(       Gradual elimination of internal border          international relations.                     Possible continued deterioration of
 and international (North-Italian,      after Croatia’s EU-entry in the Schengen        Due to the poor economic activity of         Drava ecosystem by insufficient waste
 South-German) links.                   framework,                                      the region, the own resources of             management.,
 Stronger economic links with the      CULTURE                                          regional institutions remain              GOVERNANCE AND PLANNING
 stabilizing Balkan area.               Increasing depth, value added and               inadequate even on the long run.             Weakness of common planning,
 Growing importance of the              duration of cultural cooperation,               Constant isolation of the region in the      Lack of detailed plans in certain
 southern border of the region as a     Cooperation and networking in the field of      international relations.                     sectors (education, thermal tourism
 Schengen-frontier.                     joint built and other heritage management       Qualified workforce needed for the           development),
 After a successful accession, EU-     ECONOMY                                          development of international relations       Small size of local governments
 related knowledge transfer for the     Potential for vertical integration in sectors   may leave the region (brain drain).          prevents efficient local development
 Balkan regions that wish to accede     of processed agriculture.                                                                    policy
 as well.                               Potential to export agroforestry.                                                         CULTURE
 Opportunities in wine tourism.                                                                                                   Inadequate financing leads to
                                                                                                                                     deterioration of built cultural

          The priorities of development in the region
Priority 1.: River Drava Ecotourism Border Project
                                                                                                                    Group work
Common central project to utilise the Drava-Danube nature protected region for
  ecotourism based job creating development
Priority 2.: Common Economic, Educational and Linguistic Space
                                                                                             Suggest project proposals for the
                                                                                                       priority areas
2.1. Common Economic Space

Support for common economic development         Labour     market        cooperation
   (partner finding sites, fairs, etc.)            (information)

2.2. Common Educational and Cultural Space

Cross-border higher     Cross-border intermediary level Cross-border lower level
   education projects      education projects (common      education    projects
   (training, R&D)         training, exchange, etc.)       (Common training,
                                                           exchange, etc.)

2.3. Bilingualism in the border region

Mutual language training                     Bilingual signs

Priority 3. Technical Assistance

                                                                                                                       Analysis of questionnaires and interviews prepared in
     DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS                                                                               the Croatian-Hungarian border area
                       A training course                                                                             INTERREG research: asking questionnaires in the border counties of Croatia
              supported by the INTERREG project                                                                          and Hungary.
           (project number: 4012-106/2004/01/HU-74)                                                                   In Hungary:
                                                                                                                     • 50 enterprises (including 44 agricultural ones), and
                                                                                                                     • 50 municipalities,
                                                                                                                     • from the counties: Baranya, Zala and Somogy.
                                                                                                                      In Croatia:
                                                                                                                     • The range of the inquired ones were wider: agricultural entrepreneurs: 48
                                                                                                                     • Alliances of agricultural entrepreneurs, settlement functionaries
                                                                                                                         responsible for tourism, leaders of departments responsible for rural
                                                                                                                         development: 52
            Lecture 13: Conditions of successful                                                                     • three      border   counties:    Koprivničko-križevačka
                                                                                                                         Meñimurska (Muraköz); Virovitičko-podravska (Verıce)

          development cooperation in the Hungarian-
                    Croatian border region -
                         case study

                                                                                                                     Greatest problems in Croatia (relying on the survey):
                                                                                                                                                                            Main problems:
                    Object of the Survey                                                                             • Being over-regulated by the state (23%)
                                                                                                                     • Lack of investments (17%)
                                                                                                                     • Complicated administrative duties, obligations (14%)
                                                                                                                     • Strong market competition (13%)
 to assess and compare the actual state and conditions of the                                                         The development of their organizations and enterprises could be promoted/facilitated by
                                                                                                                        the following measurements:
• organizations and enterprises, which                                                                               • Protection of the domestic market (18%)
• work or operate in the border counties, and                                                                        • State should play greater role in the development supportations/promotions (18%)
• participate in rural development.                                                                                  • Reduce tax levels (15%)
                                                                                                                     • Administration should be simplified (15%)
                                                                                                                     • Determination of the priorities of development policy in accordance with the domestic
100-100 questionnaires and 15-15 interviews have been prepared in                                                       and foreign (EU) requirements (10%)
  both sides of the border.                                                                                          • Lack of funds, capital and knowledge.
The focus of the survey in Croatia:                                                                                  Greatest problems of the enterprises in Hungary:
                                                                                                                     • Lack of working capital (56%) and investment capital (funds for investments) (ranked
• Developing a new strategy of rural development in Croatia,                                                            by 22% to the first and by 42 % to the second place!).
• Making preparations for the SAPARD programme to be launched in                                                     • Legal rules and regulations (ranked by 24,4% to the second, and by 21% to the third
  September 2006,                                                                                                       place!)
• Institutions functioning on the county, town and village levels,                                                   • Strong competition (ranked by 15,6% to the second, and by 10,5% to the third place)
                                                                                                                     • High social insurance contributions and charges (34,2%), high taxes (13,2%), EU-
• Considering the participation in rural development until now,                                                         regulations (10,5-10,5%)
  (institutions, enterprises)

         Applications (for supportation)                                                                                       Applications for supportation
             submitted in Hungary                                                                                •
                                                                                                                                         in Croatia
                                                                                                                       In Croatia 28 % of the inquired organizations has written a rural development project,
Between 1990-1999:
•  2 applications were submitted on the average, 1,26 of them has won, 7603 thousand HUF
                                                                                                                 •     And further 5% of them intends to write as well.
   was the average amount of supportation,                                                                       •     The situation is similar to that of Hungary during the period of 1990-1999.
•  78,6 % of the asked organizations have not even applied at all,                                               •     Topics of the applications:
•  7,1 % of the asked organizations submitted only 1 application,                                                • Classical agricultural activities (plant cultivation and stock breeding),
•  1-2 % of them submitted 2 – 50 (!) applications.
     –   Typical feature: the municipalities’ willingness to submit more applications than the average number.
                                                                                                                 • Protection of environment and traditional cultural revitalization of villages,
The received numbers were more balanced for the year 2005                                                        • They wrote them alone, (without help),
•   the rate of those who had not applied has reduced to 24,5 %,                                                 • Number of the winner apllications was 30, average received amount was 500 000
•   The average number of applications at the enterprises: 1-3,                                                    Kuna (approx. 20 million HUF)
•   The same at the municipalities: one of them submitted even 21 applications,                                  Why the most of them have not even applied? Mind that 67 % of them has not
•   On the average 1,97 of the submitted applications had won as well, although the largest                        even applied!
    number of the winner applications from one organization was 17,
                                                                                                                 • Lack of experience, they have never applied earlier (28%)
•   The average sum of the winner applications was 17841 thousand HUF, and the maximal
    amount was: 160000 thousand HUF.                                                                             • Lack of their own financial resources (23%)
•   Difference among the counties: the rate of those who has not even applied was lower in                       • They had insufficient information (21%)
    county Zala (17,6 %,) , while in Somogy it was 26,9%; and in Baranya: 36,8%.                                                                                       Reasons of not applying in Hungary:
     –   It has considerably decreased according to the term of 1990-1999.
•   The winners:
                                                                                                                                                                          1:The call for tender was inadequate
•   Regarding the municipalities: the approximate number of the winner applications: 0-4                                                                                    2: Financing was disadvantageous
                                             •   There were those who won even 5 – 17 applications                                                                             3: Lack of own fundings, capital
•   Regarding the enterprises: 0-3 won.                                                                                                                                         4: It’s too bureaucratical
     –   Rate of not winning ones is approximately 40 % (half of them has not even applied!)                                                                             5: They were not informed sufficiently
                                                                                                                                                             6: Preparation of an application is too expensive
                                                                                                                                                                                            7: For other reasons

                                                                                                                                2: Development of small and medium-size                   Actual tasks of rural
          The greatest problem of the rural areas –
                                                                                                                                3: Development of rural micro-enterprises
                                                                                                                                4: Improvement of local services                       development according to
              according to the inquired people                                                                                  5: Improvement of the rural infrastructure
                                                                                                                                6: Village development
                                                                                                                                                                                       the organizations inquired
                                                                                                                                7: Transportation, rural road network

                                                                                                                                                                                              in Hungary
                                                                                                                                8: Centre of microregion
                                                                                                                                9: Integrating Romanies and other social
     In Hungary the following problems were mentioned:                                                                          strata that fell behind
                                                                                                                                10: Development of working places, job
     • Lack of jobs, possibilities for work,                                                                                    opportunities
                                                                                                                                11: Improvement of the social market
     • Unsatisfactory level of the rural infrastructure,                                                                        ecomony
                                                                                                                                                                             Baranya          Somogy             Zala             Total
     • Inadequate participation of the state, shortage of state promotions,
        supportations,                                                                                                                        Least important        4.                9. Integrating     9Integrating    9. Integrating
                                                                                                                                              (average score)        Improvement       Romanies and       Romanies        Romanies and
     • Ageing of inhabitants, losing population (exodus of rural                                                                                                     of local          other social       and other       other social
        population)                                                                                                                                                  services          strata that fell   social strata   strata that fell
     • Incompetitiveness in the markets                                                                                                                              (2,47)            behind (2,81)      that fell       behind (2,82)
     • Low purchase prices in the buying-up system.
                                                                                                                                              Most important         7. Transport,     6. Village         6.Village de-   5.Improve-
                                                                                                                                              (average score)        network of        development        velopment       ment of rural
     •    Additionally: lack of money, unfavourable quality of life, subdivision of                                                                                  rural roads       (4,15)             (4,11)          infrastructure
                                                                                                                                                                     (3.95)                                               (4,00)
          landed properties, in case of applications the requirement of own
          financial funds, problems concerning education and skills, problems of                                                              Difference:      1,48                    1,34               1,13            1,18
          the institutional structure were mentioned.                                                                                         (most
                                                                                                                                  Scored      minus least        very important, 1: not very important
                                                                                                                                             in a scale from1 to 5, 5:
                                                                                                                                  Those factors were evaluated as most important, which have influence
                                                                                                                                  on the development of enterprises.
                                                                                                                                  Social problems were regarded as of less importance.
                                                                                                                                  Improvement of working places, creating employment possibilities were

               Connection with Croatian partner(s and its importance
                                                                                                                                                   Croatian opinions on Hungarian
•   87% of the inquired has no connections at all with Croatian partners:
•   6 % of them has one Croatian partner,                                                                                                              business connections
•   2 % of them has two or more.
•   Their actual connection was regarded as good or average.                                                                            • These connections are not very intensive in the border
•   Most of those having a Croatian connection are in county Somogy (19,2%),                                                              counties yet,
•   Those having the least of such connections are in county Zala (1,9%).
•   In the opinion of 30 % of them it would not even be important to have a                                                             • only 19 % of the inquired organizations have such kind
    Croatian connection,                                                                                                                  of business connections in various fields.
•   41 % of them considers it as having supplementary importance,                                                                       How many of them intends to establish a Hungarian
•   15 % of them considers the connection very important.                                                                                 connection in the near future:
•   These contacts are regarded as most important in county Somogy (34,6%).
                                                                                                                                        • 16% of them did not regard it important,
                                                                                                                                        • 25% intends only for the common projects,
                                                                                                                                        • 45% of them see good future possibilities in it,
                                                                                                                                        • (15% did not answer this question)
                                                                                                                                        • Summing up: 72 % of them would like to establish a
                                                                                                                                          connection with Hungary in the future.

     Hungarian experiences – summary:                                                                                                                       Croatian experiences
    –    How many Croatian partners have: none: 87 %, it has 1 partner: 6 %, it has 2 or more partners: 2 %.
    –    What makes the work of the enterprises more difficult: lack of working and investment capital, rules and
         regulations of law, strong competition, high social security taxes and costs,high taxes, regulations of the EU.            •    The surveyed Croatian border counties are developed agricultural
    –    Most important factor of rural development: factors influencing the development of enterprises, less important:                 territories of the neighbouring country.
         tasks to solve social problems.
    –    Active participation in preparing applications in order to solve the problems,                                             •    There is a considerable, grave agricultural and – in a wider aspect -
    –    Concerning AVOP tenders: in 2005 - 80 % of the inquired organisations submitted an application, 20 % of them                    rural development potential in the area.
         more than one.
    –    Main reasons of applying: it had no other possibility for gaining financial sources, attractiveness of the financing       •    The establishment and forming of the rural development institution
         construction, it already had a similar project finished.                                                                        system is in the beginning stage yet.
    –    Information sources: advisor, written press and the homepages of Ministries.The least frequently used resource:
         the municipality and the business partner.                                                                                 •    Considerable possibility:
    –    Only 10% of them intend to carry out its plan without the applied resource.                                                      – Cooperation of the development offices, institutions,
    –    Main difficulties: delayed administration, not reasonable requirements for suppletories, ambiguous requirements
         and conditions for preparing applications and fulfilling them.                                                                   – Cooperation of the participants in both the civil and the economic sectors for
    –    Second main hardness: fdifficulties of financing and liquidity: delayed payments, subsequent                                       rural development.
         financing/payments, liquidity problems,
    –    Third main hardness: difficulties in keeping in touch with the partners, inconvenient, unsatisfactory                      Recommendations:
         communication and the complicated method of preparing settlements and settling accounts.
    –    Who prepared the application: most of the inquired organizations (66%) made it prepared by an expert firm, only            •    Exchanging experiences, transferring knowledge, information among
         33% of them alone, unaided.                                                                                                     professional development instritutions,
    –    Among the measurements of AVOP they consider as important: the supportation of agricultural investments, the
         enlargement of the income-earning possibilities in the rural areas, improvement of the rural infrastructure.               •    Institutional network, channels for it can be evolved with the help of the
    –    Less important: supportation of the young farmers, smallholders, and professional training,                                     regional development organizations.
    –    Only a few of them had information on the EADER program.
                                                                                                                                    •    In the long run: joint preparation and fulfilment of common rural
                                                                                                                                         development programmes.
                                                                                                                                    •    Joint utilization of the river Drava for rural development aims,
                                                                                                                                    •    Possibilities for cooperation among rural enterprises.
                                                                                                                                    •    Establish and support the cooperation of Chambers of Economy,
                                                                                                                                         enterprise organizations, settlements and microregions.

                           Problems in Croatia
•   Not enough staff in the offices for preparing the huge number of plans, projects, etc.             DEVELOPMENT FEATURES OF CROSS-BORDER REGIONS
•   In political circles the concept of rural development is not accepted and supported                                  A training course
    sufficiently, it requires specifically skilled, trained experts, separate staff.
•   Croatia did not take seriously enough the tasks of rural development. Several programmes                    supported by the INTERREG project
    exist about it, however their objects, integration and fulfilment is hardly known.                        project number: 4012-106/2004/01/HU-74
•   The integration of these programmes arises difficulties, the rural population wuth lower
    qualification disagree with it, or are against it.
•   There is already an existing recommendation to establish a Bureau for Rural Development,
    although it is only a plan now.
•   The scope of authority of the different bureaus concerning rural development is not clarified,
    these offices usually work and do everything alone, but they cannot be effective separately.
•   The preparation of programmes is too complicated, experts feel themselves underqualified
    for it. Farmers are also reluctant and afraid, for being uninformed and underqualified.
•   Political targets, objectives are not clear, with many silent messages (attitude to the EU.
•   Resistance, because the decision-makers are not experts, only well-known politicians.
    Conflicts about the administrative difficulties, organizations and the distribution of funds.
    Rural development is regarded as being equal to the development of agriculture, which
                                                                                                         Lecture 14: Evaluation of case studies
    hinders the rural development institutions in better organizing also in political viewpoints.
•   Weak, inefficient cooperation of the local and national authorities. Shortage of the Initiations       individually prepared by students
    from the ground up.

         Individual task for students:
(The task will be specified before the first half
 of the semester,approx.on the 7th Lecture)
•   Chose a Hungarian border area (microregion or county-size!),
•   Analyse the Hungarian and foreign part of the border area on the basis of the
    learned aspects,
•   with regard to its territory, number of inhabitants, demography, economy,
    education, insfrastructure, natural endowments,
•   Characterize the position of the Hungarian and the foreign part of the chosen
    border area in comparison with the regional situation of your country.
•   Prepare a SWOT analysis about the sterngths, weaknesses, opportunities and
    threats of the chosen border area.
•   Characterize the borderline location, the possibilities, prospects opened up by
    being peripheric and lying near the border.
•   Calculate a few statistical indicators or index numbers, which reflect the level of
    development level or the backwardness of the border region, and add a short
    explanation to the numbers as well.
•   Outline possible programmes for cooperation. Designate the possible partners
    and other participants to be involved.
•   Prepare a PPT presentation of 10 minutes, and a written material in 4-5 pages
    about the above determined topic.


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