Regional specialisation in a transition country - Hungary



and the sector of the small and midium companies, which mainly appear in the
domestic market and owned by domestic investors. This duality manifests itself in
space too, what’s more the regional inequalities - first and foremost the west-east
disparity - experienced in the country is partly due to this dual structure. Possession,
size and efficiency are interdependent.

- Thirdly, nowadays the model of economic development prevailing in the 1990’s -
relying on the cheap local work force and intensive foreign capital investment -
gives way to the new model of development based on highly qualified creative
labour force, capital investments and innovation. This change is faster at the top
companies because of the wider range of possibilities and the bigger pressure. It also
explains the west-east regional disparity.

- Finally, the spreading of the modern information and communication technologies,
the formation of the so-called New Economy, appears as the new challenge of the
global economy at the end of the millennium. The small ventures realise the
importance of the subcontracting supply chain management only as supplier.

These new challenges fundamentally re-evaluate the regional levels of economic
development. The development of economy in the 1990’s was based on the activity of
more than 3000 local authorities as the major elements of the model of development -
the cheap labour force, foreign capital investments - typical of the decade could be
mostly organised on this level. In contrast with it, the fragmentation of production in the
case of the newly appeared companies can’t be organised on the level of settlements.
This is based on the supplier network. This way, a higher level of regional organisation
-possibly the region- is needed. It is related to the birth of the sector clusters.

An old dilemma of the regional policy is if it should help the winners are more
successful or the losers to catch up this way make the regions get closer to each other.
The regional inequalities slow down the economic closing up. The need for an
economic development with a view to regional inequalities is reasoned - besides the
general upgrading of the role of the regions. By the fact that in the course of the
transformation in the Hungarian economy - similarly to the other Central Eastern
European countries - we could see the rebirth of the traditional, mostly macro-regional
inequalities. All these factors led to an unfavourable trend in the regional development:
- the centre-periphery relation became strong again, which can be best detected in the
prime-city role of the capital city

-  the west-east disparities “ the development slope” reappeared.

C:anyuwork/ace/ersa/paper01.07.2412:14



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