Discussion Papers 2008. 
Socio-Economic Analysis of the Carpathian Area 110-115. p. 
 
12 Industry in the Carpathian area 
12.1 Industrial typology of the Carpathian regions 
Central European space examined in the scope of research demonstrates a high 
degree of heterogeneity in all respects; industry being one factor among several. 
As elsewhere, development gradients apply, showing a shift from more advanced 
activities concentrated in regions closer to the core of Central Europe (the Czech 
Republic, Austria and Southern Germany), and less advanced ones in the eastern 
border areas. The predominant gradient progresses from west to east, going in a 
southwest-northeast direction in Poland, and in a northwest-southeast one from 
Hungary to Romania and Serbia. Added to this is differentiation along the urban 
dimension, with metropolitan (capital) regions benefiting from agglomeration 
economies, as well as a high concentration of know-how, R&D activities and 
advanced financial services. Except for the Katowice conurbation in Upper Silesia 
and Kraków in Lower Poland, all of these double as capital regions. The next 
level of the urban network, the large cities, which are regional centres, they are in 
turn followed by small towns, the most typical non-rural settlement type in under-
urbanised Central Europe. Generally, an industrial typology can be constructed 
along these two axes (Table 23). 
Highly urbanised core regions have undergone significant tertiarisation since 
the transition. While a growing emphasis on the service economy is a global phe-
nomenon, Central European post-socialist states experienced it at an accelerated 
rate during the transition from industry-oriented planned systems to market 
economies. Central regions were at the forefront of the change; while they were 
previously among the most significant industrial regions4, the 1990s brought a 
rapid downsizing and the disappearance of large firms as business (among them 
financial) and consumer services replaced industry as the prime engines of 
growth. The main question regarding industry was the question of its heritage – 
i.e. brownfield redevelopment and combating unemployment. Nevertheless, while 
the concentration of industrial employment has declined or stagnated in metro-
politan areas, they have been successful in keeping some of the most advanced 
sectors, especially in knowledge-intensive fields such as pharmaceuticals, elec-
tronics, optics and certain types of chemistry. The supporting R&D framework is 
another major advantage; public and private research institutions are overwhelm-
                                                           
4 In 1971, the territory of Central Hungary concentrated 40% of national industrial employment and 
32% of investments. By 1991, this had changed to 29% and 30%, and by 2004 to 26% and 25%, 
respectively. In the same interval, Bucharest went from concentrating 18% of employment and 
14% of investments to 13–11% in 1991 and to 13% of employment in 2004 (no data on investment 
concentration was available for that year). 

Industry in the Carpathian Area. 
In: Socio-Economic Analysis of the Carpathian Area. 
Pécs: Centre for Regional Studies, 2008. 110-115. p. Discussion Papers, Special 
INDUSTRY IN THE CARPATHIAN AREA 
111 
ingly established in metropolitan areas, while it is much less common in regional 
centres and almost completely absent below this level. Slovakia and Hungary 
show the highest degree of concentration here, whereas Poland, the Czech Re-
public, Romania and Ukraine have their (relatively speaking) significant lower 
level of regional centres. 
Table 23 
Industrial typology in Central Europe 
Geographic gradient 
 
Core Peripheral 
 
Higher 
Service economy with high value  Heavy industrial centres, old 
 
added industrial branches 
industrial regions 
Urbanisation 
Lower 
Capital-intensive industry with a  Labour-intensive small-town and 
high FDI ratio and emerging 
rural industry 
networks 
Source: Author’s construction. 
Core regions with a lower urbanisation level – usually on the western borders 
– benefited most from Foreign Direct Investment transfers. We can see this most 
clearly in the Austria–Slovakia–Hungary cross border area, which has become a 
recipient of machine industry investments. It is notable that unlike metropolitan 
core regions, these areas lacked autonomous research, development and control 
functions; their prime advantages being good accessibility, competitively priced 
yet well-qualified human resources and an already established industrial milieu. 
These advantages were fundamental in the first waves of capital inflow. With 
increasing labour costs, and the catching up or reindustrialisation of more eastern 
regions, their role had been gradually diminishing. Domański (2003) argues that 
there is presently a shift from ‘costs’ to ‘markets’: cost advantages are replaced by 
factors such as market access, the quality of local services, the availability of 
skilled workforce and so forth.  
Yet these factors are in themselves insufficient to maintain the current growth 
dynamics. It has been argued (e.g. by Turnock 2001, Csizmadia – Grosz 2002, 
Worrall – Donnelly – Morris 2003, Grosz – Rechnitzer 2005) that local produc-
tion systems and encouraging innovation are the long-term guarantees of retaining 
competitiveness. Supplier networks, industrial clusters and the institutional back-
ground encouraging their formation (industrial parks, incubation centres, etc.) 
were priorities for state industrial (and occasionally regional) policies, both to 
encourage the location of new industrial investments, and to increase the em-
beddedness of already existing capacities. In multiple cases (e.g. Western Trans-
 

Industry in the Carpathian Area. 
In: Socio-Economic Analysis of the Carpathian Area. 
Pécs: Centre for Regional Studies, 2008. 110-115. p. Discussion Papers, Special 
112 
SOCIO-ECONOMIC ANALYSIS OF THE CARPATHIAN AREA 
danubia in Hungary), local and regional administration showed a better ability to 
manage these low-level systems than central intervention; in the federal state of 
Austria, regions already have the competences required for these tasks. 
Old Industrial Regions generally take a peripheral spatial position but have a 
high urbanisation level due to development dating back to the 19th century or 
socialist industrialisation policy (planned cities such as Nowa Huta, Tiszaújváros 
or Ózd belong to this latter category). Here, transformation’s consequences were 
often industrial depression as monofunctionality, the loss of markets and the in-
ability to compel large-scale producers to downsize or close down. Urban centres 
with a strong chemical industrial base were more successful at weathering the 
crisis, while metallurgy suffered worse and military industry was even harder hit.  
The causes of depression, and policy responses attempting regeneration, are 
close to Western European antecedents; the main differences were the extent of 
the problems (due in part to the delay in their mamagement) and the regional 
context. Monofunctional industrial structure often coincides with peripherality, as 
heavy industrial plants were preferentially located in low-developed regions as a 
policy instrument. With the decline of traditional sectors, these deficiencies were 
once more brought into light. Coal and steel regions like the Jiu valley, Borsod-
Abaúj-Zemplén County or Košice in Eastern Slovakia are typical examples. 
Ukrainian regions, whose centres are large cities5 surrounded by under-urbanised 
peripheral areas, showed these symptoms to an even greater extent, as their 
economies were linked to production systems supplying the entire Soviet Union. 
Industrial regeneration led to mixed results. Growth based on traditional sec-
tors has was most notable in Upper Silesia (where it is coupled with investments 
into machine, especially automotive industry, as well as advantages stemming 
from the US conurbation’s metropolitan character), but also this is where compa-
nies could modernise their technology, invest in process innovation and possibly 
diversify into higher-end products. Alternative activities based on the local 
knowledge base also produced good results, and the presence of strong secondary 
and tertiary technical education had a positive influence (e.g. in Ostrava or Ka-
towice). However, the main feature of industrial development in urbanised pe-
ripheral regions is still de-industrialisation, where services are incapable of re-
placing the economic role of industry. De-skilling, the loss of qualified human 
resources to low replacement and out-migration, precludes redevelopment and 
menaces with conserving the peripheral character of the areas under scrutiny. 
Similar phenomena are noticable in Borsod, Eastern Slovakia and several Roma-
nian counties. 
                                                           
5 Lviv has 860,000 inhabitants, Chernivtsi 242,000 and Ivano-Frankivsk 204,000. Uzhgorod, with 
111,000 inhabitants, is the smallest of them, and is closer to the under-urbanised peripheral type. 

Industry in the Carpathian Area. 
In: Socio-Economic Analysis of the Carpathian Area. 
Pécs: Centre for Regional Studies, 2008. 110-115. p. Discussion Papers, Special 
INDUSTRY IN THE CARPATHIAN AREA 
113 
The final industrial profile is found in under-urbanised peripheral regions. It 
may describe entire administrative units such as Transcarpathia, Ukraine, or en-
compass areas distant from regional centres. They have always been underdevel-
oped, located away from core areas and capital cities. Their industrialisation, 
typically in the second half of the 20th century, was a conscious decision on the 
part of development policy to modernise their economies. Since resources were 
scarce and the main social problem to be solved was unemployment, labour-in-
tensive branches in light and food industries became the typical form of invest-
ment. These were created with modest capital expenditure, but they were able to 
soak up labour surplus. While most of industry in the Carpathian area is semi-
peripheral in the world economy, these areas saw peripheral industrialisation even 
in the national context, carrying over to the post-transformation period. 
Peripheral industry, located in small towns and large villages, has been show-
ing continuing signs of stagnation. Undercapitalisation, fragmentation and market 
loss remain persistent problems (although the process is more gradual than the 
rapid collapse of heavy industry), while the local labour market also shows signs 
of weakness. However, it is possible to see a resurgence of light industry 
branches, notably textiles, on the eastern peripheries of Central Europe. Surviving 
companies have sometimes been successfully integrated into continental produc-
tion networks; progressing from simple assembly to own brand and own design 
manufacturing. This trend is most strongly noticable in Ukraine and Eastern Slo-
vakia; Polanďs largest textile centre, Łódz, is outside the current study area. Pe-
ripheral regions had also been locations of subsidiaries and production sites for 
larger industrial companies in the past (Hungary and Poland pursued industrial 
deconcentration policies to this effect from the 1960s and onwards), but the ma-
jority of these have since folded or greatly reduced operations. Romania, Ukraine 
and Serbia show better survival rates, or more precisely attrition by gradual ero-
sion instead of an initial transformation shock. 
12.2 The changing spatial structure of industry in the Carpathian area 
The role of industry in total employment shows a high level of variety in the study 
area, and is furthermore in contrast with the de-industrialisation process which 
Central Europe has undergone since transformation. As seen in Figure 11, Roma-
nian counties could be considered to be the highest industrialised where employ-
ment was concerned, and the same figure would be lowest in national capitals and 
agrarian districts (c.f. the Hungarian Great Plains, Southern Slovakia and Polanďs 
Świętokrzyski region). On the other hand, Romania also experienced the highest 
 

Industry in the Carpathian Area. 
In: Socio-Economic Analysis of the Carpathian Area. 
Pécs: Centre for Regional Studies, 2008. 110-115. p. Discussion Papers, Special 
114 
SOCIO-ECONOMIC ANALYSIS OF THE CARPATHIAN AREA 
level of de-industrialisation after 1990–1991.6 Therefore, it is likely that a high 
proportion of the secondary sector in peripheral regions or districts reflects an 
absence of job opportunities in others. Old Industrial Regions are the opposite: 
here, the highly developed urban network provides a better base for tertiary de-
velopment, and consequently, many of them are no longer leaders in their own 
countries. 
Figure 11 
Industrial employment, % of total (2004) 
 
Source: National statistical yearbooks. 
Ukraine – 2005. 
                                                           
6 On the national level, the number of industrial employees in 2004 reached 100% of 1990–1991 
figures in Slovakia, 94% in the Czech Republic, 67% in Poland, 64% in Hungary, 50% in Serbia 
and Montenegro, and last 48% in Romania. 

Industry in the Carpathian Area. 
In: Socio-Economic Analysis of the Carpathian Area. 
Pécs: Centre for Regional Studies, 2008. 110-115. p. Discussion Papers, Special 
INDUSTRY IN THE CARPATHIAN AREA 
115 
Diverse industrial branches follow different patterns of distribution. Mining 
and quarrying, which has seen dramatic decline, is to be found in a few large con-
centrations (especially Upper Silesia, Gorj, Prahova and Dâmboviţa) as high costs 
and shrinking demand made it uneconomical to preserve small capacities. Except 
Upper Silesia, mining areas are modestly urbanised and have a peripheral char-
acter. 
Larger metallurgical units are located in the urban centres of Old Industrial 
Regions (Borsod-Abaúj-Zemplén County in Hungary, Eastern Slovakia, Mora-
vian Silesia, Upper Silesia, Hunedoara and Reşiţa). All of them have experienced 
waves of downsizing (and in the case of Ózd and Miskolc in Hungary, close to 
complete dissolution), but those that remained are being integrated into global 
production networks and benefiting from increasing demand. In the case of 
smaller, scattered combines in Ukraine and Romania, this process has not yet 
been significant. Chemical industry’s patterns are similar, but they, especially 
petrol chemistry, have been rather able to adapt themselves to market demands, 
and declined less. 
As opposed to metallurgy, the distribution of machinery production has be-
come more even; while the former became more concentrated because of clo-
sures, the latter was one of the primary targets of FDI transfers, leading to the 
growth of previously smaller community close to the western borders (e.g. Győr-
Moson-Sopron, Komárom-Esztergom, Trnava and Trenčín). So far, continuities 
have been stronger than change. An examination of Central European location 
trends in the automotive industry (Worrall – Donnelly – Morris, 2003) proves that 
inherited capacities are still dominant; and even new investments are located in 
regions with a strong tradition in machine manufacturing.7 
High value added and knowledge-intensive industries are almost purely met-
ropolitan, although some manufacturing functions have been also located in un-
der-urbanised core regions and, more recently, in Old Industrial Regions as well. 
In addition to agglomeration economies, the availability of a highly qualified 
workforce, R&D and advanced business services is crucial. 
Textile and clothing (footwear etc.) industries are predominantly peripheral (a 
traditional branch of small towns) or to be found in Old Industrial Regions, where 
they were located to reduce hidden unemployment among women. Presently, 
rising labour costs are resulting in their decline in western regions, while restruc-
tured combines on eastern peripheries are, again, starting to grow. Finally, food 
industry’s distribution can be considered even; naturally, its role is stronger in 
regions where other branches are weak or not present. 
                                                           
7 Greenfield sites were in the 1000 to 4000 range, with regards to the employment greatly 
outstripped by Dacia in Piteşti (21,000), Bielsko-Biała (14,500) and Tychy (7,200).