Discussion Papers 2001.
Role of The Regions in the Enlarging European Union 146-156. p.
Role of the Regions in the Enlarging European Union
© Edited by Zoltcin Gal, Pecs, Centre for Regional Studies, 2001
INCREASING ROLE OF THE REGIONS
WITHIN THE HUNGARIAN SPATIAL
STRUCTURE
Laszlo Hrubi
The NUTS II level development region compatible with the system of the
European Union is currently being set up in Hungary. This region will be as we
believe the dominant tier of territorial economic development (the economic
development-oriented regional development).
The optimal regional framework of the conscious territorial economy ar-
rangement — and building can namely defined in the intersection of two re-
quirements. The first requirement is set by the globalising (and regionalising)
economy, as it defines the lowest possible territorial aggregation level of the
existence of necessary environmental and market factors (actually the threshold
of the economy of scale). The second requirement is the principle of self-gov-
ernance of the democratic social system, which intermediates the largest territo-
rial extension, which the self-governing local communities are able to handle.
In the first half of the 90's the euphoria of local-governance almost resulted
in the death of regional development, and practically the act on regional devel-
opment and physical planning in 21996 achieved the its awakening from this
coma (yet the wasted 5-6 years of regional development is still missing). The
act on regional development in 1996 did not undertake the "top-down" region-
alisation of the country, not even in terms of regional development, but it set
"soft regulations" the regional tier and tasks, giving green light for voluntary
organisation. The majority of "bottom-up" initiatives of the regions aimed at
regional development targets are bound with short-term financial interests or
other external motivations.
The institutional and operational processes of regional development meant
the adaptation of the mechanisms of the previous, settlement development sys-
tem depending on the central tier, rather than the building of a system express-
ing the unique content of regional development.
The ideal of the bottom-up way — usually optimal in praxis —, the too high
respect for the development and decision-making autonomy of the extremely
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
Increasing Role of the Regions Within the Hungarian Spatial Structure
147
disperse lower (local, micro-regional) level, often without a reasonable basis
(making the encouragement of processes adapted to coherent regional political
targets), launched an in terms of the achievement of regional policy targets
uncoordinated region building process, which can not take the spatial structural
interests of macro-economy into account and is not adaptable to them. These
processes together with the protection of the power status of the counties pre-
cluded the possibility of the voluntary establishment of regions equipped with
relevant functions. Furthermore, the characteristically executive—distributing
type of regional development institutional system obviously preferred its own
exclusiveness, against the more flexible organisational—developmental diver-
sity. As a result of this, and due to the time limits set by the political intention
of EU accession finally a central decision created the EU compatible regions of
regional policy — for the price of further delays — yet, maintaining the possibil-
ity of regional voluntary organisation in an occasional or permanent form.
The first half of the decade since the systemic change passed by practically
without regional development and the second with an incomplete institutional—
operational system.
Region: lack and necessity
Why are regions necessary and why is the Hungarian regional development
system deficient without regions? The answers can be defined based on first,
the new development trends characterised by the duality of globalisation and
regionalisation (in other words the nature of real processes), second, the experi-
ences of the Hungarian regional development policy and praxis functioning
practically without regions, and third the requirements set by the nearing Euro-
pean accession.
In the context of intensive competition globalisation requires from the ma-
jority of economic actors the application of new competitive tools, since in
terms of the traditional internal company elements and advantages a significant
compensation is ongoing: the capital flow without limitations evens the quality
of technologies, through the standardisation and quality insurance its standard-
ises the quality of products and therefore sets narrow frameworks for the ar-
rangement of cost—benefit relationship within the company. The majority of
new means is bound with the spatial framework of the company, is based on the
utilisation of comparative territorial advantages and requires the partial or com-
plete internalisation of the previously external elements and factors.
Similarly, the territorial community — due to the democratic system and the
self-governance — is placed into a new context, and the development of the
region can more and more rely on the mobilisation of endogenous resources
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
148
L Hrubi
and therefore the given region may find itself in a competition with other re-
gions. In order to enforce to more and more marked territorial economic inter-
ests partnership is required.
The general content of territorial interest in connection with local economy
is, to develop and maintain a continuous adaptability and through that a devel-
opment ability of the economy parallel to the most efficient (optimal) utilisation
of local resources. As regards its content the territorial interests can be de-
scribed by three factors:
a) The development of the territorial division of labour and system of rela-
tionships, the existence of a complex and diversified economic basis, and
the development of regional economic and market circumstances.
b) The growth of communal and individual income-resources (in the inter-
est of the improvement of living standards).
c) Efficient employment of the population in the region.
Since conditions and features of the regions, settlements are unique, and
they deviate from the characteristics of the entire macro-economy, territorial
interests are separate autonomous interests. This segregated character is mainly
to be found in three aspects:
a) The establishment of a territorially defined economic space,
b) To manage the development of a continuous adaptability to the market
and the restructuring and without any crisis (the ability of a balanced ter-
ritorial self-development).
c) The economy of the region should link to the economy of the macro-
region, country and world without any mediator, and should be able to
join the process European globalisation and regionalisation on its own.
Within the threefold content of territorial interest employment is the in-
stinctively and preliminarily declared element (often even omitting the attribute
of efficiency), and this is to be found as the favoured objective in of almost all
regional development actions.
In comparison, to the growth of community and personal incomes was de-
voted only secondary importance; mainly its subsequent signalling and selec-
tion criterion value was considered in all regional development tiers. The fact
obviously plays a role in this treatment, that due to the central redistribution
there is a seemingly indirect relationship between the territorial volume of the
GDP and redistributed incomes remaining within the territory, and the target
regions of regional development interventions are explicitly interested in the
maintenance of this indirect relationship.
On the other hand, one of the hardly enforced interest elements is, the (rela-
tively) compact territorial economy, which is fairly surprising, since the most
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
Increasing Role of the Regions Within the Hungarian Spatial Structure
149
commonly used means of European regional development strategies (clustering
and networking, logistical centres and zones, innovation and innovation chains,
building of the informational society, restructuring and tertiarisation, transport—
growth corridors, special treatment of human resources, etc.) rely exactly on the
from every aspect basic perspective character of exactly this interest element
and these categories have been integrated to the Hungarian practice too. The
phenomenon is actually understandable, since in the case of this interest ele-
ment the relationship of the sectoral and territorial management and the com-
plete decentralisation are crucial and therefore system specific issues.
In the above order of "importance" of the interest elements besides inherited
behaviours, the believe in central steering and the adherence to the sectoral
ministries the reduction of regional development practice — despite of its func-
tions set by the act — to levelling played an important role. Short-term thinking
is behind this interpretation. With such attitude — even if regional development
had rich resources — mainly superficial inequalities can be softened temporally
(mainly those between the settlements, or in a more optimal case between the
micro-regions). These indicators of inequalities regularly reproduce themselves
if the income producing capacity of the territorial economy does not grow. Yet
the differences in this field have increased.
We repeatedly have to relate to the fact, that the attractiveness and competi-
tiveness of the regions (the background of territorial interest enforcement)
mainly depends on the productivity, basically on the modernisation of the ter-
ritorial economy, the requirements of which is set by the globalisation and re-
gionalisation. The above mentioned circumstances require on the other such
ways of regeneration within the regional economy, the organisational—potential
background, conditions and resources of which my evolve in the case of Hun-
gary within the frameworks of an at least regional scale territorial market and
economy.
The regional development policy and practice was generally characterised
until today by a much lower efficiency and less functions than necessary. There
was a contradiction between both, the targets and the practice, and the system
and its institutions.
The act on regional development set as the basic task, the moderation of
inequalities and the encouragement and support of the motors and actors of
regional development. However the regional development policy practice still
attributed great (if not exclusive) importance to the levelling.
— The amount of the direct regional development resources is compared to
the scale of tasks minimal;
— The central harmonisation of large sectoral developments — usually sig-
nificantly larger than regional programmes — has been fulfilled with fairly
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
150
L. Hrubi
low efficiency and their lower level co-ordination does not at all function
(the majority of sectoral ministries maintained their privileged position,
and there is no firm governmental resolution towards co-ordination.)
—A territorial consideration of the impacts of economic—social processes
determining regional development is mostly absent in the decisions, the
(negative) accumulation of impacts leads time to time to subsequent and
campaign-like corrections;
—The partnership of actors interested in regional development is immature
and deficient, therefore the sphere of local governments is dominating
(the role of the economic chambers is rather moderate due to the self-
establishment, seeking for ways and means and their insecure position,
the small and medium size enterprises are further on deficient in funds
and unable to provide for development guarantees, and the volume of re-
gional development resources and the market coverage of its actions is
unable reach the stimulus threshold of large companies; the "ex ante" so-
cialisation of decisions is underdeveloped, etc.), which is mainly inter-
ested in the direct settlement development;
—The evolution of an autonomous regional development would mean the
decentralisation of power. So far what has happened in this field is, the
intensive "politicisation" of the system, and the clearly political type
compromises occupied the theoretically professional decisions.
The establishment of the frameworks of the correction of the domestic re-
gional development policy and the institutions of further decentralisation
(which means the establishment of strong regionalisation) is an important task
of the near future.
The established and partially institutionalised spatial structures (micro-re-
gions, counties) are not sufficient for the economic development-oriented re-
gional policy, since
The smallest definition unit of territorial economy is in the current mar-
ket—economic context is the county (due to the existing institutional sys-
tem and potential, the ability for and factors of capital attraction, the ex-
istence of concentrated marked with an adequate size, the conditions of
labour division and the development of market-economy, and finally the
opportunity for the improvement of employment rates), which is currently
the highest level of sub-national regional development policy;
—The competition of local—territorial economic development initiatives is
under the current circumstances inevitably limited and the territorial
economies of scale of the development aspirations is insufficient (devel-
opments are fragmented and local);
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
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—No direct linkage can be established — due to scale reasons too — between
the national spatial requirements and practice and the localterritorial
ambitions and initiatives, co-ordination is partial and accidentally;
—The crucial elements in terms of territorial economic development are
mainly integrated in the system of conditions in the central steering tier
(information, interests, decision—making, financing and efficiency);
—The essential regional policy principles guaranteed by the law (program-
ming, concentration, subsidiarity, additionality, partnership, etc.) can only
partially be enforced within the current frameworks.
The current institutionalised structure does not match in an adequate way
and with sufficient competencies with the different territorial levels of interests,
and the deficiency results in the space winning of centralisation and the sectoral
logic. (The decentralised regional development institution system is able to
treat only indirectly the essential elements crucial to the modern regional de-
velopment, such as clusters and networks, business services, & and innovation
development, environment development, territorial communication and trans-
port systems and direct territorial "accessibility and linkages", territorial cohe-
sion, etc.)
The institutional framework of the established regional development system
and mechanisms is still based on short-term logic and budget dependence, is
fragmented and has poor interest enforcement competencies.
The possibility of further decentralisation under the current circumstances is
rather moderate, since the informational, interest, decision-making, monitoring
conditions of functions and competencies to be decentralised are not and can
not be established on the basis of current spatial units, without the violation of
the enforcement of regional policy principles (preliminarily the concentration,
programming and subsidiarity).
With regard to the above the necessity of strong regions may seem a formal
reason: practically the requirement of regional development compatibility due
to the future EU accession. However, if we study the issue closer, we will un-
derstand that it is not true exactly for the above reasons and which differentiate
the governmental (common) territorial policy from the "sectoral" territorial
policy, which is reduced to a subsequent correction activity. The scale, the
logic and the requirements against the actors are different as the probable re-
sults too. As a summary, the support reception ability of the decentralised Hun-
garian regional development system is almost minimal compared with scale of
the expected support by the European Union, and this is the reason why we
declared above that the first 4 to 5 years of the decade are missing similarly to
the time wasted subsequently by the delays.
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
152
L. Hrubi
Regions: function and division of functions
The establishment of institutionalised — and euro-compatible — regions, the
formal perfection of the regional development institution system would enable
to further improvement of regional development. The most important require-
ments of progress are as follows:
—The restoration of the balance between treatment of inequalities and effi-
ciency (regional development support economic modernisation);
—The prior, mainly quantitative growth oriented regional development in-
tervention policy (which was mainly oriented towards individual actors,
trying to incubate the establishment of small enterprises and their initial
operational problems, and focusing on the elimination of the limitations
set by the development level of regional infrastructures — should be re-
placed, or actually supplemented by a new trend, which is emphasising
quality improvement and focusing on the assistance of economic growth.
In the forefront of the later are the improvement of the productivity of the
operating and viable economic potential, the common and direct im-
provement of territorial economic modernisation and the competitiveness
of the region through regular and systematised actions based on networks,
co-operations and integration, etc. Institutionalised regional economic de-
velopment (industrial parks, logistical zones and cross-border co-opera-
tions, etc.) the different economic networks, clustering, innovation chains,
regional image and marketing, etc. — are the new key words of the new
regional development course;
—The previous (mainly micro-regional) project financing should be re-
placed by the system of program financing (covering all levels);
—The regional development policy as a whole should meet the require-
ments of all seven principles (subsidiarity, decentralisation, partnership,
programming, additionality, transparency and concentration) and its in-
centive system should b e adapted to the functional requirements.
The basic territorial political function of the region is to explore the general
regional interest (in connection with regional development), its harmonisation,
representation and enforcement besides the settlement, micro-regional, county
and sectoral interests. As regards the content of the function the three most
important elements are regional economy organisation and development, infra-
structure development and environment protection. The target of the efficient
implementation of functions is: the establishment of regions able to develop
autonomously and are developing towards the strengthening of internal cohe-
sion; the respect for requirements of sustainable development; the improvement
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
Increasing Role of the Regions Within the Hungarian Spatial Structure
153
of the regional market; the intensification of regional division of labour and the
system approached development of infrastructure.
The institutionalisation of regions requires and enables the division of re-
gional development functions, and the relatively precise definition of local—
territorial competencies. The main organising principle is the parallel
enforcement of the two classical targets of regional development — moderation
of inequalities and efficiency — and the features of regional processes to be
influenced (economies of scales threshold, motivation, volume of market,
economy of operation, capital and incentive absorption ability, conditions of
partnership, the geographical scale of the process or factor, etc.).
With respect to regional inequalities the essential territorial level is the mi-
cro-region: the micro-regional inequalities are the most marked, and the differ-
ences in practically all the higher levels only reflect the later in an aggregated
way. The treatment of inequalities is and important but not the only regional
development task and the close co-ordination relationship is required with the
two most concerned spheres, with settlement development and local—regional
social policy. The dominant scene of the modification of territorial inequalities
may be the county.
The target of efficiency is connected with the territorial (economic) com-
petitiveness, the main (and perspective) elements and means of which — cluster,
network, &, economic and monetary services, institutionalised economic
development tools (industrial parks, distribution—logistical centres, business
zones, etc.) — mainly require an at least region scale space economic unit in
Hungary.
According to the characteristics of the processes and their natural scale in-
frastructure and environment protection are target areas, which also require
larger regional development frameworks, than the counties.
Similarly — but for other reasons — the regions should be attributed as the es-
sential scene of international relationships and marketing. The European spatial
development, globalisation of international (economic) co-operation require as
the minimal territorial unit the scale of Hungarian regions. This requirement is
reinforced also by the regional trends of the institutionalisation of the European
Union, the fact that regional development is "becoming a profession", the ne-
cessity of the local—regional establishment of the steering—organising-
managing organisation and its rational operation.
According to the above the basic function of the territorial tier of regional
development may be as follows:
a) Strengthening of the efficiency and competitiveness of regional economy.
The basis, framework of the above is provided by the economic organi-
sations with stable functioning and capable of progress (according to the
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
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L. Hrubi
Hungarian experiences these are the economic units with more than 20
employees). The main development fields are:
—The establishment and development economic clusters,
—Establishment and improvement of economic and economic institu-
tional networks (industrial parks, logistical centres, business zones,
etc.),
- Development of & organisations, innovation development,
—Development of economic and business services, regional develop-
ment financing,
—Elements supporting the strengthening of competitiveness (quality
control, design, etc.), development and extension of the activities of
economic sectors,
—Institutions, organisations aimed at supporting the improvement of
capital attraction and territorial economy organisation;
—Development of functions supporting economy and the establishment
of relationships (conference, exhibition services),
—Improvement of higher, university education,
—Gradual dissemination of the operational elements of the information
society.
b) Development of the large infrastructure systems (networks)
—Development roads, railways and waterway tracks (improvement of
international, national, interregional and regional scale network ele-
ments),
—Regional airport construction,
—Development of regional border stations,
—Development of communication and information systems,
—Development of the large establishments of communal infrastructure
(regional waste deposits and recycling centres, waste water treatment).
c) Environment protection. This function covers environmental activities
requiring inter-regional co-operation. Its fields are:
—Nature protection,
—Environmental pilot programmes,
—Air, water and soil protection requiring regional co-operation.
International relationships
If the regional development regions with adequate functions established, the
regional development role of the county tier will be limited to the moderation
of — preliminarily intra-county, i.e. inter—micro-regional, and secondary inter-
Hrubi, László: Increasing Role of the Regions Within the Hungarian Spatial Structure.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies,
2001. 146–156. p. Discussion Papers. Special
Increasing Role of the Regions Within the Hungarian Spatial Structure
155
county — inequalities, which is the same activity as before. Therefore, the
county tier is shall not be associated with the notions and processes of devel-
opment poles, the territorial efficiency of development, dynamism of territorial
economic growth and economic structure, etc. but rather the quality of integra-
tion ability, the formation of the relative regional-spatial structural position, the
equalisation of economic development opportunities and the consolidation of
life circumstances should be emphasised.
We also have to emphasise that the point under discussion is not the hierar-
chy of functions but rather the lack of division of functions. The division of
functions is not a burden for the two tiers but the basis of co-operation, the
dominant but not exclusive mark of their role in regional development. The
county is not the deconcentrated or executive tier of regional decisions and
similarly the region is not the resource provider for county decisions. This case
would be true if the region would carry out the same activity in a wider frame-
work as the county in a narrower space (which may be at present an assumption
or a development, which is not without foundations). The soft and inconsistent
character of the regulation is currently quite characteristic. A political break
through is required. The decentralisation to be implemented by the region is
namely not the concentration of county tier competencies, but the delegation of
certain elements of the governmental-sectoral competencies to the adequate
territorial tier.
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