Territorial Inequality,Regional Productivity,and Industrial Change in Postcommunism: Regional Transformations in Slovakia

Abstract

In this paper the author examines the development and causes of territorial inequalities in the postcommunist economies of East–Central Europe (ECE), with a specific focus on the Slovak Republic (Slovakia). He begins by examining the extent of regional economic differentiation in ECE, within the context of the European Union (EU) enlargement process, and argues that an EU of twenty-five or twenty-seven states will face enormous territorial inequality. Through a specific examination of the experience of Slovakia he then goes on to examine some of the determinants and trajectories of these territorial inequalities. Specifically, he focuses on the contribution of relative regional industrial productivity trends in the second half of the 1990s to the endurance of territorial disparities. A decomposition of regional productivity and employment across industrial sectors is provided to examine some of the reasons for the comparative performance of Slovakia's regional economies. Attention is paid to the role of key strategic inward investment projects in the upgrading of particular regional industrial sectors. In contrast, other forms of global integration through, for example, outward processing of clothing for the EU market have, in other regions, been unable to stimulate a positive upgrading of regional productivity. Indeed, it is argued that the challenge for transitional economies such as Slovakia in the early part of the 21st century is how to manage the process of increasing, yet geographically uneven, global and European economic integration at the same time as ensuring that territorial and social inequalities are reduced.