City specialisation and diversification in South East Europe (SEE) countries

42019, XXII, 2 Economics DOI: 10.15240/ ul/001/2019-2-001 In oduc ion Ci ies a e conside ed cen es o economic ac i i y and, p esumably, hey emain a ac i e loca ions o manu ac u ing i ms so as long as bene i s agglome a ion economies p e ail o e he cos s o agglome a ion diseconomies. Agglome a ion economies a ac i ms and labou o co-loca e, while agglome a ion diseconomies push i ms and labou o eloca e o decen alised loca ions (Richa dson, 1995). Indus y pa e ns o med ac oss u ban landscape o a coun y o a egion will la gely depend on he in e play o hese opposi e o ces, as well as on indus y- and i m-speci i c issues. The size o agglome a ion and he economic s uc u e may be in e ela ed and in some economies, mos ly la ge , pa e ns o ci y specialisa ion eme ge. All ci ies a e cha ac e ised by being ei he specialised o di e si i ed, depending on whe he hei economic ac i i y is concen a ed in simila o dissimila ypes o p oduc ion – and la ge ci ies end o be mo e di e si i ed (Du an on & Puga, 2000). An o e iding p oblem in U ban Economics esea ch in Sou h-Eas Eu ope is he lack o da a. In he case o ex-Yugosla coun ies, we see no egula yea ly s a is ics on ci ies since he 1990es. The da a hind ance is p obably he main eason why esea ch in CEE is also mos ly ocused on egions and no on ci ies. Resea ch opics in he egional con ex mos ly ange wi hin he income con e gence/ dispa i ies issue. Resul s om his esea ch can implici ly shed some ligh on he issue o ci y specialisa ion. Economic de elopmen o ci ies in he Sou h-Eas Eu ope since he end o he Wo ld Wa II can be seen h ough wo dis inc economic de elopmen pe iods: a) The ull- scale indus ial de elopmen o ci ies. Ci ies expand hei bo de s as economic mig an s om all he coun ies’ egions join he wa e o ising economic ac i i y; b) The e ia isa ion phase upon he b eakdown o communism and he onse o social and economic ansi ion o democ acy and ma ke economy. Economic planning is quickly dismissed as a elic o socialis planning and many ci ies a e le o cope wi h he ising unemploymen coming om he weakened indus ies. I mus be no ed ha he deindus ialisa ion p ocess in he me opoli an egions has s a ed in some ci ies e en be o e he ansi ion p ocess, in he 1980s, as documen ed in C oa ia’s capi al de elopmen (S i čić-Go o ac, 2006). Howe e , while wes e n EU economies expe ienced u ban sh inking since he 1970s, CEE coun ies con inued o suppo indus y and neglec se ice sec o up o 1989 which esul ed in o e g ow h o indus ial agglome a ions (Rumpel e al., 2013). The de elopmen o me opoli an egions con as s he de elopmen o o me indus ial ci ies. The newes indica o s o de elopmen o me opoli an egions in Eu opean ansi ion and pos - ansi ion economies a ailable a EUROSTAT and OECD indica e ha me opoli an egions ha e la gely con e ged o he EU a e age in income pe capi a and o he economic indica o s. Acco ding o he ex ensi e esea ch o Cen al and Eas e n Eu ope ci ies by Lin z e al. (2004), ma ke o ces spu ed ci y de elopmen , bu mos ly in he case o me opoli an egions. U ban a ac ion o ces o me opolises ha e d awn o eign in es o s and ha e u he s eng hen he posi ion o he capi al-ci ies wi hin he na ional u ban sys em. Doga u e al. (2014) ha e ound ha capi al ci y egions ecei ed mo e g een i eld FDI and a ac ed a wide a ie y o in es men s in bo h sec o s and unc ions. The as g ow h dynamics o me opoli an egions is unma ched by o me indus ial o indus ial & ag icul u al egions. To some CITY SPECIALISATION AND DIVERSIFICATION IN SOUTH EAST EUROPE (SEE) COUNTRIES I ana Rašić Baka ić, Ka a ina Bačić, Sunčana Slijepče ić EM_2_2019.indd 4EM_2_2019.indd 4 19.6.2019 15:10:4819.6.2019 15:10:48 5 2, XXII, 2019 Economics ex en , his can explain he le el o egional dispa i ies a NUTS le el III in he new membe s a es ha a e signi i can ly highe han in he incumben membe s: he a e age le el o he measu e o dispe sion in he yea 2011 in new membe s a es is 35.1 pe cen , compa ed o 25.8 pe cen in incumben membe s. Lin z e al. (2004) epo he con ex o he se back o many old indus ial ci ies ha hos ed impo an indus ial plan s h ough he lowe business s a -up a e o local popula ion. Lin z e al. (2007) no iced ha many old indus ial ci ies in CEE coun ies, which ha e been d i e s o g ow h in CEE coun ies o decades, ha e been acing majo p oblems (socioeconomic and en i onmen al) since he economic ansi ion and ha hey ha e expe ienced a se back. I could be deba ed ha he eliance o he local popula ion on one o ew big indus ies ha ha e employed he whole ci y and egional wo king popula ion has inhibi ed he en ep eneu ial spi i and hus also ci ies’ economic eco e y and u he g ow h. New dispa i ies be ween di e en CEE ci ies du ing ansi ion ha e been dependen on loca ion, inhe i ed economic s uc u e and en i onmen al quali y (Lin z e al., 2007), bu also s i ed by demog aphic changes and ou mig a ion (Sco & Kühn, 2012). While mos ly capi al ci ies and egional cen es de eloped (pa ly due o Eu opean union unds), pe iphe ies expe ienced u ban economic decline connec ed wi h closu e o indus ial en e p ises (Lin z e al., 2007; Sýko a & Bouza o ski, 2011). As poin ed ou , esul s om egional esea ch can be use ul in lea ning mo e abou ci ies in CEE. Regional de elopmen policies in Eu opean ansi ion economies ha e been e i ed wi h he poli ical and economic desi e o join he EU. E idence on egional specialisa ion has shown ha inc ease in specialisa ion in he incumben EU membe s was insubs an ial (OECD, 1999; 2004), hus isks associa ed wi h g ea e specialisa ion b ough by EU in eg a ion as deba ed by he US economis K ugman (1991), we e p obably illuso y. Recen ly p esen ed e idence o he new EU ansi ion membe s has shown ha in he case o Cen al Eu opean coun ies (CEC) changes in he ela i e egional specialisa ion a e mo e dynamic han in he incumben membe s (S ie le– on Schü z & S ie le, 2013). The main aim o his pape is o disce n whe he pa e ns in he ela i e specialisa ion and di e si i ca ion o manu ac u ing indus y in 98 SEE (Bosnia and He zego ina, Bulga ia, C oa ia, Se bia, Slo enia and Romania) ci ies exis , by cons uc ing specialisa ion and di e si i ca ion measu es o e he pe iod 2006-2013. The a icle is s uc u ed as ollows: Sec ion 1 p o ides a li e a u e o e iew on ci y specialisa ion issues, Sec ion 2 desc ibes he da ase , he sample o ci ies and discusses ep esen a i eness issues. In his sec ion measu es o specialisa ion (and di e si i ca ion) a e applied o he da ase , wi h he pu pose o cap u e he ai s o ci ies’ economic s uc u e. Sec ion 3 analyses di e ences wi hin manu ac u ing indus y ac oss ci ies in e ms o hei echnological complexi y and uses clus e analysis o iden i y g oups o ci ies on he basis o mul i a ia e da a, namely indices o manu ac u ing-indus y specialisa ion, and ci y size using popula ion da a. These measu es enable ecognising indus ial pa e ns in u ban space h oughou coun ies and he SEE egion. Sec ion 4 o e s conclusions. 1. Li e a u e Re iew Specialisa ion o ci ies is an impo an opic in u ban economics. Du an on and Puga (1999) summa ize he mos impo an i ndings on di e si i ca ion and specialisa ion o ci ies, mos ly coming om ci y esea ch in he US, in ew s ylised ac s (pa aph., p. 2-9): “Bo h specialised and di e si i ed ci ies exis ; La ge ci ies end o be mo e di e si i ed; Indi idual ci y specialisa ions a e s able o e ime; Mos eloca ions a e om di e si i ed o specialised ci ies.” In Hende son (1997) esea ch on di e si y and ci y size, he has ound ha la ge ci ies (popula ion abo e 500,000) in he US we e mo e specialised in se ices and medium-sized ci ies we e mo e specialised in manu ac u ing. The la e we e also mo e specialised in ma u e-indus ies ( ex iles, ood, pulp and pape ) han in new indus ies on lowe le els o agg ega ion. Du an on and Puga (2005) e ealed a shi in ci y specialisa ion in he US om sec o al o unc ional specialisa ion ha came as a esul o disin eg a ion o unc ions: managemen was loca ed in la ge ci ies and p oduc ion unc ions in smalle ci ies. Da ies and Hende son (2008) ound ha his sepa a ion is use ul o headqua e s because o he a ailabili y o di e en ia ed local supplie s and because o he p esence o he o he headqua e s. EM_2_2019.indd 5EM_2_2019.indd 5 19.6.2019 15:10:4819.6.2019 15:10:48 62019, XXII, 2 Economics Cuad ado-Rou a and Rubalcaba-Be mejo (1998, p. 134) posi ha specialisa ion is “ o emos a his o ical ac ” ha “ ends o ollow i s own li e cycle” and he specialisa ion cycle may end i specialisa ion become uncompe i i e. O he easons may be changes in in e na ional dynamics o i “su i cien size is eached o impose a di e en logical pa e n”. Ci ies a e undoub edly ecognised as cen es o knowledge gene a ion, di usion and accumula ion (Fuji a & Mo i, 2005). The li e a u e is la gely inconclusi e as o whe he agglome a ion ex e nali ies a ise be ween i ms belonging o ei he he same o o di e en indus ies (Hende son, 1986; an Hagen & Hammond, 1994; Glaese , Kallal, & Scheinkman, 1992), hough. As pu o wa d by Ma shall (1890), A ow (1962), and Rome (1986) knowledge spillo e s may a ise be ween i ms wi hin he same indus y and be suppo ed by local concen a ions o a pa icula indus y ( he Ma shall-A ow- Rome (MAR) ype localiza ion o ’specializa ion’ ex e nali ies). Acco ding o he MAR ype ex e nali ies, knowledge spillo e s in specialized geog aphically-concen a ed indus ies s imula e g ow h. On he o he hand, he no ion ha indus ial di e si y di ec ly con ibu es o agglome a ion economies comes om Jacobs ( he Jacobs-Po e ype ex e nali ies, o economies o di e si i ca ion Jacobs (1969), who a gues ha he mos impo an knowledge ans e s s em om a ie y and di e si y o geog aphically p oxima e indus ies (Da Sil a Ca ela, Goncal es, & Po cile, 2010). Applied o ci ies, he di e si i ca ion o an indus y in a ci y helps knowledge spill-o e s be ween i ms, and he e o e he g ow h o ha ci y. Kolehmainen (2003) a gues ha he en i onmen ha agglome a ion cons i u es is a mo e complex and includes mo e in e ela ed elemen s o be conside ed, including ins i u ional se ing and beha iou o i ms. S ojcic and O lic (2015) poin ou ha knowledge spillo e s and coope a ion be ween i ms and scien i i c ins i u ions can ul ima ely lead o inc easing e u ns, d awing on NEG li e a u e. Th ough ade libe alisa ion and EU in eg a ion p ocesses, pos - ansi ioning Eu ope, has opened o s uc u al changes. These p ocesses can lead o inc ease in specialisa ion ac oss key manu ac u ing loca ions, including ci ies. K ugman (1991) has p edic ed ha he emo al o ade ba ie s and Eu opean in eg a ion will b ing abou mo e indus ial specialisa ion (o concen a ion) ac oss EU and, as a consequence, mo e exposu e o asymme ic economic shocks. E idence om he incumben EU membe s o e he las wo decades was no suppo i e o his p edic ion, a leas a he egional le el (OECD, 2004). A mo e e iden p ocess o s uc u al change can be obse ed in he expansion o he se ice sec o , he e ia isa ion, a leas ac oss mos de eloped egions (Ma elli, 2004). Howe e , Longhi, Musolesi and Baumon (2014) a gue ha he me opoli an a eas and majo egional cen es o la ge EU coun ies may accumula e mos bene i s om Eu opean in eg a ion. U ban egene a ion p ojec s in some ci ies (e.g. Bucha es in Romania) we e connec ed wi h ealisa ion o Eu opean Union unds (Hla áček e al., 2016). Obse ing hese spa ial uni s as “ he Eu opean co e”, wi h he highes p obabili y o inc easing e u ns o eme ge h ough concen a ion o economic ac i i ies, wi h an econome ic model Longhi, Musolesi and Baumon (2014) show how 35 me opoli an a eas o e he pe iod o 1980- 2005 ha e unde gone s uc u al changes due o in eg a ion and de elopmen p ocesses. Longhi, Musolesi and Baumon ’s esea ch has shown ha specialisa ion has inc eased and ha sec o al s uc u es ha e become mo e simila in se ices. Mo eo e , he in eg a ion join ly wi h de elopmen posi i ely in l uence specialisa ion in he sense ha posi i e e ec o de elopmen on specialisa ion is s onge in me opoli an a eas ha a e be e in eg a ed wi h EU. S ie le- on Schü z and S ie le (2013) use a comp ehensi e se o measu es o concen a ion and specialisa ion o he pe iod anging om 1995 o 2010 o p o ide an o e iew o change in he economic s uc u es in he EU, ega ding in eg a ion p ocesses as he igge o change. Measu es we e applied o di e en indica o s o economic ac i i y a a ious sec o al b eakdowns o all EU membe s a es, including ansi ion economies. The spa ial uni o obse a ion we e egions. On an agg ega ed le el, dynamics o he le el o specialisa ion and concen a ion appea ed slow, e en when obse ed in he ligh o EU enla gemen and in he pos -2008 pe iod o economic c isis. By obse ing s uc u al ai s by sec o s, he au ho s ound ha in EU-15 and EU ansi ion economies he concen a ion o some low- ech indus ies was highe and EM_2_2019.indd 6EM_2_2019.indd 6 19.6.2019 15:10:4819.6.2019 15:10:48 7 2, XXII, 2019 Economics he concen a ion o high- ech indus ies was lowe . As expec ed hough, new membe coun ies’ concen a ion o high- ech indus ies is compa a i ely lowe . In some egions and in some sec o s he e is indica ion o con e gence o new membe coun ies’ p oduc ion s uc u es o ha o EU-15, mos ma kedly in high- ech sec o manu ac u ing. Longhi, Nijkamp and T ais a u (2005) esea ched e ec s o Eu opean in eg a ion on pa e ns o manu ac u ing loca ion and specialisa ion o Bulga ia, Es onia, Hunga y, Romania and Slo enia, accession coun ies a ha ime, o e he pe iod 1990-1999. Based on he p esump ion ha economic in eg a ion will esul in mo e e i cien alloca ion o esou ces h ough s uc u al changes and adjus men , au ho s ca y ou an econome ic analysis sea ching o he de e minan s o manu ac u ing loca ion. The economic geog aphy o manu ac u ing in hese coun ies was mo e in line wi h he p edic ions o classical and new ade heo ies han wi h p edic ions o NEG as i was de e mined by ac o endowmen s and p oximi y o la ge ma ke s. Indus y pa e ns o med ac oss u ban landscape o a coun y o a egion will la gely depend on he in e play o hese opposi e o ces, as well as on indus y- and i m-speci i c issues. The size o agglome a ion and he economic s uc u e may be in e ela ed and in some economies, mos ly la ge , pa e ns o ci y specialisa ion eme ge. E idence on he p oduc i i y ad an ages ha i ms can app op ia e by loca ing in la ge ci ies and in mo e di e si i ed loca ions can be ound in he empi ical li e a u e. Fi ms in la ge ci ies a e o e all mo e p oduc i e han i ms in smalle ci ies (Combes e al., 2012; Rosen hal & S ange, 2004), due o a numbe o easons, including o emos he agglome a ion economies, bu also localised na u al ad an age, s onge wo ke and i m selec ion (Combes e al., 2012). Fu he mo e, p oduc i i y ad an ages o i ms loca ed in ci ies as mo e di e si i ed loca ions a e no ed o e i ms in mo e specialised indus ial-dis ic - ype o a eas (Di Giacin o e al., 2014) p o ide con incing e idence o I aly). Howe e , e idence also shows ha links be ween e i ciency and he ype o agglome a ion economies a e o be obse ed in con ex o he coun ies’ de elopmen le el. Fo example, Da Sil a Ca ela, Gonçal es, and Po cile’s esea ch (2010) on he ela ion be ween ypes o agglome a ion economies (specializa ion s. di e si i ca ion) and labou p oduc i i y o 524 B azilian municipali ies in 1997 and 2007 had shown ha specialised municipali ies we e o e -pe o ming. Au ho s ha e used i ni e- mix u e eg essions and municipali ies ha e shown pola ised, wi h he o e -pe o ming g oup o municipali ies being signi i can ly specialised, while he opposi e was ound o he unde pe o ming g oup. 2. Ci y Specialisa ion and Di e si i ca ion in SEE 2.1 Da ase The main aim o his pa o he pape is o disce n whe he pa e ns in he ela i e specialisa ion and di e si i ca ion o manu ac u ing indus y in 98 SEE ci ies exis , by cons uc ing specialisa ion and di e si i ca ion measu es o e he pe iod 2006-2013. Indices ha a e used in measu ing specializa ion ( ela i e specialisa ion index) and di e si y ( ela i e di e si i ca ion index) o 98 ci ies in six SEE coun ies a e cons uc ed ollowing he wo k o Du an on and Puga (2000). The empi ical analysis was conduc ed on la ge da ase o 63,506 manu ac u ing i ms obse ed o e he pe iod 2006-2013. The da a employed in his analysis we e ob ained om he la ge pan-Eu opean i m le el da abase Amadeus p o ided by Bu eau an Dijk. The uni o analysis is he i m de i ned as a legal en i y, as opposed o he es ablishmen . The indus y da a we e agg ega ed om i m-da a ob ained in Bu eau an Dijk’s Amadeus da abase o Cen al and Eas e n Eu ope o he pe iod 2006-2013. The geog aphical uni s a e ci ies abo e 50,000 inhabi an s in six SEE coun ies (Bosnia and He zego ina, Bulga ia, C oa ia, Se bia, Slo enia and Romania). The numbe o ci ies in each coun y and hei sha e o he o al na ional popula ion a e as ollows: Bosnia and He zego ina – 12 ci ies o 35.6% o he 2011 popula ion; Bulga ia – 18 ci ies o 44.7% o he 2011 popula ion; C oa ia – nine ci ies o 35.4% o he 2011 popula ion; Romania – 38 ci ies o 32.8% o he 2011 popula ion; Se bia – 17 ci ies o 35.7% o he 2011 popula ion; Slo enia – ou ci ies o 24.8% o he 2011 popula ion. To p oduce he ci y-class-size anges, he o al popula ion o he ci y a ea was used. The g ea es numbe o he obse a ions, 37.1% e e s o i ms loca ed in la ge ci ies (ci ies EM_2_2019.indd 7EM_2_2019.indd 7 19.6.2019 15:10:4819.6.2019 15:10:48 82019, XXII, 2 Economics wi h mo e han 500,000 inhabi an s), ollowed by i ms loca ed in ci ies be ween 100,000 and 249,000 inhabi an s (24.2% o he obse a ions) and i ms loca ed in ci ies be ween 50,000 and 99,000 inhabi an s (Tab. 1). Tab. 1 displays he sec o al dis ibu ion o he obse a ions in he sample. Abou 63% o he obse a ions e e o ou indus y g oups: ood, be e ages and obacco indus y, u ni u e, o he manu ac u ed goods and ex iles, and o appa el and lea he indus y. Since da a on he numbe o i ms in manu ac u ing we e no publicly a ailable o he selec ed ci ies he o al numbe o manu ac u ing i ms in he coun y is eso ed o as ano he op ion o assessing da a co e age. The analysis o manu ac u ing indus y di e si i ca ion and specialisa ion in he ci ies is based on he ela ion be ween agglome a ion economies o he Ma shall-A ow-Rome ype (economies o loca ion o specializa ion) and he Jacobs-Po e ype (economies o u baniza ion o di e si i ca ion). Hende son’s esea ch (1997) on US ci ies has shown ha pa e ns o ci y specialisa ion-size can be obse ed. His esea ch shows ha ci ies o simila sizes a e o en specialised in simila indus ies i.e. ci ies wi h popula ion abo e 500,000, conside ed la ge ci ies, we e mo e specialised in se ices and medium-sized ci ies we e mo e specialised in manu ac u ing. The la e we e also mo e specialised in ma u e- indus ies ( ex iles, ood, pulp and pape ) han in new indus ies on lowe le els o agg ega ion. In his esea ch on manu ac u ing indus ies in he U.S. and B azil Hende son did no i nd u banisa ion economies, bu did i nd e idence o localisa ion economies explaining ha by he ac ha esou ces in manu ac u ing a e gene ally no mo e p oduc i e in la ge ci ies Indus y Ci y size class To al less han 99,000 100,000- 249,000 250,000- 499,999 > 500,000 Food, be e ages, obacco 17,715 16,315 10,997 23,840 68,867 Tex iles, appa el, lea he 15,783 16,292 9,947 20,677 62,699 Wood, co k, pape , p in ing, eco ded media 11,792 11,053 8,759 22,474 54,078 Coke and e i ned pe oleum p oduc s 128 124 12 281 545 Chemicals, pha maceu icals, ubbe , plas ic 7,943 8,336 5,647 14,308 36,234 O he non-me allic mine al p oduc s 4,196 4,111 2,239 6,184 16,730 Basic me als, me al p oduc s 14,855 15,772 9,871 19,796 60,294 Machine y and equipmen 3,161 3,909 2,738 6,399 16,207 Compu e , el. and op ical p oduc s, el. equipmen 3,469 5,490 3,317 12,056 24,332 T anspo equipmen 1,534 2,407 1,087 2,483 7,511 Fu ni u e, o he manu ac u ed goods 12,588 16,506 12,491 25,515 67,100 Businesses by size Small i ms (less han 50 employed) 82,668 88,653 60,269 139,904 371,494 Medium sized i ms (50-250 employed) 7,606 8,559 4,557 9,630 30,352 La ge i ms (mo e han 250 employed) 2,890 3,103 2,279 4,479 12,751 To al 93,164 100,315 67,105 154,013 414,597 Sou ce: Amadeus, Na ional S a is ical O i ces Tab. 1: The sample – numbe o obse a ions EM_2_2019.indd 8EM_2_2019.indd 8 19.6.2019 15:10:4919.6.2019 15:10:49 9 2, XXII, 2019 Economics and ha esou ces in any indus y a e mo e p oduc i e in places whe e he e is mo e o simila ac i i ies (Hende son, 2003). Cuad ado- Rou a and Rubalcaba-Be mejo (1998, p. 134) posi ha “ he e is a close ela ionship be ween he ole o a ci y wi hin a hie a chical sys em and i s deg ee and ype o specialisa ion”. Looking in o he specialisa ion i s , he sha e o employmen in ci y u con ained in indus y j is calcula ed. Since indus ies come in di e en sizes, he size o indus ies is no malized by hei sha e a na ional le el (in his case by sha e a he sample le el o his coun y). In such way, he ex en o which an indus y j is ep esen ed in ci y u is iden i i ed. By doing so, he obse ed indus y dis ibu ion in ci y u is compa ed wi h ha o na ional sample as a whole. Any alue o specializa ion index abo e 1 indica es ha an indus y in a ci y a ea has an employmen concen a ion abo e he na ional a e age. The specialisa ion index (no malised sha e o localiza ion coe i cien ) is gi en as sha e o indus y i in ci y j is di ided by he co esponding sec o al sha e o whole popula ion: (1) whe e i is he sha e o indus y i in ci y j, while xi is he co esponding sha e a he na ional le el. The ela i e-specialisa ion index is gi en as: (2) The ex en o ci y di e si i ca ion is measu ed using he ela i e di e si i ca ion index (RDI). The basis o i s calcula ion is he in e se o He i ndahl-Hi schman index, which is ob ained om he a io be ween one and he sum o he squa es o he sec o al sha e in ci y’s employmen . The di e si i ca ion index is: (3) DI akes he alue 1 in he case whe e economic ac i i y in he ci y unde conside a ion is ully concen a ed in a sec o . Highe le els o his index sugges g ea e le el o di e si y, while smalle le els a e associa ed wi h highe specializa ion. Howe e , acco ding o Du an on and Puga i is impo an o co ec his index o di e ences in sec o al employmen sha es a he na ional le el (Du an on & Puga, 2000), wha leads o ela i e di e si i ca ion index. Rela i e di e si i ca ion index (RDI) is he in e se o he sum o he absolu e alues o he di e ence be ween each sec o ’s sha e in ci y’s employmen and i s sha e in na ional employmen o each ci y o e all sec o s. This index will be highe as he s uc u e o ac i i ies in he ci y unde con i gu a ion ends o e l ec he di e si y o he na ional economy. Rela i e di e si i ca ion index (RDI) is gi en by: (4) Measu es o specialisa ion and di e si i ca ion we e applied o he da ase used in his esea ch. Tab. 2 displays mos and leas specialized ci ies wi h o e 50,000 inhabi an s in SEE coun ies, in he pe iod om 2006-2013. Mos specialized ci y (Bu gas) is 13 imes mo e specialised by i s index alue han he leas specialised one (Veliko Ta no o). Two ou o 10 mos specialized ci ies a e specialised in coke and e i ned pe oleum p oduc s indus y sec o and h ee ci ies in obacco indus y sec o . This ype o specialisa ion is associa ed o ci ies’ na u al esou ces o , in o he wo ds, o localised na u al ad an age. When conside ing he leas specialized ci ies, he highes alues o RSI a e p esen among sec o s o manu ac u ing indus y. In he case o he leas specialized ci ies (Veliko Ta no o and Gab o o in Bulga ia) he s uc u e o manu ac u ing indus y o a pa icula ci y is close o he na ional. Al hough no s ong, he nega i e co ela ion be ween ci y specializa ion and i s size measu ed by numbe o inhabi an s (-0.314) con i ms p e ious i ndings ha specialized ci ies end o be gene ally smalle (Du an on & Puga, 2000). In line wi h ha , i should be no ed ha among 15 mos specialized ci ies in SEE he e is no ci y wi h mo e han 250,000 inhabi an s. I is in e es ing o no e ha among he op 20 mos specialized ci ies he e is no Slo enian ci y, which could lead o he conclusion ha coun ies wi h highe GDP pe capi a in SEE ha e lowe sha e o highly EM_2_2019.indd 9EM_2_2019.indd 9 19.6.2019 15:10:4919.6.2019 15:10:49 10 2019, XXII, 2 Economics specialized ci ies, bu he economy size canno be uled ou as an al e na i e explana ion. In mos o cases o high specializa ion in Eu ope, indus ial specialisa ion e e s o he high sha e o ex iles, ood p ocessing, and in hese cases manu ac u ing sec o s a e no di e se enough o suppo o he sec o s. Acco ding o A a an (1986, p. 45) economic di e si y is de i ned as “ he p esence in an a ea o a g ea numbe o di e en ypes o indus ies” o “ he ex en o which economic ac i i y o a egion is dis ibu ed among a numbe o ca ego ies. Much o he li e a u e and esea ch on economic di e si y poin s ha di e se economies a e mo e esis an o l uc ua ions associa ed wi h he business cycles (Hackba & Ande son, 1975; Dissa , 2003), and lowe ou pu ola ili y is ela ed wi h highe economic g ow h (Ramey & Ramey, 1995). Rank Ci y Sec o Rela i e specia liza ion index (RSI) Ci y popula ion 1 Bu gas (BG) Coke and e i ned pe oleum p oduc s 27.22 198,725 2 Bijeljina (BA) O he anspo equipmen 24.36 114,663 3 Ploieş i (RO) Tobacco p oduc s 17.99 209,945 4 Yambol (BG) Mo o ehicles, aile s and semi- aile s 16.18 71,561 5 Giu giu (RO) Coke and e i ned pe oleum p oduc s 15.90 61,353 6 Blagoe g ad (BG) Tobacco p oduc s 15.70 70,293 7D obe a-Tu nu Se e in (RO) Chemicals and chemical p oduc s 15.18 92,617 8 Smede e o (RS) Basic me als 14.87 64,175 9 Nis (RS) Tobacco p oduc s 14.06 183,164 10 Galaţi (RO) Basic me als 13.69 249,432 11 Velika Go ica (HR) O he manu ac u ing 13.37 63,517 12 K alje o (SR) O he anspo equipmen 13.23 64,175 13 Tâ go iș e (RO) Basic me als 13.08 79,610 14 Banja Luka (BA) Basic pha maceu ical p oduc s and p epa a ions 13.00 199,191 15 Mos a (BA) Repai /ins alla ion o machine y and equipmen 12.63 113,169 ……. …….. ……………………………. ……….. 94 Ple en (BG) Basic me als 2.57 101,978 95 Ruse (BG) Fu ni u e 2.33 147,055 96 Plo di (BG) P in ing and ep oduc ion o eco ded media 2.32 341,567 97 Gab o o (BG) Rubbe and plas ic p oduc s 2.28 56,003 98 Veliko Ta no o (BG) Rubbe and plas ic p oduc s 1.95 68,676 Sou ce: p epa ed by he au ho s on Bu eau Van Dijk’s Amadeus da abase o Cen al and Eas e n Eu ope, 2006-2013. No e: A e age alue o RSI o e he pe iod is gi en. Tab. 2: Mos and leas specialized ci ies in he pe iod 2006-2013 EM_2_2019.indd 10EM_2_2019.indd 10 19.6.2019 15:10:4919.6.2019 15:10:49 11 2, XXII, 2019 Economics Coun y GDP pe capi a (cu en p ices, eu o) Ci ies 20 mos specialized ci ies o al sub-sample by coun ies 2013 2006-2013 2013 BA 3,569 3 12 BG 5,800 4 18 HR 10,200 1 9 RO 7,200 7 38 RS 4,800 5 17 SI 17,400 0 4 To al – 20 98 Sou ce: p epa ed by he au ho s on Bu eau Van Dijk’s Amadeus da abase o Cen al and Eas e n Eu ope and Eu os a da abase, 2006-2013. Rank Ci y (coun y) RDI 1 Plo di (BG) 2.91 2So i a (BG) 2.84 3 V a sa (BG) 2.81 4 Belg ade (SR) 2.77 5 Cluj-Napoca (RO) 2.77 6 Bucha es (RO) 2.54 7 Veliko Ta no o (BG) 2.34 8 No i Sad (RS) 2.30 9 Buzău (RO) 2.07 10 Bihać (BH) 1.99 11 Dob ich (BG) 1.97 12 Gab o o (BG) 1.90 13 Baia Ma e (RO) 1.90 14 S a a Zago a (BG) 1.90 15 Va na (BG) 1.88 …………. 94 D obe a-Tu nu Se e in (RO) 0.83 95 Bâ lad (RO) 0.82 96 V anje (RS) 0.79 97 K anj (SI) 0.78 98 Smede e o (RS) 0.71 Sou ce: p epa ed by he au ho s on Bu eau Van Dijk’s Amadeus da abase o Cen al and Eas e n Eu ope, 2006-2013. No e: Capi al ci y ank: Sa aje o (29) Zag eb (33) and Ljubljana (48). Tab. 3: Dis ibu ion o 20 mos specialised ci ies by coun ies and GDP pe capi a in SEE, 2006-2013 Tab. 4: Mos and leas di e si i ed ci ies in SEE, 2006-2013 EM_2_2019.indd 11EM_2_2019.indd 11 19.6.2019 15:10:4919.6.2019 15:10:49 12 2019, XXII, 2 Economics The ela ionship be ween ci y size measu ed by o al employmen in manu ac u ing/ o al popula ion and i s ela i e di e si i ca ion index is shown on Figs. 1 and 2. The e is a p e y s ong posi i e co ela ion be ween he ci y size (measu ed by employmen in manu ac u ing) and he ela i e di e si i ca ion index, 0.6681. The co ela ion be ween ela i e di e si i ca ion index and ci y size measu ed by o al popula ion is e en highe , 0.7543 and indica es ha di e si i ca ion inc eases wi h ci y size i.e. wi h he size o he local labou ma ke . These esul s a e in line wi h he li e a u e (Du an on & Puga, 2000). Also Da Sil a Ca ela, Goncal es and Po cile (2010), measu ing ela i e specialisa ion and di e si i ca ion in 524 B azilian ci ies con i med ha di e si i ca ion inc eases wi h ci y size. La ge ci ies ha e la ge a ie y o p oduc ion inpu s, hus enabling concen a ion and economies o scales. G ea e numbe o di e en indus ies can os e he exchange o ideas, so he i ms can bene i om he gene a ion and di usion o he knowledge. La ge ci ies a e usually mo e di e si i ed and knowledge- in ensi e and ha e mul iple specializa ions, while medium-sized and small ci ies sized ci ies may ha e jus one o wo, o none (Du an on & Puga, 2000; Aud e sch, 2002; C escenzi, Rod iguez- Pose, & S o pe , 2007; D ennan, 2002). Tab. 4 displays 15 mos di e si i ed ci ies and 5 leas di e si i ed ci ies. Wi hin he 10 mos di e si i ed ci ies he e a e h ee capi al ci ies o he la ges economies om he sample: So i a, Beog ad and Bucha es . On he o he hand, he capi al ci ies o Bosnia and He zego ina, C oa ia and Slo enia a e anked in 29 h, 33 h and 48 h place espec i ely, wha can be ela ed o he issue o he coun y size (in e ms o popula ion). Ac ually, he mos di e si i ed ci ies a e no o be ound among op en mos specialized ci ies. This is addi ionally con i med by an indica i e nega i e ela ionship be ween ci y specializa ion and di e si i ca ion, albei wi h co ela ion coe i cien o -0.317. Howe e , di e si y and specialisa ion a e no exac opposi es, as he e a e ci ies which a e bo h di e si i ed and specialised. Fig. 1: Rela i e di e si i ca ion index and ci y size in e ms o employmen in SEE Sou ce: P epa ed by he au ho s based on Bu eau Van Dijk’s Amadeus da abase o Cen al and Eas e n Eu ope, 2006-2013. EM_2_2019.indd 12EM_2_2019.indd 12 19.6.2019 15:10:4919.6.2019 15:10:49 19 2, XXII, 2019 Economics is eco ded in he medium low- ech g oup. The esul s o he k-means clus e analysis e ealed ha among la ge ci ies, capi al ci ies and mos o egional cen es unde lying pa e n in specialisa ion exis s (specializa ion in high- ech and medium high- ech indus y) and his is also he case o smalle ci ies ha ha e simila specializa ion pa e n in low- ech and medium- low ech indus ies. This esea ch was suppo ed by a g an om he CERGE-EI Founda ion unde a p og am o he Global De elopmen Ne wo k. All opinions exp essed a e hose o he au ho (s) and ha e no been endo sed by CERGE-EI o he GDN. Re e ences Abdel-Rahman, H., & Anas, A. (2004). Theo ies o sys ems o ci ies. In J. V. Hende son & J. F. Thisse (Eds.), Handbook o Regional and U ban Economics. Ams e dam: Else ie . A ow, K. J. (1962). The economic implica ions o lea ning by doing. Re iew o Economic S udies, 29(3), 155-172. h ps://doi. o g/10.2307/2295952. A a an, M. (1986). Indus ial Di e si y and Economic Pe o mance in US A eas. 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London: CEPR and Conso cio de la Zona de Vigo. I ana Rasic Baka ic, PhD Ins i u e o Economics, Zag eb Depa men o Regional De elopmen C oa ia [email p o ec ed] Ka a ina Bacic, PhD M eža znanja C oa ia [email p o ec ed] Suncana Slijepce ic, PhD Ins i u e o Economics, Zag eb Depa men o Regional De elopmen C oa ia [email p o ec ed] EM_2_2019.indd 20EM_2_2019.indd 20 19.6.2019 15:10:5119.6.2019 15:10:51 21 2, XXII, 2019 Economics Abs ac CITY SPECIALISATION AND DIVERSIFICATION IN SOUTH EAST EUROPE (SEE) COUNTRIES I ana Rašić Baka ić, Ka a ina Bačić, Sunčana Slijepče ić The main objec i e o he pape is o s udy he ole o localisa ion and he u banisa ion (o di e si i ca ion) economies in u ban pos - ansi ion SEE, by cons uc ing and analysing manu ac u ing specialisa ion and di e si i ca ion measu es o e he pe iod 2006-2013. The second objec i e o he pape is o analyse di e ences wi hin manu ac u ing indus y ac oss ci ies in e ms o hei echnological complexi y. Indus ies a e mapped ac oss ci ies wi h o e 50,000 popula ions (98 ci ies in six SEE, co e ing 35.3% o he o al SEE popula ion), a popula ion h eshold ha is in line wi h p e ious li e a u e. The da a we e ob ained om Bu eau Van Dijk’s Amadeus i m-le el da abase con aining, mos impo an ly, balance shee da a and p o i -and-loss accoun da a o CEE. The analysis o manu ac u ing indus y di e si i ca ion and specialisa ion in he ci ies is based on he ela ion be ween agglome a ion economies o he Ma shall-A ow-Rome ype (economies o loca ion o specializa ion) and he Jacobs-Po e ype (economies o u baniza ion o di e si i ca ion). Analysis esul s e ealed ha a pa icula specialisa ion pa e n ha would poin o a homogenous sys em o ci ies h oughou he egion could no be con i med. Ci y specialisa ion in manu ac u ing was nega i ely co ela ed o ci y size in SEE, bu his ela ion has no shown pa icula ly s ong. Simila ly o o he coun ies, op-specialised ci ies a e specialised in manu ac u ing closely ela ed o na u al esou ces such as pe oleum p oduc s and obacco, poin ing o ad an ages a ising om “ i s na u e” geog aphy. Howe e , di e si y and specialisa ion a e no exac opposi es, as he e a e ci ies which a e bo h di e si i ed and specialised. The esul s o he second pa o he analysis show ha medium-low echnology and low echnology g oups o indus ies in manu ac u ing p e ail in o al u no e , wi h 36.2% and 35.0% sha e, espec i ely. Ci y specializa ion in he p e ailing echnology g oup in SEE, in medium-low echnology, is highes in Bulga ian, Bosnian and He zego inian and in C oa ian ci ies. Key Wo ds: Ci y, specialisa ion, di e si i ca ion, manu ac u ing, agglome a ion economies. JEL Classi i ca ion: R00, R12, O18. DOI: 10.15240/ ul/001/2019-2-001 EM_2_2019.indd 21EM_2_2019.indd 21 19.6.2019 15:10:5119.6.2019 15:10:51