The Economic Performance of Central Europe Metropolises. A Comparative Approach

Mroczek, Arkadiusz Article The Economic Performance of Central Europe Metropolises. A Comparative Approach Comparative Economic Research. Central and Eastern Europe Provided in Cooperation with: Institute of Economics, University of Łódź Suggested Citation: Mroczek, Arkadiusz (2021) : The Economic Performance of Central Europe Metropolises. A Comparative Approach, Comparative Economic Research. Central and Eastern Europe, ISSN 2082-6737, Łodz University Press, Łodz, Vol. 24, Iss. 4, pp. 105-122, https://doi.org/10.18778/1508-2008.24.33 This Version is available at: https://hdl.handle.net/10419/259289 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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A Comparative Approach Arkadiusz Mroczek https://orcid.org/0000-0003-3736-437X Ph.D., Cracow University of Economics, College of Economics, Finance and Law Cracow, Poland, e-mail: mrocz[email protected]ow.pl Abstract Since the fall of communism, the big cities of Central Europe have been included in the international metropolitan network, and their economic performance has improved significantly. Based on that, it can be asserted that the whole region is undergoing a process of metropolisation, which may be manifested by a focus of development in the limited areas of metropolises. Therefore this paper aims to present the results of a closer examination of this process in Central Europe. It is based on a comparative analysis of the metropolises in relation to their countries in terms of economic per‑ formance. A taxonomic approach based on Hellwig’s development pattern is adopted. The available Eurostat data (NUTS 3 level) on a range of socio‑economic characteris‑ tics is used. The study results show that the economic performance of Central Euro‑ pean metropolises is relatively closer to Western Europe’s cities than the countries’ non‑metropolitan parts. Highlighting development issues in Central Europe from the spatial‑metropolitan point of view is the paper’s added value. Keywords: metropolises, Central Europe, metropolisation, taxonomy JEL: F60, O18, R19 106 Arkadiusz Mroczek Introduction Traditionally, the EU economy isseen asacommunity ofnation‑states that intensify their cooperation but are still different regarding economic performance. Some more spatially oriented authors argue that this view isabstract inthe absence oftrade bar‑ riers and the free movement ofcapital, services, and labour. Abetter way oflooking atthe European economy would beto understand itas spatially connected production systems oran archipelago ofmetropolitan centres (Krätke 2007, p.26). Asthe integration ofthe New Member States from Central Europe (CE) into the single market advances, aconvergence process between them and the “old EU” isof‑ ten emphasised. From aspatial point ofview, aquestion that arises naturally iswheth‑ er this relatively fast growth inthe east isfocused inbig cities orif itappears more equally inspace. Asthe first option could becalled metropolisation, this study will first describe the basic features ofmetropolises and metropolitan growth sources. Then, metropolisation will beexplained, and contemporary literature onthe metrop‑ olises ofCE will bereviewed. Inthe empirical part, the performance ofmetropolises and non‑metropolitan regions ofdifferent EU parts will beconsidered. Itwill make itpossible toaddress the research question: Isthe economic performance ofCE me‑ tropolises relatively closer tothe cities ofWestern Europe (WE) than the performance ofthe non‑metropolitan parts oftheir countries? The results ofboth the theoretical and analytical parts will beused inthe final reflection ofCE’s development. The pa‑ per’s added value isthat itbrings spatial and metropolitan arguments tothe discus‑ sion onthe development issues inCentral Europe. Metropolises and metropolisation – basic definitions and features Common sense suggests that ametropolis isan area ofabig city plus its suburbs1. However, the literature shows that metropolitan status depends more onfunctional characteristics than physical ordemographic size. Some ofthose metropolitan features will bebriefly described below. What primarily distinguishes metropolises from any other big agglomeration isthat the former performs high‑order economic, political, administrative, social and cul‑ tural functions (Parysek and Mierzejewska 2006, p.302). This ability isbased not only onthe size ofthe metropolis but also onits structure. Ametropolis isacomplex ofeco‑ nomically diversified districts that enable ahigh degree ofthe social division oflabour (Angotti 1995, p.627). This transfers into aunique offer both inthe field ofconsumer goods and activities, aswell asthe conditions for business activity. 1 For convenience, metropolises in this study will also be referred to as cities. 107 The Economic Performance of Central Europe Metropolises. A Comparative Approach Another feature ofmetropolises isthat they tend tobe connected byflows ofinfor‑ mation (Förster and Mainka 2015, p.1895), money, people, goods and services relatively stronger than other areas. Unrestricted flows ofthose factors allow for interdependence and specialisation ofmetropolitan areas that are often referred toas a“global network ofcities” or“global cities” (Roberts 2005, p.111). This network ofinter‑connected cities isoften seen asessential inthe current phase ofglobalisation (Taylor 2004, p.55). Even though the degree ofconnections between cities depends strongly oncontem‑ porary technology, the importance ofbig cities and their links isnothing new. Histor‑ ically, asignificant part ofsocio‑economic processes took place incities, and capital was also accumulated there (Garza 1999, p.149). Assome authors phrase it, cities were the spaces where “creative destruction” took root (Boudreau etal.2007, p.31). Political, sociological and economic changes did not come tothe cities from the outside, but they were conceived and implemented inside. Next, those changes were passed toother cities and, later on, toother areas. New technologies and production systems were introduced early inthe cities because the most intensive networking also took place there. Cities always seem toprovide asocio‑spatial milieu that isflexible incoordinating wages, industrial relations, consumption modes and political power (Cho 1997, p.195). Asactivity tends tocluster incities, this leads todisparities between them and non‑met‑ ropolitan and, especially, rural areas. Even though some living costs may also behigher incities, the urban wage premium may also exist. One study estimated itto be21% (Łaszk‑ iewicz 2016, p.865). This premium may encourage employees tomove tometropolitan areas, enriching the labour markets. Onthe other hand, employers may focus their most demanding, and therefore, highly paid, jobs inthose areas. This way, “cumulative causa‑ tion” fuels cities’ growth (Krugman 1997, p.17). This clustering ofpopulations and activities inand around large cities isreferred toas metropolisation (Fuguitt, Heaton, and Lichter 1988, p.115). Incontemporary discourse, this process isoften connected with globalisation, and the links between those processes are often emphasised. Some authors see metropolisation as“anurban counterpart ofglobalisation” (L’Hostis 2009, p.434). Totake advantage ofglobalisa‑ tion, i.e., tobecome ametropolis, acity needs tocreate and develop new activities and attract, adapt, and continuously change due toits internal economic diversity and ac‑ cumulated capital (Gaussier, Lacour, and Puissant 2003, p.253). Onthe one hand, metropolisation means spatial fragmentation and discontinui‑ ty, and itcreates “porosity”, but onthe other hand, itcan also increase the resilience ofeconomies (Pessoa, Altes, and Tassan‑Kok 2015, p.1). Itwas argued, even histori‑ cally, that critical assets, activities and processes tended toconcentrate inmetropolis‑ es. Asthe most diversified and fast‑advancing parts ofeconomies, metropolises can reinforce those economies. They seem tobe inevitable, especially for modern services and advanced industries. Based onthese arguments, Short (2012, p.6) called big met‑ ropolitan areas “new building blocks” ofeconomies. Some studies that can today beseen asclassical inthe field indicate firms’ interna‑ tionalisation asthe driving force ofmetropolisation. Foreign companies tend tolo‑ 108 Arkadiusz Mroczek cate inlarge cities, and this trend isstrongest inthe case ofheadquarters and financial branches (Rozenblat and Pumain 1993, p.1706). Those companies bring capital, but also technology and organisation, and, crucially, their presence makes acity apart ofthe global corporate network. However, metropolisation isnot limited tointer‑city connections. Italso works onthe intra‑metropolitan level and alters the spatial pattern ofcities. One study sug‑ gests that the functional division oflabour isreinforced inside cities because ofthe business service sector’s growth. This, inturn, leads toso‑called “pericentral” spatial development, where the business specialisation ofparticular districts isrelatively high (Halbert 2007, p.89). Ametropolis does not need tobe monocentric. Metropolisation can beseen asthe functional, cultural and institutional integration ofnearby cities tobenefit from ag‑ glomeration advantages. The initial cities can, inasense, “borrow the size from each other”, and this can beastimulus that allows them tobe more competitive inaglo‑ balised world. The metropolis that grows this way will probably bebased onmore than one initial city, soit will bepolycentric (Meijers, Hoogerbrugge, and Hollander 2014, p.53). Anissue that should beclarified here isthat metropolisation ismore than just apart ofthe urbanisation process. Even though onthe grounds oftheory itshould beclear that the distinction between the two processes ismore than just their scale, there isalso other evidence toprove it. The authors ofone study onmetropolises focus onthe city size interms ofpopulation, showing two interesting features derived from empirical data. The first isthat inrelatively smaller countries, the importance ofmetropolises ishigher than inlarger ones. They understand this importance asthe size ofthe main city incomparison tothe whole urban population. This means that inrelatively small countries, abig enough metropolis isnecessary toperform all the metropolitan func‑ tions, including hosting international companies. The second regularity isthat during long periods and indifferent countries, the size ofmetropolises tends togrow faster than the overall size ofthe urban population. Thus, even though urbanisation isan inevitable counterpart ofdevelopment, metropolitan growth isconnected even more strongly with advances ofeconomies (Pumain and Moriconi‑Ebrard 1997, p.313). Itmay bebecause the goods and services ofthe highest order tend tobe completely concentrated inthe most important cities, making “ordinary cities” just the receiv‑ ers. Inthis tone, metropolisation can bedescribed as“ahigher stage ofurbanisation”, inwhich the importance iscrucial (Viturka etal.2017, p.505). One ofthe consequences ofmetropolisation isthe pressure toincrease the politi‑ cal importance ofmetropolises. Assome argue, cities may gain more political power inunitary states, whereas inmore federal ones, their power will belimited byregional governments’ powers, such aslands, cantons orregions (Kübler, Schenkel, and Lere‑ sche 2003, p.276). 109 The Economic Performance of Central Europe Metropolises. A Comparative Approach Metropolisation in Central Europe After this brief characterisation ofmetropolises and metropolisation, itis possible totake acloser look atthis process inCE. Itcould beinteresting because this region was included inthe world network ofeconomies inthe 1990s, while inthe West, this stage ofglobalisation started after World WarII . Thus, itcan besafely stated that both globalisation and metropolisation inCE might still bedifferent when compared toWE. The fact that metropolisation isapart ofCE’s spacio‑economic reality has been shown from different angles. Smętkowski used data for the first decade ofthe 21stcen‑ tury and showed that metropolisation isindeed being pursued inthe CE region. Hesuggests that itis mainly based onmetropolises’ ability toattract investments inadvanced services and innovative manufacturing. However, itis especially inter‑ esting that this process applies not only tothe capital cities, which are usually the biggest interms ofpopulation, but there isalso diffusion ofthis development model inspace, atleast tosome degree (Smętkowski 2013, p.10). Onthe other hand, Pumain and Rozenblat, who focused onthe spatial character ofmetropolisation, show that this diffusion isindeed limited and metropolisation inCE differs from WE. They explored the relationship between city size and its me‑ tropolisation status, and they showed that itis much more robust inCE than inWest‑ ern Europe. Asarule, the biggest cities inparticular countries tend todemonstrate ametropolitan status (understood inthe study inafunctional way), and those metrop‑ olises donot cluster together spatially. InWE, inturn, cities follow amore centre‑pe‑ riphery pattern, which means that the most important cities tend tocluster inthe cen‑ tre ofthis region. Itmay genuinely validate the statement that metropolisation inCE isstill atadifferent stage than inWE. Pumain and Rozenblat also argue that their re‑ sults show two more things. First, they show aparadox because, before opening them‑ selves upto globalisation, the structure ofcities inCE was less hierarchical than today, almost thirty years later. Second, intheir opinion, this highly hierarchised “archipel‑ ago‑like” character ofmetropolisation may not only indicate adelay incomparison with the West, but itcan also beapermanent feature ofthe different structures ofCE economies (Pumain and Rozenblat 2019, p.1659). Šauer analysed CE metropolises inthe light ofthe tourist market, asit can beamet‑ ropolitan status symbol. Inparticular, the study was based ontourist network connec‑ tions, and itreveals that thirty years since the beginning offree international integra‑ tion, the division between WE and CE still exists. The most important tourist cities inCE are, according tothe methodology that was used, Prague and Budapest. Ofthe Polish cities, only Warsaw and Kraków can beseen asbecoming parts ofthe world tourist city network (Šauer and Bobková 2018, p.136). Itcan bestated that metropo‑ lisation understood this way isprogress inCE, although still far from maturity. Another study ofinter‑city connections was based onamore general approach that recalls the role ofadvanced services and innovative industry inmetropolitan growth. 110 Arkadiusz Mroczek Inthis case, the advanced producer services and R&D sector cooperation network was examined. The results revealed the existence ofstrong ties between mostly big CE capital cities. Itis another sign ofmetropolisation inthe region seen from the point ofview ofstrong links between metropolises (Kramar and Kadi 2013, p.196). Another study ofmetropolisation patterns was conducted for the Czech Republic. The authors generally see the Czech Republic asfollowing the metropolisation pattern ofWE. Inparticular, they draw apicture ofmetropolisation taking place mainly inthe Prague and Brno regions and argue that this trend ofmetropolitan development isgo‑ ing toprevail inthe future (Maier and Franke 2015, p.118). Those conclusions seem tobe inaccordance with other studies. Aninteresting observation was also made inanother study. Smętowski examined the influence ofthe 2008 financial crisis onmetropolisation inCE. The results show that the crisis did not change the overall trend, atleast inthe capital cities. Alarge share ofbusiness services turned out tobe the driving force ofthe metropolitan growth, which did not stop during the crisis (Smętkowski 2015, p.50). The long‑term factors behind metropolisation seem tobe stronger than the effects ofbusiness cycles. Itcan beeven argued that the West’s financial constraints may work asan incentive towards cost‑cutting investments inCE. Further advances inmetropolisation can also befound instudies that provide pre‑ dictions ofthe future development ofspatial processes. One ofthem was prepared for metropolitan development inPoland. Asaprobable scenario, itpoints tocontin‑ uing, but decelerating metropolisation. Inits authors’ opinion, this scenario should beconsidered the reference inthe investigations and policy‑related studies (Korcel‑ li‑Olejniczak and Korcelli 2015, p.119). Inour opinion, whether and towhat degree this deceleration will beseen remains one ofthe most interesting inthe field ofmet‑ ropolitan studies inPoland. Besides the research considering general patterns ofmetropolisation inthe whole CE orparticular countries, there isanother approach tothis process, based oncase studies ofparticular metropolitan regions. Abrief review ofthose studies will help complete the picture ofthe current state ofmetropolisation inCE. One study byEgedy etal.isbased onacase study ofBudapest. Although metropo‑ lisation could benoticed tosome extent incommunist times, its contemporary magni‑ tude only came after the fall ofthis system. This process was instantly driven bymarket forces that were released inthe 1990s. They emphasise that any policy attempts inthis field had only afollow‑upcharacter. There was noconscious strategy towards using the city’s potential toincrease its competitiveness based onmetropolisation (Egedy, Kovács, and Csaba Kondor 2017, p.27). The Upper Silesian conurbation inPoland can beshown asan almost opposite ex‑ ample, atleast formally. Asupra‑local administrative structure consisting ofcities and surrounding areas was created and called the “Upper Silesian Metropolis”. Inprac‑ tice, the initial phase ofmetropolisation can befully observed only inKatowice. Some signs ofinstitutional infrastructure can befound inother cities belonging tothis as‑ 111 The Economic Performance of Central Europe Metropolises. A Comparative Approach sociation, although itis too early tosay that the whole area isafunctional metropolis (Szajnowska‑Wysocka and Zuzańska‑Żyśko 2013, p.122). Itcan bepointed out that the local governments’ active fostering ofmetropolisation may prove successful asan idea ofrestructuring the post‑industrial area ofUpper Silesia. Spatial signs ofmetropolisation can also beseen inWarsaw, and they are mainly driven bymarket forces. The results ofastudy byKwaśny etal.can besummed upin astatement that this city follows a“pericentral” development pattern. This kind ofpat‑ tern was mentioned before asbeing characteristic ofthe big metropolitan area ofPar‑ is. Itis also possible toconnect itwith the theory ofclusters, aswell asurban exter‑ nalities (Kwaśny, Mroczek, and Ulbrych 2019, p.111), which allows usto say that itis one ofthe symptoms ofongoing metropolisation. Onthe one hand, the location pat‑ tern resembles western metropolises; onthe other hand, itshows some local features. Professional services prefer the central district, but other, mostly creative services tend toform clusters outside the centre. Kwaśny etal.direct attention tothe fact that inpost‑socialist cities, car dependency isrelatively high. Nevertheless, asit was argued, the “pericentral” pattern ismore the norm than the exception inthe case ofmetrop‑ olises (Smętkowski, Celińska‑Janowicz, and Wojnar 2021, p.10). According toanother study, Krakow and its surroundings are undergoing the same kind ofspatial changes. The recent development ofthe area can bereferred toas “peri‑ central”, and itis important toemphasise that this process goes beyond suburbanis‑ ing the same fraction ofinhabitants. Suburbanisation also includes businesses, both production and some kinds ofservices. Asecond sign ofgaining metropolitan status isthat the functional relationships between Krakow and other urban centres are grow‑ ing inmeaning. Itrefers not only tolocal connections but tothe growing network links with other important cities inPoland (Kurek, Wójtowicz, and Gałka 2017, p.47). Both case studies and works based onamore general approach confirm that CE isan area inwhich metropolisation istaking place. This process bears common features ofmetropolisation inother parts ofthe world, yet itis also unique due tothe region’s recent economic history. However, the picture ofmetropolisation inthe region isnot complete, and empirical questions are waiting for ananswer. One possible direction for research isthe links between metropolises and other parts ofthe country. The trivial statement that there isalways adivision between metropolitan and non‑metropolitan (orjust rural) areas isnot enough. Metropolises can also spread the development tothose latter areas, and this diffusion iswhat isoften expected. Inother words, the question isnot ifCE metropolises are ahead oftheir countries, which isevident inthe light ofthe very definition ofmetropolisation. The more appropriate problems tostudy are the relative positions ofCE metrop‑ olises inrelation totheir western counterparts and the signs ofthe development spreading from the CE metropolises tothe rest ofthe country. Those problems can beaddressed bythe question: Isthe economic performance ofCE metropo‑ lises relatively closer tothe cities ofWE than the performance ofthe non‑met‑ ropolitan parts oftheir countries. This question will bedealt with below. 112 Arkadiusz Mroczek Methodological context The study’s primary geographical area comprises the following Central European countries: Croatia, Slovenia, Slovakia, Estonia, Latvia, Lithuania, the Czech Repub‑ lic, Bulgaria, Romania, Hungary and Poland, which are all New Members States ofthe EU. Asareference, the countries ofthe EU–15, referred two asWestern Europe, are used. Those countries are divided into two groups, based ondifferences ineconom‑ ic performance related totheir geographical locations. The first one isreferred toas Northern Europe, and comprises France, Finland, Denmark, Sweden, Germany, Aus‑ tria, Belgium, the United Kingdom, the Netherlands and Ireland. The countries be‑ longing tothe second group are asfollows: Italy, Spain, Greece, Portugal and Malta, and this group are called Southern Europe. Aswas demonstrated, the understanding ofmetropolises isprimarily based ontheir socio‑economic functions and structure. This iswhy most authors that deal with urban topics prefer touse functional rather than administrative approaches todelimitate city boundaries. Inthis study, large metropolitan areas – not only city cores – will becon‑ sidered. They will becalled “cities” or“objects” (ofthe study) for convenience. Preparing the list ofobjects tostudy isoften the first step ofany study. Inthe case ofmetropolises, however, this isnot anobvious procedure. The authors ofdifferent studies use various criteria inthis case. For example, the Urban Audit report provided byEurostat includes 52 “principal metropolises”. Asits authors mention, they chose tostudy actual metropolises, inother words, the most important and developed cities (RWI 2010, p.10). However, this choice isnot appropriate for this study, asit excludes cities that are not “metropolitan enough”. Therefore, the decision was made torely onasimple demographic criterion and study all the cities that met it. Eurostat provides alist of268 metropolitan NUTS3 lev‑ el areas inEurope defined ascities and their commuting zones that comprise atleast 250 thousand inhabitants (Eurostat 2013). However, this number ofobjects seems tobe far too big for this kind ofstudy, and itis hard toconsider the smallest areas asbeing comparable tothe biggest ones. So, the list was narrowed tometropolitan areas in‑ habited byat least one million people, plus four smaller capital cities from CE, which together made 87 objects tostudy. After choosing the objects, astatistical comparison ofthem could beplanned. Hell‑ wig’s development pattern, which isasynthetic measure, was used asthe primary method. Itis ataxonomic approach that makes itpossible torank the objects under consideration according toseveral different features, which donot need tobe ofthe same kind orunit. Based onthe literature review, six indicators were initially chosen for which the data could befound inthe Eurostat database. Those indicators can also becalled features ofthe objects under consideration, ordiagnostic variables. They are presented inTable 1. 119 The Economic Performance of Central Europe Metropolises. 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Może to oznaczać, że re‑ gion ten doświadcza procesu metropolizacji polegającego na skupianiu aktywności na ograniczonych obszarach dużych miast i ich bliskiego otoczenia. Z tego względu celem artykułu jest zbadanie procesu metropolizacji w EŚW. Badanie to jest oparte na analizie porównawczej metropolii i obszarów niemetropolitalnych pod względem poziomu rozwoju gospodarczego. W badaniu wykorzystano taksonomiczną miarę roz‑ woju Hellwiga. Użyto w nim danych Eurostatu (na poziomie NUTS 3) w zakresie szere‑ gu wskaźników społeczno‑ekonomicznych. Wyniki wskazują, że metropolie z regionu są bliższe pod względem gospodarczym metropoliom Europy Zachodniej, niż obszary niemetropolitalne z regionu w stosunku do ich zachodnich odpowiedników. Wartością dodaną artykułu jest spojrzenie na kwestię rozwoju regionu Europy Środkowej przez pryzmat przestrzenny i metropolitalny. Słowa kluczowe: metropolie, Europa Środkowa, metropolizacja, taksonomia 122 Arkadiusz Mroczek © by the author, licensee Łódź University – Łódź University Press, Łódź, Poland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution license CC‑BY‑NC‑ND 4.0 (https://creativecommons.org/licenses/by‑nc‑nd/4.0/) Received: 2021‑02‑16. Verified: 2021‑07‑05. Accepted: 2021‑08‑11.