A new dimension for spatial disparities and dependence in a transitioning economy: the emergence and development of the APS sector (316)

Theme Track: Sectoral Changes and New Markets - Advanced Producer Services

Author:
Nagy, Erika

In the 1990s, that is considered the transition period in Hungary, new trends emerged in the national economy that stimulated the rise and expansion of new 'core' regions and also reinforced spatial disparities inherited from the former system. In the early years of the transition, regional differentiation was spurred by the factors of economic crisis and decline however, since 1996, the spatial structure has been formed chiefly by the factors of dynamism that rested on economic restructuring. The emergence and development of advanced producer services (APS) had significant impact on the discussed trends directly, by improving national/regional output in the (whole) transition period and indirectly, by stimulating growth through providing information and knowledge to enterprises in the stage of 'learning' market economy (i.e. foundation and adaptation) in a changing legal environment. In spatial terms, advanced producer services were agents for re-building (and preserving) business links at local, national and international level.

The APS sector is particularly polarised in structural, organisational and spatial terms in transitioning economies. Due to the key role of the sector in economic transition and adaptation to international markets, local and regional structure of the APS must be considered as an indicator for prosperity and dependence. Such aspects of spatial differences are subject to this paper. The findings discussed below rest on spatio-statistical analysis of the APS sector and case studies (questionnaire surveys) done in three regions of Hungary, each representing a particular model of economic transformation in the 1990s.

Two dimensions of dependence and uneven development were defined in the flow of business information and knowledge (i.e. in the structure and organisation of the APS sector), such as

- the capital/countryside dichotomy that rests on the monopoly of Budapest in controlling the flow of capital (e.g. through centralised bank-system), (international and national) business information, concentration of R&D capacities and (re-)centralisation of national resources and decision-making in re-distribution of wealth; in this way, information and capital is 'filtering down' in the hierarchy of settlements slowly and accidentally that is highly dependent on political (often personal-informal) relations of local decision-makers;

- secondly, entrepreneurs of rural regions/settlements must rely on the APS sector of major country towns that provide 'basic' or 'routine' business services that scarcely support innovation and (nor national and neither international) market expansion. Therefore, such agents are destined for fighting for survival on local markets.

Regional differentiation of the sector seems to be of less significance. Although, in export-based, dynamic regional economies, a wide range of APS is provided locally/regionally, agents operating at international level are highly dependent on the APS sector of Budapest (e.g. technical and technological developments, specialised financial and computer services, international transportation and logistics). Such scale and structure of spatial polarisation shall be maintained in long term by the acute shortage of capital and the poor quality of transportation infrastructure in the economically backwarded regions of Hungary, by the low propensity of entrepreneurs for using e-services and also by the lack of policies targeting the improvement of business information flow to SMEs.

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