European Regional Science Association
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European Regional Science Association
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The abstract for paper number 408:
Hugues Sachter, Universite d'Artois, Ereia-Faculte des Sciences Economiques, Bethune, France
Local development and shadow economy in the central Balkanic regions (Albania, Montenengro, Kosovo, Macedonia and Serbian Sandjak)
The standard theory of transition from socialism assumed that the spatial pattern of activity would follow the standard schemes of the new economic geography, as initiated by P. Krugman. Unfortunately, the economic agents, once the state and party regulators out of the game, began to act in an economical rationnal way, but the instruments of of a market operating consistently with the use of money were missing. So there was a shortcoming in the formation of a spatial array which could reflect teh new economic conditions.
In the case of Central Balkans, The desagregation of the former economic flows of exchanges could be a reason for an even greater change, but some other facts should be taken in account :
-wars and the economics of predation they spurred
-demographic turmoil, with a slow down of nantality overwhelmed by sudden and massive migrations
-economic slumps which could be controlled only by the introduction of a hard foreign currency or of curency boards
-slowliness of the reconstruction of a state of right, including the financial and corporate system.
This trend was highly against the development of regular firms, and boosted shadow economies. A good part of this shadow economy has been even sheltered in the former socialist firms of the formal economy. In addition, the border regions, which for geographical (high mountains, lack of roads, hard winter) and transportationnal reasons were the less developped, became more wealthy, in contradiction with the state of their infrastructure and with their capacity to buid plans for a more sustainable way of development.
The criminal economy has its part in this trend : weapons smuggling, human trafficking, stolen cars, drug and tobacco transporting need not much permanent activity for a high yield. But there is also the point for permanent guerillas, which helps raising funds from the emigration abroad, besides regular remittancies, which are themselves subject to predation through the corrupt administrative and banking system.All these ways of earning go against the development of a rational spatial pattern, while the efforts of the international community, and mostly from the UE, try to rationalize the connesxion of these regions with the european transportation network (corridors 5 and 8) of the european network)
But the most interesting feature seen from the point of view of regional industrial economics is the adverse use of the industrial network inherited from the socialist attempt to industrialize these regions : tobacco processing plants as a support for hiding international traffic, production of weaponry near borders out of control, looseness of control over the banking system.
Yet a more regular part of the industry can be diverted from its normal path. The most striking example, besides the Serb and Bosnian arms complex could be seen in the Sandjak of Novi Pazar, where a powerful garments industrial district of counterfeit brands is operating at full speed, in the frame of a strict industrial logic of SMEs. Except for the tradition of long range trading in this area, all the odds would be again its development on an industrial basis, and so it was under communism; but in the conditions of underground economy, all the adverse conditions turn in favor of the industrial district of Sandjak.
The main issue for spatial organization is that, since the commercial and industrial flows are disconnected with the general logics of location, there is little space to develop a sustainable system of residential and activity location, and there is a high risk of maintaining a high level of mafia type of local power. But on the other side, we must acknowledge that this illegal way offers momentally much more opportunities to fix the demographic trends and to avoid permanent emigration than would the patterns of development supported by the international community
Unfortunately full paper has not been submitted.