CEU Electronic Theses and Dissertations, 2015
| Author | Medve-Bálint, Gergő Dániel |
|---|---|
| Title | Converging on Divergence: The Political Economy of Uneven Regional Development in East Central Europe (1990-2014) |
| Summary | By focusing on investment and regional development policies, this work explores some of the key transnational and domestic regulatory and political determinants of uneven regional development in East Central Europe (ECE) since the early 1990s. It argues that contrary to the original objectives, transnational regulatory convergence in these two policy fields has reinforced rather than mitigated internal economic disparities in the Eastern members of the European Union (EU). The project emphasizes the role of the complex interactions between the EU, multinational investors and central governments in determining uneven territorial development in a gradually converging regulatory environment. In this respect, it challenges the propositions of those mainstream theories that attribute the presence of spatial divergence in capitalist economies merely to the regional diversity in endowments. The research extends to the four Visegrad countries (V4), which, while structurally rather similar to each other, introduced different investment and regional development policies in the 1990s, only to later converge on European rules as a consequence of regulatory integration within the EU. The implications of these mechanisms for regional disparities are demonstrated on two different outcomes. On the one hand, the analysis finds that subsidized foreign direct investment (FDI) has primarily entered the relatively well-developed NUTS 3 regions while leaving the most backward areas virtually void of FDI. On the other hand, this work brings ample empirical evidence in support of the argument that the spatial distribution of the EU’s Structural Funds failed to reduce inter-regional disparities but contributed to the rise in intra-regional inequality. The reason for these puzzling outcomes rests in the uniform application of EU regulations to the Visegrad as well as to other ECE countries. Instead of differentiating among the regions based on their internal developmental positions, the EU applied a European benchmark when setting both the regional state aid ceilings and the criteria for fund eligibility. Compared to EU standards, all the ECE regions qualify as backward thus neither state aid limits nor the criteria for receiving EU funds distinguished sufficiently among the more prosperous and the less advanced regions. This regulatory gap generated an unequal competition which proved advantageous for the more developed regions both in terms of securing foreign investments and EU funds. Regarding FDI, the level playing field in regional state aid ceilings increased the already superior bargaining position of transnational companies (TNCs) over central governments, while the latter were being engaged in a fierce investment competition. In the end, TNCs managed to play off these states against each other and maximized their benefits by entering the most prosperous regions with the best endowments while also obtaining generous investment incentives for their projects. In terms of securing EU funds, uniform eligibility placed the more developed regions and localities in a better position relative to the backward ones. At the same time, the centralized fund management systems in ECE allowed the incumbents to allocate funds according to current political interests which did not necessarily supply the least prosperous regions and localities with more development grants. |
| Supervisor | Greskovits, Béla |
| Department | International Relations PhD |
| Full text | https://www.etd.ceu.edu/2015/medve-balint_gergo.pdf |
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