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Localization methods for regional development purposes

 

 

 

 

Although no model can accurately represent and imitate reality, models can expand our understanding about a certain problem by helping us ask the right questions. And the questions are currently more than tthe answers. Are there recognizable Bulgarian products at shops in other EU countries? What happens to the border regions when highways on the axis East-West are being built? Which are the cities on the Balkans, which are the centres of influence? How will the Bulgarian economy become competitive? These are only a part of the questions, which provoke the author to introduce and follow various localization methods in the regional development domain.

As I start reading the book “Localization methods for regional development” the first sentence catching my eye is the thought of Peter Drucker: “It is not so important to make things right but to do the right things”. “Bulgaria has experience in making all the wrong things.”,  tells me the author and points out I should read about the New Economic Geography concept.

At the start of the 90s of the 20th century, a new movement starts that is being discussed in scientific literature. The movement New Economic Geography encompasses many analysis models.  NEG is based upon the concept of  “accumulation economy” or economy based on reduction of transport expenses followed by increase of profits (the last proceeds from scale and factor mobility). The concept is based on the attempt to explain the concentration of clusters.

Actually European integration, projects about international trans-European corridors, which include bridges, highways, tunnels, ports and other elements, aim exactly the same – companies in EU countries to be able to trade at very low transport costs. Therefore, the EU aims to integrate the market zones. By improving infrastructure, the relation between time and space changes, as well as competitiveness of companies in a given region and market zone.

There are two types of sectors that shape the economy of a certain region:

  1. Export-oriented sectors – they include all activities, to which effective demand is exterior to the region and the main part of the production is being exported. These sectors secure the greater part of net money inflow in the region.
  2. Local sectors – they include all sectors, to which effective demand is interior to the region. These are production systems, which provide everyday services to the local population.

For example, the opening of a new company in an export sector will secure directly jobs for  4,000 people but at the same time indirectly will create 6,000 more jobs in the local sectors. Thus, the overall cumulative effect would equal 10,000 new vacancies (export-based multiplier after Haggett, 1965).

Another underestimated fact in Bulgaria is that the economic system functions based on the perceptions, customs and estimates of the participants in it. In this respect, economic geography is a behavioural science. One of the forces, which cause agglomerations to come to existence, and is not studied enough, are the relations between people that include creation and transfer of knowledge, or the “K-relationships”. Contrary to “K- relationships”, traditional relations through production and transfer of goods and services can be called “E- relationships”, which describes economic relationships.

More about Localization methods for regional development purposes can be found in the same-named book of Kosyo Stoychev, 2012.

 

 

Last Updated (Thursday, 14 February 2013 17:15)

 
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