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# Claudia Popescu Human Geographies – Journal of Studies and Research in Human Geography Vol. 10, No. 2, November 2016 | www.humangeographies.org.ro ISSN–print: 1843–6587 | ISSN–online: 2067–2284 After deindustrialisation: changing urban economy in the Danube valley region Claudia Popescu* Academy of Economic Studies Bucharest & Institute of Geography Romanian Academy The paper is aiming to discuss the role of deindustrialization in generating socio-economic dislocation at regional level. The change of industry along the way from the centrally- planned to market oriented economy, while redening the spatial patterns of growth and decline, has combined with emergent forms of social and economic inequality. The specic aims of the paper are twofold. First, having the privilege of a two and a half-decade long perspective, the paper looks back at the period of deindustrialization, pinpointing the successive waves of employment decline in the wider context of the extensive process of economic restructuring. Second, using methods of spatial analysis, the paper examines the new distribution pattern of industrial change in the Danube region, specifying in empirical terms the relation with evolutionary trends and regional specialization. The ndings pinpoint at the consequences of the far-reaching deindustrialization process on the regional economic base of the Danube towns. Key Words: deindustrialization, urban economy, regional specialization, Danube Valley Region. Article Info: Received: June 3, 2016; Revised: September 24, 2016; Accepted: October 15, 2016; Online: November 30, 2016. Introduction Deindustrialization has expanded to former communist countries since the early 1990s, causing a period of socio-economic dislocation, materialized in rational- ization of production, plant closings and rising unemployment rate. Restructuring the economy was initially accomplished by shrinking the oversized socialist industrial sector, leading to a new cycle of economic transformation that changed mainly the urban economies (Popescu, 2014). The transition * Correspondence address Address: Academy of Economic Studies Bucharest. Faculty of Commerce - Department of Tourism and Geography 41 Dacia Blvd., zip code 010404, Romania. Phone: +403191990/ext 378 | Email: [email protected] ©2016 Human Geographies; The authors DOI:10.5719/hgeo.2016.102.1 100 Claudia Popescu After deindustrialisation 101 to the market economy and trade reorientation, as a consequence of new economic specialization. The region was subject to similar changes with COMECOM dissolution, have resulted in a structural change, mainly industrial those at the national level. Restructuring the economy was initially accomplished restructuring and labor reallocation across sectors and regions. In the 1990s, by shrinking the oversized socialist industrial sector, leading to a counterproduc- Romanian industry has experienced considerable decline in output and employ- tive expansion of the agricultural sector that played the role of a buffer (Maniu ment. et al. 2001). During the 1990s, the employment share of the industry sector in The South of the country has a strong agricultural legacy and a long stand- Romania has contracted by 8%. This loss was matched by an increase in the ing economic and social underdevelopment. With few exceptions, industrializa- employment share of the agricultural sector, which had a share of 40% in tion came late to the Danube region, hence it was only after the 1970s that national employment in 1999 (Traistaru and Wolff 2003). While the agricultural signicant industrial investments targeted the Danube towns. There were two sector remained at 3.4 million employed, the industrial sector lost more than 1 reasons justifying this choice: rstly, the tendency for a balanced and uniform million workers, with the number of employed persons falling from 3.3 to 2 development of the industry was emphasized by the end of the socialist period; million during the 1990s (idem). Broadly speaking, manufacturing has been secondly, the Romanian economy was increasingly dependent on imported following a path of a long-run decline in employment, while services have been energy and mineral resources, thus the Danube riparian and Black Sea coast experiencing a slow growth, but this has been far from a „smooth” evolutionary location of industry came to be a basic principle of the economic development transition. The two sectors are embroiled in a form of combined and cumulative policy. However, the effort to develop poorer regions had only short-term restructuring, with profound implications both for socio-economic sustainability effects: developing a modest industrial base has served to reduce underemploy- and for the distribution of jobs and incomes. The other main sector of the ment and the excessive interregional migration of rural population. Anyway, the economy, agriculture became dominated by self-employment and low revenues traditional agricultural belt of the Danube towns was turned into a manufactur- stemming largely from subsistence farming. In comparison with other former ing belt. In the late 1980s, one third of the Danube cities hosted steel companies socialist countries, Romania was characterized by a huge aggregate structural as a result of the overemphasis on heavy industry pursued by the economic change, especially a process of deindustrialization and consequently a process of policy. re-agrarization (Traistaru and Wolff, 2003), which basically reversed the shares The paper is aiming to discuss the role of deindustrialization in generating of the two sectors in the total employment during the rst decade of transition socio-economic dislocation at regional level. The change of industry along the (industry – 37.9% in 1990 and 23.5% in 2001; agriculture – 28.2% in 1990 and way from the centrally-planned to market oriented economy, while redening 40.4% in 2001) (Pavelescu 2003). Labor resources have moved from industry to the spatial patterns of growth and decline, has combined with emergent forms agriculture rather unusually for a European country in the process of post- of social and economic inequality. The specic aims of the paper are twofold. communist transformation, with services employing a largely stagnant share of First, having the privilege of a two and a half-decade long perspective, the paper all employed. The agricultural sector and rural areas have acted as a kind of looks back at the period of deindustrialization, pinpointing the successive waves buffer, absorbing people who have lost jobs in industry and have not been able of employment decline in the wider context of the extensive process of eco- to nd employment in the slowly developing service sector. nomic restructuring. Second, using methods of spatial analysis, the paper The variance of regional employment growth was driven almost entirely by examines the new distribution pattern of industrial change in the Danube region-specic factors, while industry mix and regional competitiveness factors region, specifying in empirical terms the relation with evolutionary trends and played only a minor role in explaining regional employment dynamics regional specialization. (Traistaru and Wolff 2003). Highly specialized regions are more vulnerable to The paper begins by reviewing the link between deindustrialization and the asymmetric shocks, since industry shocks may become region-specic shocks as, overall economic restructuring, drawing attention on the shifts of employment for instance, in the case of former mining regions. The level of industrialization across the economic sectors. It follows then a closer examination of the succes- at the beginning of the transition period, in 1992, plays a signicant role in sive rounds of investment and disinvestment and the deep implications over explaining the different paths of evolution taken by regional economies. In deindustrialization and economic cycles since the early 1990s. Regional reloca- stronger industrialized regional economies, the manufacturing loss has largely tion of industries creates a pattern of uneven growth which stays at the core of exceeded the total employment loss showing a better capacity of services to understanding the new geography of manufacturing in the Danube Region. expand and absorb the workforce released by the industrial sector. A closely Finally, the paper attempts to capture the consequences of the far-reaching related factor is the large-scale urban economies that enhanced the economic deindustrialization process on the regional economic base. potential of regions to grow. The weaker industrialized economies, on the contrary, seemed to suffer the most due to their limited capacity to attract Deindustrialization and the economic restructuring in the Danube growing economic activities. Here, the ratio between the manufacturing and Region total employment loss was reversed and regional economies were subject to long term decline. The positive correlation between the initial level of industrializa- The Danube Region with its agricultural potential and declining industry was tion and the path of transition is a legacy of the socialist era when the progress structurally affected by inter-sectoral employment shifts which gave birth to a to economic development was almost entirely based on manufacturing growth. 100 Claudia Popescu After deindustrialisation 101 to the market economy and trade reorientation, as a consequence of new economic specialization. The region was subject to similar changes with COMECOM dissolution, have

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