Toward an Integrated European Economic System: An Assessment of regional integration and specialization

Abstract: The purpose of this paper is to provide a tentative record of the process of integration between the EU and the East and Central European economies. Twelve years after the break up of the former state trade system in Eastern Europe, a new international system of production and trade is visible. The first transition countries are on the edge of becoming members of the EU. After a brief examination of the state of the ‘pre-accession’ with regard to trade, FDI and the adaptation to the economic regime of market economies the nature of economic links between the EU and the CEEC is analyzed. Point of departure is a survey of the political and institutional framework for economic transactions established during the decade. Based on this overview the main focus is on the issue of the participation of the former state trade economies in the regional production system in Europe. The first step is an overall assessment of economic links (i.e. trade and FDI) within the region and between the involved countries and the outside world. Secondly, an in-depth analysis of trade and specialization is added, mainly through an outline of intra-industry trade between the EU and the former transition economies. The third step of the investigation concentrates on a case study of a particular sector (textile and apparel) to illuminate impacts of integration not only in the transition economies, but also in the EU countries. The final section of the paper offers the findings and an assessment of the level of integration within the region. The latter is based on theoretical concepts of economic integration. Finally a number of scenarios for the future trends of development in the economic relations between the CEEC and the EU are sketched, in particular with regard to impacts on regional and international competitiveness. Key words: A new system of production - specialization - trade - FDI - regional integration- competitiveness.

The regional system of innovation and regional development

Innovations and the capacity to innovate are crucial factors in the development of a firm and its ability to adapt to changes in the external environment. Growing attention has been paid to the mechanism facilitating innovation in firms, both in large, small and medium-sized enterprises. As a consequence, increasing attention has been on the role of innovation policy in regional development. The purpose of this project is to analyse the linkages between the business advisory systems efforts to promote innovation and the innovative firm with special attention to small and medium sized enterprises. The analysis of this paper deals with entities and relations of the innovative environment. The focal point is the interaction between the analysed business entity and the external environment as a part of a broader network of innovative relations covering intra-firm as well as extra-firm relations and processes. The first part of the paper addresses various concepts of innovation and the role of the advisory system in the creation of a regional innovative business environment. The second part of the paper reports first findings from a survey of manufacturing firms and advisory organisations in Southern Denmark and Northern Germany. The essential objective of this part is to identify the potential of and the crucial obstacles to a proactive regional innovation policy, since previous studies have shown that in particular small firms have difficulties to use the advisory system and the services offered. The final section of the paper summarizes the findings of the questionnaire, and provide a first assessment of how to create a proactive regional development based on literature and the results of the empirical survey. Key-words: Regional system of innovation - Advisory system - business incubators and science parks - R & D programs

Co-operation between companies and the advisory system in innovations – a comparative analysis of Northern Germany and Western Denmark

Innovations and the capacity to innovate are crucial factors in the development of a firm and its ability to adapt to changes in the external environment. Growing attention has been paid to the mechanisms facilitating innovation in firms, both in large, small and medium-sized enterprises. As a consequence, attention has been on the role of innovation policy in economic policy in general and regional development in particular. The aim of this paper is to analyze the linkages between the business advisory system’s efforts to promote innovation and the innovative activity within the firm with special attention to small and medium sized enterprises. The main aspects addressed deal with entities and relations of the innovative environment. The focal point is the interaction between the analyzed business entity and the external environment as a part of a broader network of innovative relations covering intra-firm as well as extra-firm relations and processes. The paper will highlight three aspects of the topic: • In the first part of the paper concepts and policies of innovation are discussed with regard to their ability to influence economic development. • The second section is dedicated to an introduction to the role of the advisory system in the creation of a regional innovative business environment, and will in particular focus on the comparative analysis of regional systems of innovation in an organizational and structural perspective. • The next section analyzes the regional system of innovation based on a survey of manufacturing firms and advisory organizations in Western Denmark and Northern Germany. The essential objective of this survey is to identify the potential of, and the crucial obstacles to a proactive regional innovation policy, since previous studies have shown that in particular small firms have difficulties in using the advisory system and the services offered. Based on this analysis, the study aims at contributing to the ongoing discussion of the role of public support schemes in innovation and technology in a regional and organizational perspective, based on the comparative analysis of regions in two countries. Key words: Regional system of innovation - Advisory system - Business incubators and science parks - R & D programs

The problem of transition and reintegration of East and Central Europe: conceptual remarks and empirical problems

Abstract: Eight years after the fall of the Berlin Wall and the Iron Curtain economic and political cleavages are still visible in Europe. With respect to social and economic transition the saliency of the problems seem to increase, as the efforts to solve the problems become the common business of governments and international organizations. Regional economic and political integration have significant impacts on this process, namely through the European Union programs for restructuring and development. The purpose of this paper is to analyze the main problems in the process of transition and reintegration has to so overcome from a theoretical and conceptual point of view. The theoretical anchors political and economic theories of regional integration. After a period with declining attention, regional integration has again become topic in various parts of the world. Concepts of integration are still pivotal in Europe, partly regarding the internal development of the European Union, partly as a framework of cooperation between the EU and the rest of Europe. Based on the analysis of the concepts of Regional Economic Cooperation in Europe, the links between international economic integration and internal development are analyzed. The relationship between makcroeconomic integration and the necessary of providing instruments to cover specific areas or sector from significant adverse effects of this process is given special attention in the analysis.. This part of the analysis will focus on the needs for restructuring of existing EU-policies to meet the challenges of the next enlargements. The theoretical concepts will be used for a principal evaluation of the needs for a future regional policy for an enlarged community. The process of transition and recovery in East Europe has been challenged not only by the regained influence of traditional political groups in East Europe but also through the reluctance of the EU to open their markets in sectors where the former CMEA-countries are competitive. To avoid further drawbacks it seems necessary to establish a self sustainable economic system able to handle external (i.e. the process of enlargement) as well as internal (i.e. the structural funds) demands for restructuring. The first precondition is the opening of western markets. The second is to provide a reliable regime for development and knowledge transfer. Last but not least, the paper stress' the need to establish a reasonable framework for cooperation until the East and Central Europe can participate on equal terms in the mainstream of European Integration, and to handle the different waves of membership negotiations in a reliable way. Keywords: Reintegration, Regime for transition, Concepts of structural adaptation and integration.

Economic integration in a cross border perspective - An emerging new system of production?

The economic development of regions is today closely determined by the linkages and networks to external partners as well as their own Hinterlands. Main focus in this paper is on issues related to changes in the system of production, in regional as well as international, and a cross border perspective. Empirically the analysis is based on results from a project analyzing regional development in the Baltic Sea Regions. Issues addressed are spatial impacts of alterations in the economic linkages in the BSR since the transition process started in the aftermath of the break down of the iron curtain. Theoretically the concepts applied are based on economic integration and location. An analytical framework is sketched in the first part of the paper. The second section provides a brief introduction to the economic development in the regions considered, including an assessment of cross border flows, i.e. trade and FDI. Part three is devoted to an analysis of changes in the regional production system with regard to manufacture, and the implication for regional economic performance and employment in the out-sourcing regions as well as in in-sourcing regions. In addition, the issue of ‘re-outsourcing’ is addressed. The latter deals with western companies considering moving production facilities out of the BSR region into areas with lower production costs. The final section summarizes the result with regard to relocation i.e. in border-areas, within the BSR or in a global perspective. Impacts on employment is evaluated as well the paper addresses witch branches in particular are at risk to loose economic weight in the BSR as a consequence of changes in the international division of labor.

Economic and Political Perspectives on Integration in the Baltic Sea Region

The purpose of this paper is to address the influence of the changes in the European economic landscape in the aftermath of the break up of the iron curtain and the new dynamics of the process of European integration in the since 1989. The main focus is on the interaction between political and economic aspects of transition and reintegration in the Baltic Sea Region (BSR). In the first section a concept of spatial integration is sketched based on political and economic concepts of integration. The second part provides a brief record of political and economic integration and reintegration in the Baltic Sea Region. The central hypothesis is that the region has embarked on a path toward a coherent economic and political region with regard to political and economic affiliation. We have seen a consolidation of the old market economies within one trading block, and the former state trade economies will join the EU within two years. The old division of the Nordic countries into two different blocks concerning security policy seems also to diminish. In the same period, the cleavages between East and West with regard to security policy and economic system have disappeared. The paper aims to provide a comprehensive assessment of this process at the end of the first phase of transition at the threshold of the creation of a unified economic space in the Baltic Sea Region. The empirical section will contain information on economic flows as well as an assessment of the institutional changes within the BSR and the emerging new system of production and division of labor in the area. The final section will, based on the concept of spatial integration discuss, whether or not the BSR constitutes a functional region within the European regional system. Keywords: European economic integration - Transition and transformation in the BSR - The BSR in the European regional system ? Trade and Production in the BSR

Regional impacts of economic transition: From manufacturing to service and knowledge based development: Long term trends and recent Danish experiences in the Wind Energy industry.

Most mature industrial economies faced the challenge of severe structural changes in the last decades. Traditional manufacturing moved from the metropolitan and central regions to the periphery. Later the value chain in most industries changed toward knowledge intensive and service activities. This tendency has been reinforced by the trend toward globalization and recently by the impacts of the financial crisis. The aim of the paper is to sketch the long term trends of regional and industrial development in Denmark; and to identify the drivers of economic and geographical change in the production system Denmark belongs to. The starting hypothesis is that the long term transition is driven by a combination of domestic and international factors. The first part provides an overview of the Danish economy in an international perspective focusing on structural change (i.e. the relative size of primary, secondary and tertiary activities) and the impacts of the internationalization. The second section provides an analysis of the regional structural change in Denmark with special attention on the impacts of globalization and the changes in the international production system. The main focus is on the fact that the global financial crisis seemingly has been a catalyst of a process of change, with probably irreversible impacts on the geography of economic activities in Denmark. The third part digs deeper into the processes of regional and functional transformation based on a case study of the Danish wind power industry facing fierce global competition and the challenges of international relocation, with heavy regional consequences for employment. Regional impacts in particular in Western Denmark have been significant both with regards to employment and value-added. The functional and competence profile of the industry in Denmark has transformed, reducing the content of physical production. Currently two tendencies are identified; the move from a production to a skill and knowledge based industry integrated in a global value chain, and an increasing importance of construction and service provision for production capacities in offshore locations. Keywords: International interdependence – regional and structural change – a new functional division of production – toward a service based economy

Regional Growth Policy in Denmark - An Assessment of the Role of Innovation As an Instrument in Regional Policy

A recent study for the Danish government has identified innovation as one of the major drivers of regional competitiveness in Denmark. Innovation and the capacity to innovate are crucial factors in the development of a firm and its ability to adapt to changes in the external environment. In particular changes in the international production system with increasing out-sourcing of physical production from Western Europe has highlighted the need for an alternative economic base in many regions. As a consequence, attention has been on the role of innovation policy in economic policy in general and regional development in particular. The aim of this paper is to analyze the interaction between the actors in the innovative environment (i.e. the firm, advisory and research institution) and the external environment as a part of a broader network of innovative relations covering intra-firm as well as extra-firm relations and processes. The project covers the following aspects: • In the first part of the paper concepts and policies of innovation are discussed with regard to their ability to move the economy toward higher growth. • The second section provides a brief overview of regional convergence and disparities in Denmark in the last decade, and compares with the trends in a broader European perspective. • The next section summarizes the findings of a recent study of the regional system of innovation in Western Denmark, and provides a critical review of the role of innovation in the process of economic restructuring in the perspective of growing internationalization in many branches. Based on this assessment the future perspectives of regional policy in Denmark are discussed on the background of the ongoing reorganization of local and regional government in general, and the introduction of five regional growth-forums in particular.