Institutional Change in Old Industrial Areas – Lessons for ... - UMAR

also be regarded as an argument for countries in transition to strengthen their
regional dimension of economic policy by establishing new administrative entities
and to reinforce regional policy actions.
OIAs in the West suggest that the geographical concentration of industrial sectors (in
quite various sectors ranging from raw materials like coal and ore to textiles, car
production, watches and furniture - to name but a few) can grow old and petrify
under certain conditions: these areas tend to become inflexible, and in the worst
cases, unable to adapt to a new environment. Different theoretical answers (not quite
incompatible) have been given why this happens, why OIAs cannot adapt to new
conditions; why they cannot develop new products, why they cannot adapt their
skills; why their old specialisation cannot meet demand any more. In this sense they
can serve as examples why and how market processes under certain conditions are
not capable to prevent aging and petrification.
This calls for a design of policy strategies and instruments. Economists who strongly
believe in the allocative power of markets may object to this (in their view) misplaced
task of policy. Yet history has proven that rejuvenating OIAs is possible and that this
process of rejuvenation was definitely (and positively) influenced by policy. Economic
policy was necessary and in many cases successful - not in the form of subsidies
and public ownership, but by:
• improving infrastructure,
• creating access to various kinds of information,
• a differentiated form of social policy,
• the support of new firm creation,
• deregulation,
• an induced change of mentality.
All in all, it was a well designed change of an institutional framework with new
incentive structures. It is in this sense that OIAs and regional and
industrial/technology policy oriented towards them can serve as an example for
processes of transformation - this policy with ist strategies and instruments should be
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