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

5- Lessons to be drawn?
(still to be completed)
The history, the empirical analysis, theoretical foundations and policy strategies of
OIAs - in the specific case of Styria, but in other cases as well (for a recent overview
of comparable regions and analyses see e.g. Boschma/Lambooy 1999) - may they
serve for an interpretation for processes of change in the countries in transition?
Let us first summarize what lessons are drawn from the experience and attempts of
reconversion of OIAs per se:
1) Structural change is unavoidable, also (and especially) in a growing economy.
OIAs were for a long time prosperous regions with a growing output; yet this
growth destroyed the conditions for survival - the successful products stayed too
long within the region. If the ageing product cannot leave the region, it changes
the region for worse - it binds its resources which usually are used to find new
products and processes. Monostructure is then a result - not a cause - of its
behaviour.
2) The incomplete adjustment process is mainly a problem of information and
negligence of relevant signals. Structural change therefore hardly comes from
within (from the "market"), but is forced from outside (from "policy").
3) Decision makers inside the region (management, unions, politicians) therefore do
not act, but react - mostly by further concentration and fusion, by closing in, with
strong elements of rent seeking nurtured by fear leading to collusive behaviour.
4) The process of reconversion is a time consuming process including several steps
and a sequence of different instruments used. It is not done by means of a "big
bang" leading to sudden closures and redundancies. Even from an economic
point of view this would be counterproductive leading to discouragement. A
change in mentality - learning and rebuilding - needs long phases of life. So
institutions have to be found which are able to give time (it took Upper Styria
about 20-30 years to manage the process of reconversion).
5) The market is not capable of delivering this process.
46