The spatial anatomy of shrinkage: the geography of labour-intensive industries in Hungary after the turn of the Millennium

Abstract

This study examines the spatial dynamics of the shrinking labour-intensive textile and clothing industry as well as the leather and footwear sector both of which play only a marginal role in the economic structure of Hungary today. The study is based on enterprise data at different spatial levels from the last 18 years and settlement-level employment data of the 2011 census. The article draws on theoretical concepts of new regionalism, especially the approaches of industrial districts and clusters, and also attempts to identify the most important locations of the sectors investigated. According to the theories applied spatial concentrations of industries offer localisation economies and potentially ensure a broader variety of qualitative location factors essential for successful upgrading and adaptation processes in a changing economic environment.

This research relates an overall decline of labour-intensive industries with significant spatial differences. The erosion of critical masses reduces opportunities for localisation economies that would allow for an improved competitiveness of these sectors in Hungary. Processes of industrial concentration seem to sustain the viability of the leather and footwear industry.

The region of Szolnok, Martfű and Tiszaföldvár (county of Jász-Nagykun-Szolnok) represents one of the most significant locations for this sector. It is the only agglomeration within the Hungarian labour-intensive light industry that shows employment growth after the turn of the millennium. Both the textile and clothing sector as well as the leather and footwear industry are important employers in some peripheral regions where a substitution by new economic activities seems to be more difficult than at the economically developed locations.

Traditional labour-intensive light industries offering low wages and limited career opportunities cannot compete with the more dynamic sectors of the domestic economy or with some incomes earned by working abroad. For this reason, serious transformations are required in order to attract a skilled and motivated young workforce needed for the qualitative restructuring of these industries.

The article contributes towards understanding the geographic dimensions of the changes that can make a future development of this industrial culture of long tradition possible within the Hungarian economy.