Loading...

"Neue Mitte" in the middle of nowhere - Structural Change for the better?

Term Paper (Advanced seminar) 2005 23 Pages

Politics - International Politics - Topic: European Union

Excerpt

Table of Contents

Summary

I. Introduction and Methodology
1. Introduction
2. Methodology

II. Structural Change for the better?
1. Structural Change in the Ruhr Area
1.1. Historical Development
1.2. Social Consequences
1.3. Image
2. Structural Change in Oberhausen
2.1. Historical Development
2.2. Neue Mitte
2.2.1. Problems of structural change in Oberhausen
2.2.2. Coping with negative developments
2.3. Regional Structural change framework
3. Critical view on structural change

III. Conclusion

Annexes
Annex 1: Employment in the Ruhr Area
Annex 2: O-Vision

Reference List

Summary

Economy is determined by dynamic processes. Structural change in the Ruhr Area is symptomatic for Europe’s manufacturing regions. Grown on the base of heavy industry during industrialisation, a consumption and productivity crisis influenced the whole economy of the region. High unemployment rates and the closing down of factories and mines recoined the image of the area. Today structural change led the region towards high-tech, culture and leisure facilities.

Structural change has consequences on workers, inhabitants and the region’s economy as a whole. Impacts can be either negative or positive. Planners must keep these consequences in mind while planning a new project for structural change. Oberhausen’s structural change was really successful. The “Neue Mitte” created 10000 new jobs, Oberhausen became a growth pole for consumption and leisure facilities. Nevertheless new problems arose. Purchasing power that was attracted by the CentrO has had negative impacts on cities in vicinity and also on the city centre of Oberhausen itself, which results in a Zero-Sum-Game.

The regional structural change framework shows that supply and demand factors are the starting points of a regions economic performance. This performance is influenced as well by institutional factors as by the grade of diversity of the economy. In the Ruhr Area and in Oberhausen local governments first acted too late to absorb the decline of the industry (constraints), then they set up projects to emphasize the change (incentives). The “Neue Mitte” shows that structural change needs diversity, otherwise a new dependent mono-structure develops, which is again vulnerable and likely to break down.

Responsibility, diversity and balance are the features of successful structural change. Of course, economy is not all about people in the calculations of companies, but without people there would simply be no economy. Change must focus on the needs of people; otherwise it is development “in the middle of nowhere”.

I. Introduction and Methodology

1. Introduction

The European integration’s lift-off started from an economic cooperation based upon coal and steel, the European Coal and Steel Community. Those core sectors underlie heavy, negative changes since the 1960s. In Germany especially the Ruhr Area suffers from the decline in this sector – the sector which has led the area to the rise before. Due to late reactions of the government and the industry itself the whole area fell into a crisis. Today massive structural change has taken part – in many different variations and timings. Some cities are now “well off” again, other still suffer to a huge extend from the crisis. Therefore the research question of this paper must be: What are the impacts of structural change on a determined area?

The whole process cannot be seen as uniform and straight development, but is nevertheless often regarded as something that leads to benefits for the whole area. But does structural change always lead to benefits for all involved actors? And in the consequence thereof, shall there be structural change in any case?

As the questions alone would be a bit brought, this paper shall focus on structural change in the Ruhr Area and especially on the city of Oberhausen and its alteration from steel producing to health-technology and consumption – from manufacturing to services.

In the following the regional structural change framework is linked with the whole topic to ad some theoretical aspects to the analysis. Part II ‘Structural Change for the better?’ deals on the one hand with structural change in the Ruhr Area to give an introduction to the whole topic; and furthermore to show that the developments in Oberhausen are not unique and that findings might be applicable to the whole region. On the other hand the analysis focuses on Oberhausen and its development from a steel producing city to the construction of the ‘Neue Mitte’, as a service city.

The distinction between super regions, structural change and creative cities is not that easy, and also in this case not necessary. The Ruhr Area is a super region which underlies structural change. Oberhausen also coped with structural change by being a creative city with clear place marketing. Nevertheless the focus of this paper is laid upon structural change, even though all four topics are somehow interwoven.

Basics about the Ruhr Area and structural change are regarded as known.

2. Methodology

“Regional economics today does not yet offer a comprehensive theory that could explain spatial structural change in Europe.”[1] Therefore as a base for this paper the framework of regional structural change explained in the text “Beyond the Blue Banana? Structural Change in Europe’s Geo-Economy” by Hospers is used.[2] The framework is displayed in a simplified version in this paper, otherwise it would have been to complex for the length of this paper.

The starting point of the regional structural change framework is the concept of “creative destruction”. Entrepreneurs develop innovations by which the existing economic structure is replaced by a new one. Structural change theory is used as a time-dimension and agglomeration theory as a spatial dimension. “The process of structural change is understood as an interaction of supply, demand and institutional factors.”[3]

The supply side determines the economic structure of an area. There must be enough profit-seeking entrepreneurs who are able to create a new structure out of the old one. Companies might grow into growth poles, which might work as a magnet for producers and consumers (success breeds success).

Demand side: “In response to changes in demand an existing growth pole may shrink in favour of new growth poles and, therefore, new locations.”[4] These changes are not that important in the short run, but in the long run. Technological change creates higher incomes and transfers the economy to a (more complex) service economy. This process is called tertiarisation.

Supply and demand side together are the base from which areas can lift off. If they are successful in the long run depends on their adaptability to new circumstances, which is determined by two factors: Firstly the degree of diversification. Diversified economies are less vulnerable to shocks and changes. Mono-structures are likely to break down as a whole. Secondly the institutional surroundings. Institutions can be constraints or incentives for economic developments in a region.

The framework of regional structural change is the starting point of the paper and helps to explain the origin and factors influencing structural change. With this concept in mind one can make some assumptions, summed up in the following table.

illustration not visible in this excerpt

II. Structural Change for the better?

1. Structural Change in the Ruhr Area

3.1. Historical Development

The German Ruhr Area is an outstanding symbol for structural change – this process led the area twice to an economic powerful status: The first time during industrialisation and the second time during the post-war economic miracle. In the 1960s the whole sector came into a crisis. Massive unemployment and economic downfall shocked the Ruhr Area. Today a lot of cities have passed the process of structural change already and the Ruhr Area has a chance to become as economically powerful as it has been.

From Rise to Relegation

Economic boom in the former rural area started in the 1860s with the process of industrialisation. Coal and steel mining and producing were the “heartbeat” of the area. Workers migrated to all cities in the Ruhr Area from all over Germany. The area increased in size, population and importance. Boarders of the region are not that easy to determine. A saying from the end of the 19th century explains: “The Ruhr Area reaches as far, as coal and steel reach.”[5] Today this sentence is changed into past tense, as the importance of these sectors can only be regarded as historical.

The second boom period of the Ruhr Area passed off in the time of the economic miracle in Germany after the Second World War. To build up Europe again the demand for coal and steel rose tremendously. Germany was embedded in the European Coal and Steel Community, the starting point of the European Union. Coal- and ore-mining and steel producing were the driving forces of the whole area – and that was at the same point the starting of the crisis. An economic mono-structure led the area to an immense dependency upon coal and steel. Mono-structures are – as briefly explained in the methodology part of this paper – unlikely to cope with shocks.

The crisis already started in 1957. Cheap oil accessed the energy markets – the coal crisis was born (demand-crisis). Ten years later technological change in the steel producing sector initiated the same for the steel sector (productivity-crisis). The Ruhr Area’s means of existence were “destroyed”.

“Die Wiederherstellung der Schwerindustrie, von der Kohleförderung bis zur Metallverarbeitenden Industrie war noch nicht abgeschlossen, da folgte schon Ende der 50er Jahre die Schließung der ersten Zechen, wurden die ersten Feierschichten gefahren.”[6]

[illustration not visible in this excerpt] The crisis’ dimension was boosted by politicians that did not react and an industry who did not want to realize its own downfall. Still in the 1960s/70s guest workers from south European countries were recruited to come and work in the Ruhr Area. Subsidies (such as the “Kohlepfennig”) kept the production-prices for coal and steel down – and still do it today. Only one decade after the first signs of the crisis the federal government started some measures for structural change. Already in the 1970s the surface near layers of coal were exhausted. The prices for the mining of the lower laying coal boosted the prices – the German coal was no longer able to compete on the market. One ton of German coal of 150 € was far too expansive in contrast 45 € on the world market.[7] The European Commission allows subsidies for coal in the area until 2010. Today every job is subsidized by 75000€.

[...]


[1] Hospers, G.-J. 2003. Beyond the Blue Banana? Structural Change in Europe’s Geo-Economy. Intereconomics. (Further: Hospers: Blue Banana) p.78

[2] Chapter I.2. is largely based upon Hospers: Blue Banana

[3] ibid. p. 81

[4] ibid. p. 83

[5] Heineberg, H. and Temelitz, K. 2003. Strukturwandel und Perspektiven der Emscher-Lippe-Region im Ruhrgebiet. Geographische Kommission für Westfalen, Münster Emscher Lippe. (Further: Heineberg/Temelitz: Strukturwandel) p.5

[6] Malley, J. 2000. Strukturwandel, Tertiärisierung, Entwicklungspotential und Strukturpolitik : Regionen im Vergleich: Ruhrgebiet, Pittsburgh, Luxemburg, Lille. FES, Bonn. (Further: Malley: Regionen)p.10

[7] Heineberg/Temelitz: Strukturwandel. p.7

Details

Pages
23
Year
2005
ISBN (eBook)
9783638583435
File size
1 MB
Language
English
Catalog Number
v65881
Institution / College
University of Twente – Faculty of Business, Public Adminstration and Technology
Grade
1,0
Tags
Neue Mitte Structural Change Public Administration European Economic Governance

Author

Share

Previous

Title: "Neue Mitte" in the middle of nowhere - Structural Change for the better?