Comparative Analysis of Territorial Development in the Belgrade Metropolitan Area and in Serbian part of the Danube River Basin

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The paper gives a comparative analysis of the territorial development in the Belgrade metropolitan area and in the region of the Danube river basin in Serbia. An identification of main results is undertaken by application of a regional comparative
  Comparative Analysis of Territorial Development in the BelgradeMetropolitan Area and in Serbian part of the Danube River Basin SLAVKA ZEKOVIĆ, MIODRAG VUJOŠEVIĆ, TAMARA MARIČIĆInstitute of Architecture and Urban & Spatial Planning of Serbia,11000 Belgrade, Bulevar kralja Aleksandra 73/,,   Abstract: - The paper gives a comparative analysis of the territorial development in the Belgrademetropolitan area and in the region of the Danube river basin in Serbia. An identification of main results isundertaken by application of a regional comparative analysis, shift-share analysis and Spider method. The paper shows that the consideration of the national share, industrial mix and regional share in total shift shareof both regions indicate very strong process of deindustrialization. It is evaluated that allocative component of economic growth of Belgrade and Danube basin regions has positive value, reflecting the above-averagesectoral productivity in these regions compared to the national average. The empirical results show that inter-regional differences in economic growth are almost entirely explained by the differences in regionalspecificities in terms of employment. Results are important for the increase of regional competitiveness andterritorial distribution in this area.  Key-Words : - Comparative analysis, Shift-share, competitiveness, territorial development, Belgrademetropolitan area, Danube region 1 Introduction   Comparative politics is part of a regional academicscience which has established itself with the political, economic theory and the theory of sustainable development, as well as withinternational and domestic policy [1]. The subject of comparative research is international and domesticregional policy, as well as interregional andintraregional dependencies and connections. Theapplied research methodology is essential in that.The methodological approach is based on thesituation analysis, comparisons and guidelines for improvement of the perceived problems of comparative regional policy.The main subject of comparative politics at mid-20 th century has been extended from the institutionaldimension (  polity ) to the dimension of the processand political actors (  politics ), while in the 1970s ithas been shifted to the development dimension of  politics, conditions and results of policy actions(  policy-policies ) [2]. Dogan [3] indicates that thearea of comparative politics expanded to manydisciplines, so it has an “imperialistic“ and “hybrid”character. This is reflected in the existence of various comparisons (over/sub/national level) to theinterdisciplinary analysis. The contextual factors play an important role in research of comparative politics at the regional level. This implies that thesubject of the regional comparative politics shouldinclude the contextual factors and indicators, as the basic determinants of comparative studies.Contextual factors and indicators provide a better connection of case study and specific regionalconcept that is being studied, compared or evaluated.When it comes to empirical comparative analysisof the decomposition of regional differences ineconomic growth on the example of Belgrade andthe Danube region in Serbia, the main contextualfactors can be named in the transition process andits repercussions on the development segments.During the transition recession in Serbia, further strengthened by the global economic and financialcrisis, the one million jobs (out of which 700,000 inthe industry) has been lost, with almost one millionunemployed, about one million illegal buildings and1.3 million or 20% of poor citizens, the declinevalue of the shares, growth illiquidity , growingliquidation and bankruptcy of enterprises, and so on.[4].The basis for comparison of regional differencesand spatial distribution of economic growth is made by the overall development context and divergent/convergent processes. Recent Researches in Engineering Mechanics, Urban & Naval Transportation and TourismISBN: 978-1-61804-071-8120    2 Applied methods of the comparativeanalysis of regional differences For comparison of the spatial development of theregional areas analysts rely on standard tools: a setof  quantitative methods that includes analysistechniques of the economic base, several models of  production functions, shift-share analysis, input-output analysis, location quotient (or Ballassaindex), optimization techniques, cost-benefitmethods, etc. These techniques can be used tocompare regional differences (regional convergence/ divergence and territorial cohesion) and traditionalregional policy (allocation, distribution). For acomparison of regional differences in thecompetitiveness of the economy and spatialdevelopment of the Belgrade metropolitan area andthe Danube region in Serbia, shift-share analysis andspider method (based on indicators) have been used. 2.2 Shift-share analysis Shift-share analysis is a widely used analyticaltechnique used for retrospective decomposing of changes in employment in different areas or regions.The aim of this analysis is to identify changes in theindustry or other economic activities withconsideration of comparative advantages in a particular areas/regions regardless of whether theyhave growth or decline of employment and population. It usually studies agriculture, industrialmanufacturing and service industries, indicating acompetitive advantages, and rarely on the locationadvantages of the certain region/ area.According to the general form of analysis, totalemployment in the regional area is e , while isemployment in the activity i th of the region e i ( e i   t  atthe beginning of the period and e i   t+n at the end). Thecalculation includes the wider framework of reference area (country), where the total number of employees  E  (  E  t  at the beginning of the period and  E  t+n at the end) with employment in the i th activity  E  i  (  E  i   t  at the beginning of the period and  E  it+n at theend). One assumption of the shift-share analysis isthat the larger comparative area (state) is closedeconomic system. Shift-share model is based on thegrowth/ decline in employment in the i th activity of the regional area that is a function of threecomponents [5]: (1) regional share in nationalgrowth; (2) mix of changes in the activitiesthemselves; and (3) shift and change of activities inthe regional area.Changes in employment in the i th activity of theregional area from the time t  to time t + n , can bemeasured by the share change, mix change and shiftchange according to the formula [5]:AccordinglyShift-Share analysis is used to determinecontribution of the each component to the regionalor local economic growth, by the formula:SS = NS + IM + RS, where: SS - shift-share, theshare of changes, NS - the proportion of changes atthe national level, IM - the share of industrialstructure, the RS - the regional allocation changes.The component “national share” (NS) ismeasured as increase of total employment in thelocal area due to the growth of national economy inthe analyzed period.The component “industry (structural) mix”  (MI) identifies the growth rate of industrial sector inthe local area based on national growth rates for individual industrial sectors. Allocative component “regional change” (RS) or the competitive effect is perhaps the most important among the components.It points to the potential and role of leading andlagging industries in the regional / local area.Specifically, the competitive effect compares thegrowth rate of regional / local area in the industrialsector with a growth rate for the same sector at thestate level (or e.g. labor productivity). Leadingindustry is the one in which a local area has a higher growth rate compared to the growth rate of industryin the state.Shift-share analysis has more varieties, and in practice is often used the shortened form of shift-share analysis and dynamic shift-share analysis [6].Shift-share analysis provides an overview of thecomplex changes in all activities or any activity inshift to or from regional area. The advantage of shift-share method is that it uses a simple way todecompose the territorial/ regional differences ineconomic or sectoral growth by analysis of the threegrowth components (employment, productivity):  structural, competitive/ sectoral and allocative [7,8]. Esteban J. [8] proposes the division of regionalgrowth into three components: structural,differential and allocative. In addition, thistechnique can be used to identify the economiccompetitiveness of local industries.Critics of this method suggest that it oftenreflects the initial resources of the area withoutshowing its competitive effects, comparative andlocational advantages. General experience showsthat this technique is basically a descriptive tool andshould be used in combination with other types of analysis for the decomposition of regional spatial Recent Researches in Engineering Mechanics, Urban & Naval Transportation and TourismISBN: 978-1-61804-071-8121    differences and determination of the regionaleconomic and spatial potentials - the territorialcapital. Main limitations are: it doesn’t take intoaccount other factors such as impacts of businessand investment cycles, the identification of comparative advantages, the differences resultingfrom complex industrial trade, institutional andorganizational solutions, etc. The analysis does not provide a clear picture of regional and nationaleconomy, although the results are based on long-time series data. At the same time, this technique provides a simple and direct approach to extract theshare of national and industrial contributions fromregional or local growth, offers a simple and reliabledecomposition of regional differences, from thestandpoint of comparing the employment and labor  productivity with regard to the national average.Technique indicates the competitive effect of theregion and its allocative component in thedecomposition of employment and labor  productivity, as a reflection of local / regionalconditions and potentials. Also, the analysis isuseful for potential determination of types of industries that can offer significant opportunities for future growth.In the practical application of this simpleanalysis, based on a small number of data, manyresearchers have begun to adapt it by introducingthe probability and regression analysis models. In practice, other forms of regional industrial-economic analysis are used, such as econometricmodeling, input-output analysis, location quotient,and others.Barff R., Knight P. [6] show that, in order to bridge the gap between development policy of advanced and lagging regions, they need to focus onfactors that affect the more balanced growth of  productivity in the less developed regions. 2.2 Comparative analysis of regionalcompetitiveness of Belgrade and Danube region Regional competitiveness is defined as the ability toachieve economic growth, i.e. appropriate level of economic productivity in GDP creation based onutilization of available resources. Today, verycomplex mechanisms and models for determinationand monitoring of the regional competitiveness have been developed, based on numerous and complexindicators.For a comparative analysis of regionalcompetitiveness of Danube and Belgrade regions,Spider method has been applied, according to theindicators of competitiveness.Comparative analysis of regionalcompetitiveness of these areas is based onidentification and usage of those indicators for which data were available at this territorial level (for Belgrade - level NUTS 2, for Danube region - asummary of data for the level of municipalities and partly for level NUTS 3). The Republic’s statisticsdoes not publish almost any economic data at theregional level, so the selection of indicators wasmade solely according to the available data [9, 10and 11]. Despite efforts to apply indicators of competitiveness and regional developmentidentified in the portfolio of the European strategicdocuments on sustainable development, theselection of indicators was conditioned and limited by available statistical material and strategic-development documents.Empirical comparison of regionalcompetitiveness of metropolitan region of Belgradeand Danube region was carried out by application of Spider method. It involves translation of theabsolute and relative values of eight indicators in Spider  standardized values for each region.Figure 1 shows results of evaluation andcomparison of regional competitiveness of Danubeand Belgrade regions which are significant for regional territorial development. They point onabsolute and relative differences in efficiency of usage of territorial capital for each region, confirmabsolute and relative domination of Belgrademetropolitan region in the regional competitivenessof the Serbian area and point on significant inter-regional differences in the level of competitiveness,development and efficiency of territorial capital.Fig.1. Comparative review of indicators of competitiveness and spatial development inBelgrade metropolitan region and Danube region 0510 BDP/p.c.(in €)BDP/km2 (in 000 €)Invest/p.c.% B.A. degreeUnemployment rateNet personal income,01/2011Industrialisation rateEmployment rate Danube regionBelgradeSerbia   A strong process of de-industrialization of citiesand regions, the concentration of economicactivities and productive forces in the Belgrademetropolitan area, with increasing geographicaldifferences in the level overall and industrialdevelopment are the consequence of transitional Recent Researches in Engineering Mechanics, Urban & Naval Transportation and TourismISBN: 978-1-61804-071-8122    recession and reflection of the lack of adequateregional policy, regional policy of industrialinnovation, strong impact of market, the use of available territorial capital and spatial directing of activities [12, 13]. 3 Results and Discussion onapplication of Shift-share analysis By application of shift-share technique we offeredin this paper a way of general assessment on as towhich part of the inter-regional differences in theaverage employment can be attributed to specificregional differences in employment (and productivity) and which part to the effects of certainsectoral structure. In order to distinguish the role of these factors, we used a standard shift-share analysisfor decomposition of differences in regionalemployment in relation to the national average,through three components: share of nationalinfluence factor, share of economic/ industrialstructure and regional allocations and conditions.Empirical comparison and evaluation of thedynamics of regional development of Danube andBelgrade regions based on this technique has beenimplemented for the period 1990-2010.Comparative analysis shows that in the analyzedareas the greatest contribution to decline of industrial employment was weak and inappropriatecompetitive industry structure, then the impact of factors and components of the national economicgrowth trends. In the case of both areas favorableregional conditions had positive impact on theachievement of greater industrial employment, i.e.on prevention of larger decline in industrialemployment than would be accomplished accordingto the dynamics of national growth/ decline. As aconsequence of a set of general, contextual, local,institutional and favorable regional factors andconditions the industry has recorded a smaller decline of employment (and of total employment)than the average decline in the national economy.The results of shift-share analysis are sort of indicators of sources of regional differences,competitiveness, regional development conditions, passivity or activity in regional development policies, the existing institutional and organizationalarrangements, cooperation, spatial integration, theuse of the regional capital, as well as indicators of the role of regional / local level in the creation of regional developmental and spatial disparities.Hereafter are the specific empirical results, a brief discussion of the results and comparative overviewof findings for both regional areas. 3.1 Danube region – corridor VII Application of shift-share analysis in determiningthe role and contribution of individual componentsin the economic regional growth compared to thenational level have shown the exact results. Due tothe intensive process of de-industrialization, veryunfavorable influence of industrial structure isevident in the Danube region, with a bit less adverseimpact of national components, while only theimpacts of regional factors had a positivecontribution to economic growth of this area. Theindustrial structure has very strongly influenced thedecline in industrial and total employment of theDanube region by loss of 121.126 employees in the period 1990-2010. In other words, if industrialsector in Danube region declined at the same rate asthe industrial sector in Serbia, the region wouldhave lost 121.126 employees. If the manufacturingsector in the region increased/ decreased at the samerate as the overall national economy, it woulddeprive the region of 98.275 jobs. The difference inthese figures in relation to the actual change inemployment in industrial employment in theDanube region indicates that this region iscompetitive above average compared to the Serbianaverage (in real terms there would be a loss of 62.251 employees) regarding that it lost 28.017workers less, as a consequence of favorable regionalconditions. Favorable impact on the movement of the regional total and industrial employment had better conditions and higher productivity Danuberegion. Table 1 shows the empirical results obtained by application of general shift-share analysisformula in the Danube region - Corridor VII inSerbia in the period 1990-2010.Table 1. Results of Shift-share analysis in the Danuberegion in period 1990-2010. Shift-share (SS)   Nationalshare (NS)  Industrialmix (IM)  Regionalshare (RS)   -191,386 -98,275 -121,126 +28,017-0.191386 -0.98275 -0.121126 +0.028017SS = NS + IM + RS SS= (- 98,275) +(- 121,126) + 28,017SS= - 191,386 Real SS= - 0.098275 – 0.121126 + 0.028017Real SS = - 0.191386 3.2 Belgrade region Application of shift share analysis in determiningthe role and contribution of individual componentsin the economic growth of the Belgrademetropolitan area compared to the national level Recent Researches in Engineering Mechanics, Urban & Naval Transportation and TourismISBN: 978-1-61804-071-8123    showed similar results as for the Danube region.Due to the intensive de-industrialization process,Belgrade region is characterized by a considerablevolume of adverse impacts of industrial structure,with less adverse impact of national components.Industrial structure and the factors that determine it(compared to the national level of employmentdecline in industry and overall economy) led to thedecline of industrial and overall employment in theBelgrade area by loss of 60.532 employees in the period 1990-2010. In other words, if the industrialsector in the region declined at the same rate as theindustrial sector in Serbia, Belgrade would have lostthat number of jobs. If the manufacturing sector inthe region declined at the same rate as the overallnational economy, it would deprive Belgrade -49.111 jobs. The difference in these figures inrelation to the actual change in industrialemployment in Belgrade suggests that this region iscompetitive above average compared to the Serbianaverage (otherwise, the real loss would be 8.096employees) as the real extent of loss of employmentis lower for that amount. This is a consequence of the favorable regional conditions. The influence of extremely attractive and convenient metropolitanfactors made a positive contribution to the economictrends of the area, measured in relation to theSerbian level of increase/ decrease in employment.A comparative research does not intend to studythese advantages and limitations, territorial capitalof Belgrade, nor the influence of development of theservices sector as the dominant economic sector.Results of shift-share analysis for the Belgraderegion are shown in Table 2.Table 2. Results of shift-share analysis in Belgrademetropolitan region in period 1990-2010. Shift-share (SS)   Nationalshare (NS)  Industrialmix (IM)  Regionalshare (RS)   -91,548 -49,111 -60,532 +18,096-0.091548 -0.04911 -0.060532 +0.018096SS = NS + IM + RS SS= - 49,111.88 – 60,532 +18,095.88SS= - 91,548 Real SS = - 0.049111 – 0.060532 + 0.018095Results of comparative empirical analysisindicate that the process of de-industrialization,measured by drastic drop in employment has beenvery intense in the area of Belgrade and Danuberegion. Increased employee productivity andfavorable regional conditions and territorial capitalof Belgrade and Danube region, as well as better management arrangements have contributed toalleviation of overall decline of industrialemployment in these areas, compared to the Serbianaverage. Allocative component of decomposedeconomic growth of both regions has a positivevalue (+0.028017 and +0.018095). This shows that both regions are specialized in sectors whose productivity is above the national average.Comparative review of results of shift-share analysisis presented in Table 3 and 4, and in Graph 2.Table 3. Comparative review of the results of shift-share analysis in regional areas in period 1990-2010(absolute shift-share values) NS IM RS SSDanuberegion -98,275 -121,126 +28,017-191,386 Belgrade -49,111 -60,532 +18,096-91,548 Table 4. Comparative review of the results of shift-share analysis in regional areas in period 1990-2010(real shift-share values) NS IM RS SSDanuberegion -0.098275 -0.121126 +0.02801 -0.191386 Belgrade -0.049111 -0.060532 +0.18096 -0.091548 Graph 2. Comparative review of the results of shift-share analysis in regional areas in period 1990-2010 -140000-120000-100000-80000-60000-40000-2000002000040000 NS IM RSDANUBEREGIONBELGRADE   4 Conclusions The empirical results show that inter-regionaldifferences in economic growth are almost entirelyexplained by differences in regional specificities interms of employment. Allocative component of decomposed economic growth of both regions has a positive value as a reflection of specialization in thesectors of both regions, whose productivity is abovethe national average. Comparative analysis indicatesthat the process of regional de-industrialization, Recent Researches in Engineering Mechanics, Urban & Naval Transportation and TourismISBN: 978-1-61804-071-8124
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