Hungary – Case study 1, Tatabánya

History

Tatabánya (65.000 inhabitants) is situated at M1 motorway that links Budapest and Vienna, in an urbanized industrial region (including 7 small towns and 9-40 thousand economically active residents in each). (https://tatabanya.lap.hu/tatabanya_terkepe/25602722)

Tatabánya was established as a socialist new town in 1947 by the amalgamation of 4 villages and the nearby mine fields and camps. Under state socialism, it was developed as a complex industrial centre (the 7th largest in Hungary by the early 1960s) particularly, for heavy industries (mining, energy, chemical industry, metallurgy, machinery, construction industry). This involved inward migration (fig.1) and commuting at a massive scale (9000 workers at its peak).

Figure 1. Population trends in Tatabánya (Source: Central Statistical Office, Hungary)
Figure 1. Population trends in Tatabánya (Source: Central Statistical Office, Hungary)

Crisis and recovery in the local economy:  agencies and structural conditions

The town was hit by series of structural crises due to the closing down of the mines (late 1980s), and post-socialist transition (1990s) that manifested in series of bankruptcies and loss of jobs (about 50%) in the local industry and outward migration. Such processes threw the city in a complex social crisis exacerbated by heavy environmental problems in the early 1990s. From the late 1990s, Tatabánya grew as a ‘model city’ of export-based industrial recovery. Economic restructuring that also changed negative population trends, rested on local and non-local factors and agencies that were increasingly interrelated and supported local and regional synergies after 2004. 

(i) The geographical position of the town was appreciated by international investors, particularly, its position within international transportation networks and in the emerging flexible production enclave in NW Hungary specialised primarily to motorcar industry. The growth of FDI  was supported also by tangible and non-tangible sources rooted in the regions’ industrial past such as extensive (re)development areas, skilled labour, regional networking (flows of knowledge, producer services, inter-firm cooperation), and the good access to ICT services.  

(ii) Tatabánya is a second-ranked centre (a county seat) in the national administrative system that supported the development of a wide spectrum of institutional services (in public and higher education, health care, culture etc.). In the recent re-centralising regime manifesting e.g. in rescaling power from municipalities to central government, institutional capacities and the bargaining power the city enabled local leaders to get access to national and EU funds for local economic development and public services.

(iii) Local leadership and institutional learning also had a substantial role in economic recovery that was promoted directly by local government through infrastructure schemes, industrial park development along with the rehabilitation of environmentally damaged areas, and efficient city marketing to support FDI and employment. The municipality took the responsibility for property management, city marketing and acted a mediator between state administration/local agents/investors, moreover, coordinated vocational training in the city. The semi-private College of Modern Business Studies (now, Edutus University) supported the municipality in institutional innovations. Recently, a new actor owned and managed by a central governmental agency has entered the local industrial property market cooperating with local institutions and channelled private capital, cohesion funds and social capital in a new industrial park. 

The municipal industrial park (source: tatabanya.hu)
Picture 1: The municipal industrial park (source: tatabanya.hu)

Recent processes: economic growth, social change and their limits

Today, the local economy rests on engineering, chemical industry, the production of medical instruments, electronics and environmental engineering (including R&D activities). Growing diversity introduced new dependencies: international ownership grew dominant in local industry, and major industrial plants (Henkel, Grundfoss, Bridgestone, etc.) as well as local SMEs have been embedded in global production networks particularly, since Hungary’s EU accession. As a consequence, industrial output/capita in the LAU1 area is among the highest in the country (2016), and the post-crisis recovery of local businesses was rapid, the export-driven dynamics had been restored by 2010/11. Yet further growth is hindered heavily by labour shortage in the city and its catchment area (30-km vicinity of Tatabánya) that was responded by the local employers and the central government by extensive international guest worker programs.    

Now, Tatabánya with its LAU1 region is the only industrial area in Hungary had been hit by heavy post-socialist structural crisis, that have positive migration balance, and an improving image – along with a substantial and dynamically growing share in industrial export. Yet they are struggling with the problems of the socialist heritage, such as environmental degradation, the quality problem s of housing and living environment in general, and the lack of physical compactness (Picture 2,3.).

Picture 2: The mosaic-like structure of Tatabánya (source: tatabanya.hu)
Picture 2: The mosaic-like structure of Tatabánya (source: tatabanya.hu)
Picture 3: The city’s surroundings – advertised by the municipality to attract residents/employees and tourists (source: tatabanya.hu)
Picture 3: The city’s surroundings – advertised by the municipality to attract residents/employees and tourists (source: tatabanya.hu)