03forum.pdf

Planning

from

the

Bottom

Up

An

Interview

with

Professor

Walter Stohr

Elizabeth

Morton

Heidi Walter Powell

WalterStohrisa professorofregionalplanning,

and

Director_ofthe InterdisciplinaryInstitutefor

Urban and

Regional

Studies, University of

Economics

(Wirtschaftuniversitat), Vienna, Austria.

He

iscurrentlyundertakinga compilation

and

analysisoflocal

economic development

initiativesinseveralregionsofEurope,

and

hasrecentlycompletedastudy

on

the impacts of industrial parks in the United States

and

abroad.

CP:

Please describe the"EuropeanPerspectives Project" that

you

are

working

on

for United Nations University.

STOHR:

UN

Universityislocated inTokyo, but itdoes

researchworldwide.

The

study

which

was

contracted to

me

will

document

experiences

from

Europe.

The

goal is tosee

how

localor regionalcommunities havesuccessfully

restructured internally,

and

primarily out of their

own

initiative

and

resources, tocope withthechanging

inter-national division oflabor.

A

team

of twelve case-study

authorsis

examining

what

experiences havebeen

made

in several

major

regions of

Europe

as a result of this

restructuring.

We

areconductingresearchinrural areas,

which

is the

most

common

area type in the analysis,

and

oldindustrial areas,

where

declining industrieshave

to be restructured

—

these are the

two major problem

areas.

We

alsolookatsmall-

and

intermediate-sizedcities

and

at

some

restructuring cases of large metropolitan

areas

which

have very specific

problems

and

different potentials.

CP:

Could

you

give

some

examples ofthe types of

de-velopment

activities

you

have found?

STOHR:

We're looking at the actors within individual

communities

who

haveinitiated thischangeprocess.We're

considering the type of actor

and

how

he orshehasrelated tolocal institutional,politicalorsocialstructures in

bring-ing about such a change.

The

precondition has always

been

an

actor, butactorsvary

from

clergytoan

entrepre-neur

who

became

more

thanjusta private entrepreneur,

butasocialentrepreneur

—

hetried tostimulateactivities

in addition to his

own

enterprise.

Very

often the actor

would

bealocal authority. Forthe

most

part, successful

local authorities

were

in countries with

dynamic

local

governments

which had

recently introduced increasing

autonomy

forpolitical

and economic development

atthe

local level.

CP:

You'vestressedtheimportance ofinternal

develop-ment,

and

have described

two

types of external inputs

which

tend to increase dependency: central

government

and

large multiregional or multinational enterprises. Is

oneof these the"lesserof

two

evils"?

Do

depressed regions

have

more

room

forinnovation

and

flexibility

under

one

set of external conditions?

STOHR: One

cannot generalize

by

saying that

one

is

betteror

worse

than theother. In the centrally planned

countries,

two

of

which

areincludedin thisstudy

(Hun-gary

and

Poland), the central

government

isalways the

major

initiatorof

development

atthelocallevel, butthe

government

has brought about a

dependency

of local

communities

which

has to a great extent stifled their ability to act out of their

own

initiative. This also very

often

happens

with multinational companies.

Multina-tional

companies

—

thetypicalcaseisa

company

town

—

will

become

such a

dominating

factor in a local

com-munity

that

no

otherinitiativescan

emerge

successfully.

In both cases, local

communities

can avoid this

depen-dence.

Some

of theEastern

European

case studies

show

thatthereare

ways

toavoidthiscomplete

dependence

on

centralgovernment.

These

studieshave identifiedniches

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willbetolerated

and which

canmobilize

human

and

other resourcesfor localdevelopmentsuccessfully.

The

same

can be applied to large

company

towns. There are

ways

in

which

alocal

community

cantry tobenefit

from

the multi-national

company

without

becoming

completely depen-dent

on

it

by

using it as a catalyst for introducing

new

technologies

which

localfirmscantakeadvantageof.

So

thequestionhereveryoftenis:

How

can

we

promote

the

involvement of local firms in servicing or initially

con-tractingorsubcontractingwith

MNCs,

ratherthanleaving these

companies

to get all theirinputs

from

outside the region.

CP:

How

isthe

"community

interest"usuallyrepresented

innegotiations as areas try toattract

new

high-tech

and

industrialdevelopment?Specifically,

do

you

feelthe

com-munity

as a

whole

has been served

by

the presence of

Research Triangle Park?

STOHR:

Most

often, local or regional authorities will

negotiatewithexternal firms

—

thatisthe

normal

pattern.

The

negotiator

may

also be a separate

company

set

up

for development. In Research Triangle Park, Triangle J

Councilof

Governments

substitutesforor representslocal

government

innegotiations.

My

impressionofResearch

TriangleParkisthatit

was

abletoattractlarge enterprises,

both public

and

private. This is important for creating a

new

image

and

for starting high-technology activities in

North

Carolina, sincethe state has traditionally

had

a different

image

and

different

dominant

sectors.

The

questionis:

How

broad

hasthiseffect

become

and

how

broad

willit

become?

ResearchTrianglePark seemstobe

comprised of a large

number

of enterprises that close

themselvesoff

from

theoutside; theytrynottointerrelate

with other enterprises, while benefitting

from

local

re-sources like university knowledge.

Once

they get this

knowledge, however, they

want

tomonopolizeit, refusing

to sharewith neighboringenterprises. This is

one

ofthe

dangersof attractinglargecorporations. Itmight be

pos-sible to establish a

number

of facilities within Research

Triange Park to establish

which

would

beable to house

small-

and medium-sized

enterprises, sort-of

on an

incu-batorbasis, toestablish relations

and

offer services to the

large enterprises.

The

small-

and

medium-sizedenterprises

would

thereby

become

beneficiaries of

some

of the

in-novations that the large enterprises are developing in

Research Triangle Park.

The

incubator could be within

thepark,adjacentto, or outside the park.This

would

pro-vide a type of spillover or multiplier

which

would

cer-tainly

broaden

theimpactofsucha researchtechnology

park.

CP:

Have

local

development

endeavors been successful inutilizinglocallyavailable resources, ratherthan attempt-ing to create or attract high-tech industries?

STOHR:

Many

of the case studiesthat

we

have analyzed

in the

European

context

show

that thepanaceaof

intro-ducing high-technologyindustriesisoftennotconsidered

by

local

communities

asthe

most

importantaspect.

The

most

important aspect is to transform existing sectors,

retraining theirtraditional strengths, but adapting

them

to

modern

requirements

and

toexistingworld market

con-ditions. Localities

must

transform

and

modernizeexisting

enterprises

and

find

new

forms of cooperation

among

existingenterprises

which

would

permit

them

to

become

competitivewithout beingclosed

down

and

replaced

by

high-technology firms.

There

are a

number

of success

storieseveninsectorsconsideredasdecliningin industri-alized countries.

The

Italiantextileindustry,forexample, has

had

a

marvelous

successstory. Afterinitialclosures,

the Italians

modernized

small

and

decentralized plants

which

today arecompletely competitive becausethey've

changed

theirtechnology

and

they've

changed

their

prod-uct mix.

They

are

now

making

very

good money.

They've

become

profitabledespite strongcompetition

from

East

Asianfirmsin textiles

and

similarsectors. They've been

abletocarveoutfunctions

which

the

low-wage

countries

cannot fulfill.

CP:

What

do

you

think ofindustrialrecruitment as

an

economic development

strategy

and

how

prevalentisit?

STOHR:

Industrial recruitment has been the

dominant

strategy of localcommunitiesthat try tooutbidother

com-munitiesto attractoutsidefirms.Usuallytheonlycriteria

which communities

specified

were

that firms be large,

powerful

and

willing tocreate a large

number

ofjobsin

thearea.

The

types of jobs that

would

be created,

and

the types of entrepreneurial functions that

would

be

transferred to the area

were

usually overlooked.

These

have turned outtobe keyelements. Ifa firmoffers only

routinejobswithout providing

any

key entrepreneurial

functions,it

may

havea negativeeffect

on

thecommunity.

The

firm

may

draw

labor

from

othersectors

—

agriculture orservices

—

becauseit

may

pay

slightlyhigher wages. But

itdoes notcreate

any

developmentalpotential. Itisvery

important forlocal

communities

to

make

arrangements

with suchenterprisestolocatekeyentrepreneurial

func-tions like research

and development

or marketing or

headquarter functions.

These

are certainly the essential

functionsthat, ifattracted tothearea, bring

much

greater benefits because they are creating quality jobs

and

the determination of

company

policyis

much

more

accessible tolocal employees.Ifafirmperforms onlyroutine

func-tions,thelocal

community

merely

implements

what

was

decided

somewhere

else.

One

therefore,

by

definition

be-comes

more

dependent

on

outside decisionmakers. It is

importantforlocalcommunitiesto

become

awareof these

keyissuesso thattheycanadvocatefortheir interests in

negotiationswithoutsidefirms.Indefiningtheirinterests,

communities

should notlook onlyatthe

number

of jobs or

magnitude

ofcapitalinvested, butatthe types of jobs

and

types of investment that will be

made.

Such

qualitative issues have very often

been

overlooked.

CP:

What

are

some

advantages

and

disadvantages of

using qualitative

development

indicators?

STOHR:

Qualitative measures are not substitutes for quantitativemeasures.

They

shouldbe usedtogether,

and

one

can quantify

many

of the qualitative criteria.

One

would

try toquantifyqualitativecriteriainorderto

make

a

more

objective evaluation. In the past, however,

re-searchershave excludedqualitative characteristicsbecause

theycould not be evaluated withsufficiently rigid

quan-titativetests.Ifacharacteristicisimportant, itissensible

toforgo the"rigid criterion"

and

includesomething

which

may

be methodologically less

demanding

but

which

would

stillservean importantfunctioninevaluatingsuch

a project.

CP:

How

might

one

measure

qualitative characteristics

over time? If

one were

interested in

examining

changes

inculture, forexample,

how

would

onetestorprove such

an

hypothesis?

STOHR:

Culture might be a "soft" area in this respect;

however, even within the

economics

field

you

have a

number

of qualitativecriteria

which

have notbeen taken

into considerationin the past. For example,

an

area

ex-periencing a decline ofindependentfirms

and an

increas-ing

number

ofbranchplantsneedstobeconsidered.

Such

factors indicate that the

autonomy

of theregional

econ-omy

isgraduallybeingdebilitated. Similarly, if

one

looks

atthe qualificationstrataof theworkforce,

one

sees that there are large increases in

employment,

but they all

happen

inonly

one

stratum

—

maybe

theleast qualified

orthe

most

qualified only,

which happens

very oftenin

high-technologyzonessuchasSilicon Valley.

Once

alerted

to this

phenomenon,

one

would

askthe question:

"What

happens

ifthelabor

market

begins

demanding

the

inter-mediate qualifications?"

One

would

then try todevelop

activities

which

would

give

employment

to a less

bifur-catedlabor

market

thanthat

which

often results

from

a

high-technologyindustry.

Another

qualitative

character-isticis

how

much

research

and development

money

firms

in the region are spending. If

one

calculates the rate of

total

R&D

expenditures

compared

to total expenditures

of theseenterprises,

one

gets a qualitativecharacteristic

measured

in quantitative terms.

CP:

Have

you found

a greaterdegreeof similarity

among

types of areas you'vedefined, suchas "rural"or"old in-dustrial," or within individual countries?

What

sorts of

similarities

and

differenceshave

you found

among

local

development

initiatives?

STOHR:

There are

more

similar characteristics

among

areas of similar type. Rurallocal

development

initiatives

will probably resemble

one

another

more

closely than

theywill initiatives in old industrial areas in their

own

areas

between European

countrieswill be

more

similar

with those of other areas.

There

are certain nationally

determinedrestrictions

and

advantages.Nationalpolicy,

for instance, or national constitutional conditions, will restrict or

promote

possibilities existing in all types of

areas.

A

highlycentralized political

and

administrative structure will probably have a negative impact

on

the

development

ofall types oflocal initiatives. In a

decen-tralized federalcountry

on

theotherhand, allareas

would

benefit

from

theincreased

autonomy

oflocal

and

regional

authorities, irrespective of area type.

CP:

Might

you

not have other

problems under

such a decentralizedsystem; forexample, theemergenceof

com-pany towns which

you

spoke of earlier?

STOHR:

Ithink

company

towns

would

cutacross

coun-tries.

Company

towns

would

normally

emerge

insparsely

settled areas with

no

other

economic

activities besides agriculture

and

maybe some

localsupportservices.These

would

generallybe rural, peripheral areas.

Sweden,

for

instance, hassuch

communities

initsnorthernmost terri-tories

where

iron

mining

dominates the

economy.

No

other

economic

activity of

any magnitude

exists there.

CP:

What

common

development

problems

do

such

pe-ripheralareasface?

Have you found any

particularly inno-vative local

development

initiatives in peripheral areas?

STOHR:

If

one

definesperipheralareas asthosewithout easy access to

major

population centers or

economic

activities, this

means

that they are marginal to existing markets,

and

in thisrespectarehandicapped.

On

theother

hand, withregardtolocalinitiatives,ithas been observed

thatthis distanceprovides

them

withgreater

maneuver-ability.

That

is, thecentral

government

tendstoexertless control. InScandinavia, thisperipheral locationhasbeen

considered an advantage becauseithas givenlocal

com-munities

more

of

an

"actionradius"todevelopinititatives

on

their

own. There

are, therefore, advantages

and

dis-advantages.

The

artistousetheadvantagestospecialize

inproducts

which

do

not need extensive transport

net-works.Forinstance,particularly inhigh-technologyfields,

airhas

become

the

most

important

medium

for

transpor-tation.

One

cantryto developa strategy

which

satisfies

both requirements.

Scandinaviapresents

an

interesting

example

of

an

at-tempttobringcomputer-based

homework

intoperipheral

areas

where one

canlink

up

computersfairly easily.This

enables residents to remain in dispersed settlement

pat-terns inperipheral locations.

Another example

of

an

innovative initiative is

from

Scotland

—

theconcept of a

community

cooperative.These

are cooperatives

which

aregeared notonlyto

one

sector

Initiatives inScandinavia's peripheral areasenableresidents toremain indispersed settlements.

—

they aremultisectoral.

They

try toincludenotonly pro-duction, but service activities

and

social services.

They

are therefore multifunctional

and

multisectoral.

InHungary,therural localcooperatives are established

on

aterritorialbasis.

They

can

employ

all types of activ-ities,notonlyagricultural,butmanufacturing

and

service activities. In thisrespect, theyare similar toa

multisec-toral complex, but theyhave a territorial

bond

and

are thereforeinterested indevelopingthatterritorialunitwith

whatever sector activity

seems

feasible

and

promising.

Thisisquite different

from

theaverage cooperative,

which

is usually only

an

agricultural, manufacturing or

mar-keting cooperative.

These

traditional cooperatives are linked primarily to international markets; their

major

allegiances are with such markets rather than with the

local

community

orterritorial unit.

A

similar

example

is

the

Basque

Mondragon

cooperative. Here, a territorial

identity is also the basis for thecooperativefederation,

a

whole

system of cooperatives.

The

goal is to develop

broad

packagesofactivitieswithinthe

community

rather

thantospecialize in fields

which

areonly

world

market-oriented buthave

few

local linkages

and narrow

multi-pliers.

CP:

What

are the current attitudes internationally,

re-garding the

promotion

of these kinds of

development

activities?

STOHR:

In

many

European

countries,

and

also in the

United States, it has

been

considered properto separate

governmentalactivities

from

private enterpriseactivities

—

and

forunderstandablereasons.However, the

sue-cessful inthesemiconductorindustrybecausethe

govern-ment,in thiscase theMinistryof InternationalTrade

and

Industry, isintegratedwithprivate industry.Togetherthey

developed a

common

strategy ofsectoral development,

particularly in the

computer

industry,

which

has given

Japanese industrytremendous advantagesoverU.S.

indus-try.

An

imitation of theJapanese

model

currently

under

negotiationinthe U.S. isSematech,

which

isthefirstjoint

venture

between

the U.S.

government

and

private

enter-prise.In this project, thefederal

government

would

team

up

with about a

dozen

computer

firms to create a joint

computer development

center.

CP:

What

can

and

shouldbetheroleofnational

govern-mentsinstimulating thetype ofinternaldevelopment

you

advocate?

STOHR:

Ina departure

from

past practices,governments

would

nottry tocreatejobsdirectly in ruralorold

indus-trialareas, or onlyattract capital totheseareas through

capital incentives. This policy has proven to be very

short-sightedbecauseit

assumes

thatcapital

and

jobs are

homogenous

factors

—

neitheris. Itis

much

more

impor-tant for central

government

to

improve

access to

com-munications to rural or old industrial areas about

new

technologies,bothregardingworld marketconditions

and

potential niches of

unmet

demand

which

might be local-ly filled,

and

also about organizational

management

practices.

The

government

should be

more

involved in facilitatinginformationaccessthantryingtointervene

by

givingcapitalor

employment

incentives inanunqualified

way.

Another

important step

would

be to

promote

the

formationofinnovativestructures. In Japan, thecentral

government

has

promoted

the establishment of local

private-public-university partnerships, tripartite

partner-ships, asthe basis oflocalinnovation

and

development.

If suchlocal partnerships are provided, the

government

is willing to co-finance

an

applied research center, for

instance, for local industry, particularly forlocal

small-and medium-sized

enterprises.

CP:

What

approach

can areas lacking the resources to

developatripartitepartnership taketostimulate

develop-ment?

STOHR:

The

Basque

cooperative,

Mondragon,

hasbeen verysuccessfulinlinking

up

withforeign universities in

the U.S.

and

inFrance,

from which

it

draws

basicresearch data.

The

cooperative then transformsthe technologies

initscenter forapplied technological innovation, for use

within

members'

own

regional contexts. Distance

from

a

university can often be bridged quite successfully

by

transferringinformationwhich, ifwell-organized, canbe

sufficientforabriefperiod. Inthelong-run, suchanarea

would

certainlyneedtodevelopits

own

local university

orresearch

and

training functionsunderauniversity-like label. But if this is not possible initially, there are

substitutes, as the case studies have

shown.

CP:

What

are theprospects forhigh-tech

development?

Do

you

see

any

new

innovations or trendseither inthe

technology itself, or the spatial patterns that

emerge

as

a result?

STOHR:

Microelectronics

development

isextremely

im-portant,butthereare

new

developments suchas biotech-nologies

and

new

materials

which

arealsovery important.

The

Japanese have identified five areas of innovation

which

they promote.

One

is microelectronics; a second

iscomputers; a thirdis

new

materials, suchasceramics;

a fourthisbiotechnology;

and

finallytelecommunications. Microelectronics isakey innovative element, both

tech-nologically

and

spatially.Itpermitstheefficientoperation of small

machines

and

small firms,

which

are flexible

enough

toproducefordifferentiated

demand.

Small-

and

medium-sizedenterprisescan then be verycompetitivein

a decentralized pattern.

Such

"flexible automation" is spatially important becauseitcanbeestablished outside

of the largeagglomerations,

where

small-

and

medium-sized firms dominate.