Industry’s Traditional Spaces: Old Industrial Regions

Abstract

This paper focuses on the crisis and transformation of Old Industrial Regions (OIRs), spaces which played a dominant role in the industrial development of the 20 th century. Discussion is concerned with the relevance of OIRs and the macroeconomic conditions that had lead to their emergence, with a special emphasis on the market-distorting effects of soft budget constraints and muddled coordination systems. Furthermore, the paper outlines the evolution that has taken place among the relevant theories explaining industrial decline, showing how their focus has shifted from exogenous to endogenous factors. In the conclud- ing part, the applicability of the OIR problem is discussed with regards to state socialism and post-socialist transformation; it is argued that parallels can be drawn between market and planned economies, and both the macroeconomic and regional causes of industrial de- cline can be identified within the state socialist economic system.