European map showing the extent of the industrial and economic core, with key problem regions highlighted.
Geographical remoteness is most significant in economic terms due to the lack of efficient transport linkage essential to modern, competitive economies of scale. Essentially the lack of integrated, rapid, inexpensive transport in remote regions acts as a deterrent to investment. An extreme example of a problem region hindered in such a way is Norrbotten in Sweden (see ‘A’ on map), the most northerly county, 1000km by road from Stockholm, which is a further 1000km from the economic core of the EU. Despite rich natural resources in the form of iron ore deposits around Kiruna and potential for further commercial forestry and Hydroelectric power exploitation, so far investment has been limited to high-tech businesses with a notable lack in small manufacturing enterprises. Furthermore, the dominant primary sector still only employs 6% of the workforce. This has resulted in high unemployment, at 12%, although GDP per capita is only 4% below Sweden’s average. Underdeveloped infrastructure is most to blame, with only a single rail line to the port of Lulea for iron ore shipping, and no fast road connections to the relatively prosperous south of Sweden.
However, other factors have arguably equally contributed to the problems of Norrbotten, and physical factors especially add to the difficulties faced by most problem regions, other examples being Portugal, Spain Greece and Southern Italy on the Mediterranean fringe. In Northern Sweden however it is the cold winters often below -20°C, and the rocky infertile ground that render most of the land uncultivable. Pack ice along the Gulf of Bothnia restricts sea transport of iron ore in winter, and this has restricted exploitation of the mineral resources. The low population density caused by out-migration (7500 people in 2000), is itself due to the economic difficulties, and a lack of population reduces the pool of entrepreneurial skill that is a key catalyst to starting up small private businesses that allow gradual upward cumulative causation. Although other factors are clearly involved, Norrbotten is greatly limited by the friction of distance that separates it from the core.
Another problem region that illustrates the importance in connectivity for economic growth is Andalucia in southern Spain (see ‘B’ on map), with a GDP of only 58 out of the EU average of 100 and very high regional unemployment of 26.8%. Transport links to Andalucia are poor, with 12-hour 450km train journeys to Madrid, the nearest commercial centre, and so this peripheral region has an agricultural based economy, with 12% of employment in farming. With one fifth of the country’s population, Andalucia accounts for only 10% of the industrial output, and mass tourism is the greatest asset. Manufacturing is restricted to farming related industry and food processing (e.g. olive oil production), which does little in aid of attracting foreign investment. Andalucia is an example of a large rural region that lacks urban foci between which fast and efficient transport routes can become established, as is the case with interconnected core towns and cities. One underlying cause of Andalucia’s remoteness and lack of connected towns is the low productivity of the dry, relatively infertile soil, never being able to support a dense inland population. Malaga on the coast has recently attracted a few high tech industries, but the lack of skills and other industrial growth presently prevent widespread industry from rapidly taking hold and spreading throughout the region.
Arguably the remoteness of a region is predetermined by physical factors, giving the physical geography of Europe the greatest role in deciding where economic development can become established. For example the western-central European lowlands are favoured with wide stretches of flat fertile land and number of large rivers (i.e. the Rhine and Seine) providing natural irrigation. Some regions, however, are exceptions in that they have a climate and relief favourable for agriculture, as well as having efficient transport connections to the core of Europe, giving the potential for economic strength; and yet are economically underdeveloped.
Following reunification in 1989 the eastern ‘länder’ of Germany (see ‘D’ on map), for example, have been connected through numerous railways and motorways to prosperous western Germany. This initially led to a temporary economic boom in eastern Germany as sale of western products accelerated. However, the realities and difficulties of establishing a competitive economy after fifty years of centralised economic control remained. Many western firms opened up branches in the eastern part but these investments neither made up for the economic losses through unification nor did they contribute to decisive growth. This is due to the fact that the economic base was being simultaneously eroded by the privatisation of former state-owned firms. The weak economic foundations and the lack of domestic investments, partly originating from the lack of capital, are still a major problem in eastern Germany. Through restructuring measures, large parts of the workforce were laid-off. These problems were triggered by the highly inefficient economic system and centralised planning pre-reunification. East Germany, which had one of the strongest socialist economies, stagnated in the 1980s. The decline of markets in the eastern block was a major reason for this. The fallout of large state-directed monopoly organizations (Kombinate) has been expropriations; over-employment; serious environmental damage; non-competitive industries; a lack of commerce; decaying infrastructure and housing and an overall lack of supply.
The unemployment rates have soared since 1989 and are still around 20% in the five eastern states. Some regions in eastern Germany are among the poorest in Europe, for example Mecklenburg-Vorpommen had an enormous unemployment rate of 18.7% in 1998. In 2002 manufacturing and mining provided employment for just 28 persons per 1 000 inhabitants (compared with 83 in the "old" Länder), making Mecklenburg-Vorpommen the Land with the lowest industrial concentration in all of Germany. Effectively eastern German states have not had the time or input necessary to adapt to western market economy, and although having abundant human and physical resources, are disadvantaged through economic alienation from western Germany while connectivity is relatively higher than in other problem regions.
A region with even greater connectivity than eastern Germany is South Yorkshire, and freight railways combined with large motorways such as the M1 make journey times to the southeast only a few hours. Despite this close proximity to Greater London, the core region with the highest GDP (243 - over twice the EU average of 100 units), South Yorkshire now has a GDP of only 70.7% of the average for the EU, whereas before the 1970s earnings were above the national mean. As with eastern Germany the current economic problems originated from reliance on a narrow range of primary and secondary industry. Coalmining, iron and steel heavy industries survived until the early 1970s when their vulnerability was exposed by sudden collapses in the prices of all three outputs. From 1978 to 1998 industry shed 177000 jobs, with the overall workforce being reduced to a fifth of its original total. External changes in demand brought about by government rationalisation and undercutting by foreign industries forced the industry into decline, and no degree of proximity to the core of the EU could prevent such market fluctuations. Arguably the few hours it takes to reach South Yorkshire by road is still enough to put it outside the sphere of modern out of town high-tech industrial developments that have spread from the south-east conurbation. Thus moderate remoteness relative to the British core region does have an impact on South Yorkshire by discouraging industry from locating much further north of the midlands; and thereby prolonging the effects of heavy industry decline that could be amended with an influx of new high-tech industry and the associated benefits (i.e. positive cumulative causation).
