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The automotive industry crisis as a determinant of regional unemployment growth in Slovakia and Hungary in 2008-2009

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  • Karel Hostomský
  • Jan Ženka

Abstract

Slovakia and Hungary provide good examples of export-oriented countries with small domestic markets, which are heavily dependent on foreign capital. Excessive orientation on the automotive industry and supplying industries (especially in the case of Slovakia) and high level of geographic concentration of (mostly greenfi eld) production/ assembly plants into the western parts of both countries make their regional labor markets vulnerable at times of economic crisis. Neither Slovakia nor Hungary were specialised on the automotive industry in the period of socialism and thus were not able to offer an industrial tradition, pool of skilled labor force and dense network of suppliers to the extent like Czechia was. Therefore, it was generally expected that their industrial centres will be seriously threatened by plant closures and relocations of production abroad as soon as they start to loose cost-based competitive advantage. However, automotive industries in these countries exhibited surprisingly strong resistance to the recent economic slowdown. With the exception of metropolitan Bratislavsky region all Slovak regions experienced either stagnation or even increase in the automotive employment. Although Hungarian automotive industry had been seriously damaged by crisis and signifi cantly contributed to increases in unemployment especially in the most developed regions in the northwestern part of country, few large scale bankruptcies were reported. Automotive industry didn´t signifi cantly alter the traditional regional pattern of unemployment in Slovakia and Hungary. Geographical proximity to the Western European markets, large capital investments, relatively skilled and cheap labor force seem to favor maintaining production activities in Central European countries.

Suggested Citation

  • Karel Hostomský & Jan Ženka, 2011. "The automotive industry crisis as a determinant of regional unemployment growth in Slovakia and Hungary in 2008-2009," Regionální studia, University of Economics, Prague, vol. 2011(2), pages 25-31.
  • Handle: RePEc:prg:jnlrst:v:2011:y:2011:i:2:id:33:p:25-31
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    References listed on IDEAS

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