extra-medium  introduction  news projects publications personal contact disclaimer [ Changes to the Economy ] Eastern European urban economies have responded differently to the changes in macroeconomic conditions. New challenges have emerged due to profound structural changes in the economy in the transition from planning to markets. The pressures of national and international economic forces, and the opening up of previously sheltered markets, have generated rapid adjustment of industries, services and other economic activities. Economic restructuring has a crucial impact on direction of growth and change, on future specialization in the economic base of cities, their mix of traditional manufacturing industries and advanced services. Empirical evidence suggests that economic diversification, associated with the transition from industrial to service oriented-information based urban economies, has become more prominent and is reflected in the composition of the GDP. Central and Eastern European countries have experienced a significant growth in the share of service based GDP. Small and medium-size enterprises have become a genuine source of private sector growth and employment. These processes in return bring corresponding changes in the demand for urban resources, land, and infrastructure provision. While the extent of this adjustment is related to macro-level policies, market integration, technological innovation and the power of international capital, endogenous factors in the urban economy also have a significant role. Land, existing industrial capacity, natural resources, labour, good urban governance also contribute to the competitiveness of cities and their ability to attract new industries and economic activities. [ Social Changes ] While economic growth prospects in the region have been evaluated positively, the social impact of the transition process presents a major challenge to market reforms. The most significant aspect of social change is associated with labor market adjustment and social differentiation. In response to structural and macroeconomic pressures, labour market adjustment has proceeded through changing sectoral employment patterns, unemployment fluctuations and wage differentiation. Service employment, for example, has experienced significant growth in the second phase of the transition. In addition to shifts in the occupational structure, labour market restructuring is manifested in unemployment rate fluctuations. Unemployment increased rapidly in most countries at the start of macroeconomic reforms and, after a decade of consolidation, the number of available jobs is decreasing again as a result of the worldwide recession tendencies. After the cosmeticized even societies of the socialist regimes both extreme poverty and wellness have appeared in the region since the early 1990s. This, along with the down and out masses formerly occupied in socialist heavy industry, resulted in social, but also ethnic tension, especially in the case of gipsy minorities that are overrepresented in the lowest social classes. An ageing population and high economic dependency ratio has placed excessively high demand on social security systems (pensions & health care) and aggravated patterns of poverty and inequality. The scale and amount of changes has in many cases been just too big for societies to handle, leading to an unhealthy mix of new social norms and of those still rooted in communist times. [ Changes in Governance ] In the context of transition from planning to free markets the role of national governments has been redefined to facilitate liberalisation of the economy, to promote economic and social stability, and to ensure distributional equity. This process has included efforts to introduce more local autonomy, citizen participation and rebalancing of public and private sector roles. All of these efforts have strong implications for subnational and local governments. Specifically, local government reforms in the countries of transition have several aspects: decentralisation, devolution of power, and privatisation. Political, fiscal and administrative decentralisation has taken place across the region over the past decades in an effort to make governments more democratic and efficient. Within the framework of institutional reforms in Central Eastern Europe, governments enhanced local autonomy and decentralized power and responsibilities. Local governments have become the principal institutions responsible for urban planning and management. In addition, they have retained the statutory responsibility for the provision and maintenance of technical infrastructure and urban social services. However, inflation, subsidy restructuring and significant budget cuts have raised the cost of urban services dramatically. Running schools, hospitals, social care homes and other social facilities has contributed to high local government shares of public expenditure. In this respect, it has placed Hungarian, Polish and Romanian local governments in the Premier League of European spenders along with the Scandinavian countries. It has also increased the dependency on intergovernmental transfers, since the scale of resources needed far exceeds the potential of any local tax base. Local governments are also under a lot of pressure to maintain the competitiveness of the public transit system. As the fleets are getting older, more capital funding is required to provide good quality of transportation services and sufficient frequency. Limited data from transportation surveys indicate that the average commuting time by public transport is growing, which makes the commute with private automobiles much more attractive. In addition to the above, the dual-level municipal structure introduced in Budapest often leads to interest conflicts between the districts' and the city's governement. Furthermore, some local regulations contradict those implemented by Budapest's municipality, often leading to unclear situations in building and public space use laws - to name a few. [ Changes to the Urban Structure ] Post-socialist cities have a distinctive form. The legacy of the socialist experiments in planning and housing provision has created excessively high densities in the urban periphery compared to the market city . These areas contain a high proportion of system-built housing and some basic social services (schools, medical care, etc.), but lack sufficient retail and employment opportunities. This segregation of land uses contributes to excessively long commuting trips to centers of employment, urban inefficiency and high transportation costs. Mass produced socialist housing in the peripheral residential estates shelters 50-60% of the population in larger cities. In Cluj for example, the district of Manastur alone is home to one third of all inhabitants. Rapid privatisation of public housing has transferred ownership of those units to former tenants at bellow market prices. The 'nations of home owners', amongst them Romania, have reached levels of home ownership around or even over 90%, well above the EU average of 56%. The transition to more advanced, market oriented forms of economic development, industrial production and labor is reflected in series of changes in the urban fabric. Existing industrial zones have been in the process of intensification to accommodate the establishment of a large number of new private firms, warehouses and office activities. As most post-socialist cities, Budapest has a disproportionately high share of industrial land - a direct result of socialism's explicit emphasis on industrialization. Other forces behind the dynamics of urban change are land reforms, property market differentiation, and fragmentation of investment flows. These new challenges and opportunities have triggered turbulence and controversy in the planning professions through the 1990s. A new generation of master plans, aiming at defining the future for the capital cities under market conditions, has had a limited degree of success so far. The impact of these planning efforts, however, should be considered against the background of economic, social and institutional change. Within the new market reality urban development is associated with a wave of investment in land uses offering opportunities for higher return, selective inner city redevelopment by the private sector and gentrification of inner city neighborhoods. Studies indicate that investment and wealth accumulation through housing, other real estate, productive and infrastructure assets in the region are predominantly concentrated in cities. Firms continue to locate in cities to benefit from agglomeration economies, a pool of diverse labour force and wider access to information and technology. Though productivity advantages of urban areas are significant, inefficient urban management, inadequate transportation and lack of affordable housing impede the quality of urban life and labor mobility.