"Neue Mitte" in the middle of nowhere - Structural Change for the better?

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Summary

Economy is determined by dynamic processes. Structural change in the Ruhr Area is symptomatic for Europe’s manufacturing regions. Grown on the base of heavy industry during industrialisation, a consumption and productivity crisis influenced the whole economy of the region. High unemployment rates and the closing down of factories and mines recoined the image of the area. Today structural change led the region towards high-tech, culture and leisure facilities. Structural change has consequences on workers, inhabitants and the region’s economy as a whole. Impacts can be either negative or positive. Planners must keep these consequences in mind while planning a new project for structural change. Oberhausen’s structural change was really successful. The “Neue Mitte” created 10000 new jobs, Oberhausen became a growth pole for consumption and leisure facilities. Nevertheless new problems arose. Purchasing power that was attracted by the CentrO has had negative impacts on cities in vicinity and also on the city centre of Oberhausen itself, which results in a Zero-Sum-Game.

The regional structural change framework shows that supply and demand factors are the starting points of a regions economic performance. This performance is influenced as well by institutional factors as by the grade of diversity of the economy. In the Ruhr Area and in Oberhausen local governments first acted too late to absorb the decline of the industry (constraints), then they set up projects to emphasize the change (incentives). The “Neue Mitte” shows that structural change needs diversity, otherwise a new dependent mono-structure develops, which is again vulnerable and likely to break down.

Responsibility, diversity and balance are the features of successful structural change. Of course, economy is not all about people in the calculations of companies, but without people there would simply be no economy. Change must focus on the needs of people; otherwise it is development “in the middle of nowhere”.

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Table of Contents:

  Summary  3

I.  Introduction and Methodology  

  5  

1.  Introduction  5

2.  Methodology  6

II.  Structural Change for the better?  

  7  

1.  Structural Change in the Ruhr Area  7

1.1.  Historical Development  7

1.2.  Social Consequences  11

1.3.  Image  12

2.  Structural Change in Oberhausen  13

2.1.  Historical Development  13

2.2.  Neue Mitte  14

2.2.1.  Problems of structural change in Oberhausen  16

2.2.2.  Coping with negative developments  17

2.3.  Regional Structural change framework  17

3.  Critical view on structural change  18

III.  Conclusion  

  20  

Annexes 21   

Annex 1  : Employment in the Ruhr Area  21

Annex 2  : O-Vision  22

  Reference List  23

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I. . I In nt tr ro od du uc ct ti io on n a an nd d M Me et th ho od do ol lo og gy y I

1. Introduction

The European integration’s lift-off started from an economic cooperation based upon coal and steel, the European Coal and Steel Community. Those core sectors underlie heavy, negative changes since the 1960s. In Germany especially the Ruhr Area suffers from the decline in this sector - the sector which has led the area to the rise before. Due to late reactions of the government and the industry itself the whole area fell into a crisis. Today massive structural change has taken part - in many different variations and timings. Some cities are now “well off” again, other still suffer to a huge extend from the crisis. Therefore the research question of this paper must be: What are the impacts of structural change on a determined area? The whole process cannot be seen as uniform and straight development, but is nevertheless often regarded as something that leads to benefits for the whole area. But does structural change always lead to benefits for all involved actors? And in the consequence thereof, shall there be structural change in any case? As the questions alone would be a bit brought, this paper shall focus on structural change in the Ruhr Area and especially on the city of Oberhausen and its alteration from steel producing to health-technology and consumption - from manufacturing to services.

In the following the regional structural change framework is linked with the whole topic to ad some theoretical aspects to the analysis. Part II ‘Structural Change for the better?’ deals on the one hand with structural change in the Ruhr Area to give an introduction to the whole topic; and furthermore to show that the developments in Oberhausen are not unique and that findings might be applicable to the whole region. On the other hand the analysis focuses on Oberhausen and its development from a steel producing city to the construction of the ‘Neue Mitte’, as a service city. The distinction between super regions, structural change and creative cities is not that easy, and also in this case not necessary. The Ruhr Area is a super region which underlies structural change. Oberhausen also coped with structural change by being a creative city with clear place marketing. Nevertheless the focus of this paper is laid upon structural change, even though all four topics are somehow interwoven. Basics about the Ruhr Area and structural change are regarded as known.

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2. Methodology

“Regional economics today does not yet offer a comprehensive theory that could explain spatial structural change in Europe.” ¹ Therefore as a base for this paper the framework of regional structural change explained in the text “Beyond the Blue Banana? Structural Change in Europe’s Geo-Economy” by Hospers is used. ² The framework is displayed in a simplified version in this paper, otherwise it would have been to complex for the length of this paper.

The starting point of the regional structural change framework is the concept of “creative destruction”. Entrepreneurs develop innovations by which the existing economic structure is replaced by a new one. Structural change theory is used as a time-dimension and agglomeration theory as a spatial dimension. “The process of structural change is understood as an interaction of supply, demand and institutional factors.” 3

The supply side determines the economic structure of an area. There must be enough profit-seeking entrepreneurs who are able to create a new structure out of the old one. Companies might grow into growth poles, which might work as a magnet for producers and consumers (success breeds success).

Demand side: “In response to changes in demand an existing growth pole may shrink in favour of new growth poles and, therefore, new locations.” ⁴ These changes are not that important in the short run, but in the long run. Technological change creates higher incomes and transfers the economy to a (more complex) service economy. This process is called tertiarisation.

Supply and demand side together are the base from which areas can lift off. If they are successful in the long run depends on their adaptability to new circumstances, which is determined by two factors: Firstly the degree of diversification. Diversified economies are less vulnerable to shocks and changes. Mono-structures are likely to break down as a whole. Secondly the institutional surroundings. Institutions can be constraints or incentives for economic developments in a region. The framework of regional structural change is the starting point of the paper and helps to explain the origin and factors influencing structural change. With this concept in mind one can make some assumptions, summed up in the following table.

1 Hospers, G.-J. 2003. Beyond the Blue Banana? Structural Change in Europe’s Geo-Economy. Intereconomics. (Further: Hospers: Blue Banana) p.78

² Chapter I.2. is largely based upon Hospers: Blue Banana

³ ibid. p. 81

⁴ ibid. p. 83