The role of the foundational economy: The case of two regional centres in Central and Eastern Europe.

Abstract

Our comparative research examines the changes in the economic position of two rural regional centres, Cluj-Napoca and PĂŠcs, in the post-crisis period. The focus of our interest is the sectoral structure of the local economies in the light of the concept of ‘foundational economy’. Our empirical research covers data from the largest local firms in each of the two cities, as well as regionally aggregated data, analysed from a labour productivity perspective with exploratory statistical methods. The source of our data is the Orbis Europe enterprise database, supplemented by EuroStat data at regional level. Our results suggest that due to the large weight of the foundational economy in both cities, it should be considered an important driver of long-term territorial development and local well-being. There are several sectors in the local economy of the two cities where some activities of the foundational economy excel in productivity, thus we cannot establish a direct contradiction between the high weight of the foundational economy and lower efficiency.