I. SPATIAL TRENDS AND CHALLENGES

1. Socio-economic development trends in the nineties

1.1 Transition and transformation

Transformation of economies and societies has accelerated throughout the world during the past decade, as a consequence of globalisation and of the emerging information society.

Transition is commonly used to describe the specific transformation process of former socialist countries, comprising, in the BSR, the region south of the Baltic Sea shores, from Mecklenburg-Vorpommern in Germany through Poland, Kaliningrad, Lithuania, Belarus, Latvia, Estonia to the Russian regions of Leningrad, Novgorod, Pskov, Murmansk oblasts, Karelian Republic and St. Petersburg city.

These countries and regions are being transformed from a previously centralised system with state-owned and state-controlled business, to a market oriented system with domination of private business. Remaining public sector functions are being decentralised to reflect the subsidiarity principle. Transition started in the early 90s, and is not completed yet.

Transition countries and regions face a duplicate change pressure: globalisation and transition. Added to this, a third change has begun to provoke impacts: EU accession.

Two BSR countries have gone through the accession experience since 1995, Sweden and Finland. Others will follow, including Poland, Estonia, Lithuania and Latvia. While Russia and Belarus will not accede the EU, they will also be affected by changing trade regimes with the enlarged EU. Kaliningrad region will be surrounded entirely by EU territories.

Countries having applied for EU accession have already been widely reconnected with western economies. Economic integration has proceeded faster than the political-institutional one.

Transition has lasted now for a decade, affecting almost all facets of life. Changes have been particularly strong in countries seeing the new conditions as an opportunity to be made best use of. But even these countries have only made it half-way. But still, business executives expect changes in the next ten years to be even greater than those of the last decade .¹

Annual change (%) in GDP of BSR countries 1992-98 at constant prices in global comparison

Spatial structural changes follow those in economic, social and political conditions with a time-lag. Spatial changes of past years are probably just a first indication for those still to be expected.

This means that there is still scope (and need) to influence the spatial impacts from current socio-economic trends.

Generally, BSR transition countries proceeded fast in comparison to some south-eastern European countries. But differences in the pace of reform within the BSR are considerable.

Development of purchasing power of wages, 1991-1998

Source: Andersen, Reconnecting Europe, p.37 based on EBRD data