Integration into global production networks and path-dependence: the footwear industry in post-socialist Hungary

Molnár, Ernő and Lengyel, István Máté (2016) Integration into global production networks and path-dependence: the footwear industry in post-socialist Hungary. Zeitschrift für Wirtschaftsgeographie, 60 (4). pp. 171-185. ISSN 0044-3751

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Abstract

Labour-intensive industries suffered a spectacular loss of their weight in the industrial structure of post-socialist Hungary having an intermediary position between the Western economies controlling the global industrial value chains and the Eastern low-cost production locations. This degradation process can be particularly witnessed in the case of the footwear industry which experienced two large waves of decline, one during the change of regime in 1989 and the other after the turn of the millennium. In the background of the changing performance of the footwear sector there were also significant structural changes during both periods of decline. Integration into global production networks by subcontracting or as subsidiaries of foreign enterprises, process and functional upgrading tendencies within the existing value chains as well as the establishment of Hungary’s own brand products for niche markets are the most important issues in this respect. This study is built upon two key questions: (1) What kind of dynamics does the Hungarian footwear industry show during its integration into the (global) production networks of the sector? (2) How are global production networks becoming embedded into the local economy; and to what extent can the transformation of the Hungarian footwear industry be considered as a path- and place-dependent process? The empirical research is based on semi-structured and in-depth interviews carried out in the last three years with representatives of enterprises from eleven industrial locations — comprising about 35 % of the total sectoral employment — in addition to sector-relevant national and local institutions.

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