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ABSTRACT
This article explores the transition of integrated periphery countries to a semi-periphery status. It sets out to refine the broad category of ‘semi-periphery’, distinguishing between upper and lower-order semi-periphery. It shows that compared to established members of the automotive semi-periphery, newcomers are often poorly equipped to thrive in the new competitive environment. Since it takes decades of organic accumulation to develop competitive assets that provide resilience, newcomers that used to thrive in the competitive environment of the integrated periphery often turn out to be the weakest members in the semi-periphery. Based on expert interviews, the article illustrates the theoretical arguments comparing the evolutionary trajectories of the Austrian and Hungarian automotive industries. We show that Austria, exemplifying the case of within-category upgrading (within the upper semi-periphery), can leverage its strong innovation potential, dense network of capable domestic-owned suppliers, tradition of cluster-based and industry – university collaboration, and developed market for technology. In contrast, the between-category transition of Hungary was propelled by the rising wage-level, while other indicators would not qualify it for the club of semi-periphery countries. Evolutionary trajectories in the lower-order semi-periphery can easily be derailed if industrial policy gets stuck in its – previously highly effective – integrated-periphery role.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. In this regard, our approach resembles the clustering exercise by Pavlínek (Citation2022), who also set to refine the threefold taxonomy by introducing two subtypes in the categories of core and periphery, respectively. Our approach differs in its focus on the category of semi-periphery.
2. Notable exceptions include Blažek (Citation2016) and Blažek et al. (Citation2020).
3. Obviously within-category upgrading is pertinent not only in the semi-periphery but in each category: both in core economies and in the integrated periphery.
4. 1) ‘On the way to net zero mobility’, workshop organised by the European Trade Union Institute, in April, 2022, in Brussels; 2) ‘Just transition: Where is the European car industry heading?’, final conference of the ’Just transition’ project supported by the European Climate Initiative, in May, 2022, in Brussels; 3) ‘The Need for Transformation: the European Automotive Industry’, workshop organised by the Rosa Luxemburg Foundation, in May, 2022, in Milano.
5. Relatedly, the scarcity of adequately qualified frontline workers and engineers was recurrently mentioned both by the Hungarian and the Austrian interviewees. Expert H–12 pointed out that the key problem was the relatively low performance of employees in support functions (technicians, maintenance workers). Quality differences in this specific field can be traced back to the low performance of the Hungarian upper-secondary level vocational education. Around half of the Hungarian interviewees mentioned the prohibitive degree of employee churn, which exacerbates the shortage of frontline workers. Moreover, corporate investment in in-house training is a waste of resources in the wake of a high employee churn.
6. For example, the two Austrian companies in our sample have filed 57 and 220 patent applications respectively.
7. According to the snapshot data published by Visualcapitalist.com, in 2021, Hungary hosted the third and Poland the fourth largest lithium-ion battery manufacturing capacity in the world: 28 GWh and 22 GWh respectively, trailing only China and the U.S. https://www.visualcapitalist.com/mapped-ev-battery-manufacturing-capacity-by-region/.
8. Note that in accordance with the general principles of the EU industrial policy, there are no dedicated automotive policy programmes in Hungary: policy supports digital transformation, sustainability, human resources development, R&D and innovation, and investments in capacity expansion and technological upgrading. Nevertheless, politicians announcing the completion of subsidized automotive investments rarely fail to emphasize the importance of this industry for the Hungarian economy.
9. Obviously, existing automotive investors’ investments in capacity expansion and upgrading also receives generous public support.