City specialisation and diversification in South East Europe (SEE) countries

The main objective of the paper is to study the role of localisation and the urbanisation (or diversifi cation) economies in urban post-transition SEE, by constructing and analysing manufacturing specialisation and diversifi cation measures over the period 2006-2013. The second objective of the paper is to analyse differences within manufacturing industry across cities in terms of their technological complexity. Industries are mapped across cities with over 50,000 populations (98 cities in six SEE, covering 35.3% of the total SEE population), a population threshold that is in line with previous literature. The data were obtained from Bureau Van Dijk’s Amadeus fi rm-level database containing, most importantly, balance sheet data and profi t-and-loss account data for CEE. The analysis of manufacturing industry diversifi cation and specialisation in the cities is based on the relation between agglomeration economies of the Marshall-Arrow-Romer type (economies of location or specialization) and the Jacobs-Porter type (economies of urbanization or diversifi cation). Analysis results revealed that a particular specialisation pattern that would point to a homogenous system of cities throughout the region could not be confi rmed. City specialisation in manufacturing was negatively correlated to city size in SEE, but this relation has not shown particularly strong. Similarly to other countries, top-specialised cities are specialised in manufacturing closely related to natural resources such as petroleum products and tobacco, pointing to advantages arising from “fi rst nature” geography. However, diversity and specialisation are not exact opposites, as there are cities which are both diversifi ed and specialised. The results of the second part of the analysis show that medium-low technology and low technology groups of industries in manufacturing prevail in total turnover, with 36.2% and 35.0% share, respectively. City specialization in the prevailing technology group in SEE, in medium-low technology, is highest in Bulgarian, Bosnian and Herzegovinian and in Croatian cities