THE SPRAWL OF ECONOMIC ACTIVITIES: A CASE STUDY OF THE CITY OF SPLIT
Silvia Golem, Department of Economics, University of Split,
Abstract
In this paper we discuss the ongoing spatial changes which are re-shaping landscapes in cities and their surrounding area.Increasing urban population and the various demands for land in and around cities significantly contribute to transforming urban landscapes, particularly in the costal regions. In this modified landscape, a new urban development is encroaching on inland areas; urbanised areas are spreading, while coasts are becoming increasingly intertwined with the hinterland. These trends render the concept of a 'single most central focal point' rather insufficient to explain and predict the urban spatial structure changes. The evidence suggests that where growth around the periphery of the city is coordinated by strong urban policy, more compact forms of urban development can be secured and the positive overall effect can be assured. Of course, planning policies should ensure such urban development in which environmental and social considerations are fully embedded in spatial planning policies at all steps of the policy cycle.
Within this perspective, we assess the trend of dissipation of economic activities from the city centre to surrounding areas and discuss the establishment of business zones in metropolitan areas in general, and in the metropolitan area of Split in particular.
The existence of the business zone at the outskirt of the city of Split seems to have positive effects on the overall economic development of theSplit metropolitan area. It is an opportunityforsmall and medium sized enterprises to obtain relatively cheap and infrastructurally-equipped land to re-locate or start their business in. Apart from the favourable location which contributes to the sizeable reduction of transportation costs, there are many other 'pull' factors for firms seeking a profit-maximising location. However, one troublesome side effect of this process of de-concentration of economic activities is that it consumes excessive resources and leads to greater air and water pollution.
1The ongoing changes in economic-spatial development of a coastal city
It appears that cities around the world are undergoing substantial spatial changes. On a daily basis, we all witness rapid, visible and conflicting changes in land use which are shaping landscapes in cities and around them as never before (EEA Report, 2006).To a large extent, these changes are driven byincreasing urban populations and the various demands for land in and around cities that are becoming increasingly acute, particularly in the costal regions that are being urbanised at an accelerating rate[1].
According to Hoover and Giarratani (1999) recent trends have entailed the rapid sprawl and coalescence of originally discrete cities and towns into larger metropolitan and megalopolitan complexes, bringing this multinuclear aspect into prominence as a basic characteristic of the urban pattern. In this modified landscape, a new urban development is encroaching on inland areas; urbanised areas are spreading, while coasts are becoming increasingly intertwined with the hinterland. It appears that residential areas as well as economic activates are spreading around the city boundaries while metropolitan centreis losing itsattractiveness as a location to live or to locate the business in. This may come as surprise at the first glance, since theclassical and indeed some novel theories of spatial urban structure emphasise the attractiveness of central locations. Factors contributing to the attractiveness of central areas, such as possibility of face-to-face contacts, linkages, experience and idea sharing, realisation of agglomeration economies etc all work as concentration-enhancing factors. Indeed, these elements are regularly recognised as prime and necessary precondition for a city existence and growth. However, recent trends show that de-concentrating factors pull people and economic activities from the centre concentration to low-density suburban and hinterland areas. These factors make the concept of a 'single most central focal point' rather insufficient to explain and predict the urban spatial structure changes. Cities are tending to decentralise and this tendency towards metropolitan decentralisation, as pointed by Jenses (1996), is a natural outcome of the spatial market in operation where the concept of resource migration becomes a basic and natural part of the dynamics of the space-economy.
The dissipation of households and economic activities from traditional centres is facilitated by the technological progress, including transportation and telecommunication developments. Further, the congestion confronted in accessing the dense concentration has also contributed to decreased attractiveness of central locations.Changes in people's preferences are also deconcentration-enhancing factors. Households' preferences are nowadays more inclined towards more spacious residence units. Further, the households' disposable incomes and automobile usage have been increasing.
While making their intra-urban location decisions, business establishments as well as householdsconsider primarily, as pointed by Hoover and Giarratani (1999), environmental characteristics, access and cost of the location. Given those locational characteristics andthe abovementionedtechnological and economic developments, the sprawl of households and businesses into hinterland is quite apparent.
As far as environmental characteristics are concerned, hinterland is more environmentally preserved and healthier area to live in compared to the core of the city. According to (EEA Report, 2006) the attractiveness of living in the centre of cities has fallen, while the quality of life associated with more 'rural areas' including city suburbs, being closer to nature, has increased. Access to and from hinterland is nowadays facilitated by the development of transport networks, which are intrinsic causes of expanding cities.New transportation investments, in particular motorway construction, can be a powerful stimulant for new development and sprawl. As for the third factor, the cost of the site, price of suburban land compared to already urbanised land ismuch lower in many European cities. This is in accordance with the central place theory and the rent gradient function that describes a decrease in land prices as distance from the centre increases. From the perspective of land economics, high land prices in the core of the city force developers to seek lower prices in the more peripheral areas.
Taken together, these factors have increasedthe attractiveness of villages near cities for residential or business purposes and, at least to some extent, decreased the pressure on densely populated coastal line. However, on the other hand, it is typically abandoned or idle agricultural land adjacent to existing urban areas that is ideal for urban expansion. Of course, the loss of agricultural land has major adverse impacts on biodiversity. Hence, these changes of urban landscape present a challenge forintegrated coastal zone management which attempts to balance the needs of development with protection of the very resources that sustain coastal economies.
However, it should be added and emphasised that, even where there is little or no population pressure in the central location, a variety of factors, particularlythe desire to realise new lifestyles in suburban environments, outside the inner city, are still driving urban sprawl(EEA Report, 2006).
Faced with the increase in demand for land, small municipalities traditionally attempting to maintain their populations and attract small and medium-sized enterprises,have found themselves unprepared for such planning challenges. Many of those municipalities have been tempted to relax controls on the development of agricultural land and even offer tax benefits to commercial and industrial enterprises to invest in the municipality. This has increase the supply of land in the surrounding areas, making it easier for investors and households to find the desirable parcel. Moreover, to increase the availability of the land for business purposes, many countries, Croatia in particular, have proclaimed the beneficial effects of business zones located at the outskirts of large cities. By different instruments governments have stimulated the establishment of such zones. Governments' policies are primarily based on the positive effects of such zones on the overall economic development. Namely, the economic literature suggests that clustering of business activities in geographically boundedconcentrations has positive effects on the urban regeneration and overall economic development. Among other factors, this positive effect is due to localisation and agglomeration economies, easier transfer of innovative ideas and activities, transfer of technology and inter-firm cooperationand networking. Of course, these effects are enhanced in the case of the similar and complementary activities. However, proximity advantages remain evident even for dissimilar businesses should they located close to each other. However, in the interest of reasonable brevity of the paper, the discussion of the cluster effects, at this point, remains only general.
2The city of Split – post-socialist coastal city
The largest Croatian coastal city, the city of Split, has been undergoing major transformations in its developmental path, particularly during the last two decades. These changes encompass all the spheres of the socio-economic reality, with the most important being the transition from centralised to market-oriented economy. The process of transition, to a large extent and particularly in the 1990s, has rendered most of Croatian cities in institutional vacuum without any clear vision and strategic plan of development. This has given rise to somewhat destructive and impeding processes, particularly in the urban spatial development and planning sphere. However, in recent years some institutional and political attempts from central and, in some cases, local governments were made to reverse these negative trends.
When addressing issues of the urban development of the city of Split, we believe that it is of major importance to consider its metropolitan, rather than administrative boundary (Fig.1).Namely, there is a continuing perception of cities as isolated from their wider regional context. In reality, however, cities flow imperceptibly across municipal boundaries and the functional influences of cities are recognised as reaching far beyond their immediate boundaries. There are multidimensional links between urban and rural areas that are becoming more and more apparent.Unfortunately, the existing regional and local spatial plans are ignorant of the ongoing process of metropolitanisation of the city of Split. At the same time, the responsibility for land use management remains divided between different administrations and this fragmentation of management, frequently exacerbated by the political tensions of neighbouring administrations, may lead to incoherent and uncoordinated land use management.There is no all-embracing and comprehensive spatial plan of the whole metropolitan area.
The establishment of metropolitan area boundaries, however, is a subject of many debates. Here, we adopt the common practice of drawing the boundary around area in which people daily and permanently commute. Approximately, to establish the metropolitan boundary we use an hour public-transport driving distance from the city centre. This results in a compact area of a city and its surrounding based on the strong economic and social interrelationships. Instead of 188 000 inhabitants of the administrative area, metropolitan area is populated with 348 288 inhabitants (Croatia Bureau of Statistics, 2001). Geographically, this area consists of three "belts": inland, coastal zone and islands. These belts are separated by mountainous barriers and see, which created climate differences, influenced communication channels and the way of living.
As for the location ofeconomic activities, there is aggregation of businesses, workplaces and functions in the very centre of the metropolitan area resulting in congestion and deterioration of living conditions in the city of Split. On the other hand, the rest of the metropolitan area is characterised by low economic activity, but healthy and unspoiled environment. This dichotomy has contributed to creation of inequality and imbalance, which resulted in deep disparities between the centre of the metropolitan area and its hinterland. However, as mentioned in the previous section, numerous studies show that economic structure both in the city and in the hinterland is essentially changed. The excessive concentration of workplaces and functions in Split shows strong tendency towards dispersion. The recent data indicate that migration in the Split metropolitan area has led to the growth of rural towns and villages at theexpense of the city of Split (Filipic et al., 2003). However, due to lack of integrative spatial and economic planning of the metropolitan area, entrepreneurs willing to relocate their business in the hinterland were often faced with administrative obstacles, poor regulatory environment, unsolved claims of ownership and reluctance of local authoritiesto cooperate.
Fig. 1. Split metropolitan area
However, in the past three years there have been some changes that have enabledplanned dispersion of economic life throughout the metropolitan area. Firstly, there has been a motorway build as a major precondition and strongest factor that contributed to revitalisation of the hinterland. There was another important factor, and it is in the focus of this paper, the creation of business zone in the municipality of Dugopolje, a small municipality located 20 kilometres from the centre of Split.
3Business zone in Dugopolje
Although it is not uncommon to witness a proliferation of small business hubs that have established themselves in coexistences with the central city, linked effectively by motorways (Wong, 2004), the specificity of 'Dugopolje' business zone is that it has become, unlike majority of other business zones in Croatia, self-sustained and as such it has stir up the dust and pointed to the need for a systematic spatial planning of metropolitan areas. Business zone 'Dugopolje' is now playing a supportive role, and has emerged as key suburban centre serving the city of Split.
Although this zone was not established primarily to contribute to more balanced formation of the economic activities within the metropolitan area, but to revitalise the municipality of Dugopolje and reverse the depopulation that this municipality has been subject to for many years, it has certainly attract many firms previously located in Split and pointed totrends of decentralization of economic activates. The localisation advantages of this zone seem to have been enough to attract increasing numbers of companies and other institutions, leading to a self-reinforcing cycle.
Terminologically, it is quite difficult to specify the right term for the business zone that has been established in Dugopolje. It is not classical Marshallian industrial district-type of zone because it comprises of different economic activities and firms that are not interrelated, nor vertically nor horizontally. One could argue that this zone is more of a form of "latent cluster", i.e. cluster with high number of firms but with a low level of interaction due to lack of trust, low cooperation and high transaction costs (Isbasoiu, 2007).Hence, firms do not operate in related industries, but are geographically concentrated in space.The member firms are highly heterogeneous, in terms of their main activities and markets. However, almost all of them fall into category of privately owned small and medium size enterprises.
Prior to establishment of the business zone and construction of the motorway, Dugopolje was relatively depopulated and economically underdeveloped area. The level of economic activity was low with agriculture being predominant occupation and young people moving out, mostly in the city of Split. From the geographical point of view, this area has many comparative advantages. It is located near the city of Split, not far from the Bosnian border, and on the motorway Split-Zagreb.
In the past five years, there have been some major changes and reverse trends taking place in Dugopolje. The unemployment rate has been declining, the living standard of the local people as well asthe local revenues stream has been increasing, and people have started to immigrate. Local authorities aiming to attract investorsprovided various business-friendly facilities and made substantial efforts tofacilitate access and start-up process for firms willing to locate in this area.Investors can easily get construction permission and all the documents needed to start up their business, parcels areinfrastructurally equipped, many companies get tax-free and/or subsidies for a certain percentage of interest rates for the first three years etc. Taken together, local authorities have played a major role at establishing this zone.
There are many other factors thatcontribute to the success of this zone. To a great extent, the success of this zone stems from cost andlocational advantages that have attracted many firms to locate in this area. Another important factor is insufficient and relatively expensive landand saturation of building construction areas in the city of Split.This problem with the lack of land has been acting as an impediment to many existing firms aiming to expand their businesses as well as to new comers and foreign firms looking for alarge terrain to set their businesses in.