Regional Economy Specialisation and Industry Concentration in the Slovak Republic

The paper aims to quantify and analyze changes in the Slovak economy structure on national (SR) and regional NUTS II (Nomenclature of territorial units for statistics) levels, over 1995 - 2010. We analyze development of specialization, industry concentration and examine impact of selected factors on industry concentration development. We use yearly data of sectoral employment and gross value added at the national and NUTS II regional levels for Bratislava Region (BA), Western Slovakia (WS), Central Slovakia (CS) and Eastern Slovakia (ES), classified according the NACE Rev. 2 (Statistical classification of economic activities). Specialization and industry concentration were quantified by entropy index. Selected factors effect on industry concentration development was estimated by econometric model (Vogiatzouglou 2006) modified by Konyova, Bartova (2013). We used three explanatory variables: technological differences, differences in relative factor endowments and economy of scale. Generally, the western part of the country, including Bratislava (capital) region has been more economically developed. We found, that the Slovak economy became more specialized before the SR accession to the EU. After the accession, the most diversified was Bratislava regional economy, but its specialization has been increasing. The most specialized was the Western Slovakia economy. Industry concentration had been declining significantly in the Western Slovakia, while growing in the Middle and stagnating in the Eastern, less developed part of the country and in Bratislava region. Impact of differences in relative factor endowments, scale economy and technological differences variables on sector concentration was highly significant and had, as expected, a positive effect on geographic concentration in the Eastern Slovakia region. We found negative significant effect of relative factor endowments in the Middle Slovakia and negative significant effect of scale economy in the Western Slovakia. Accession of Slovakia to the EU had statistically positive significant effect on sector concentration and negative effect on economy specialization on national level and in the Eastern Slovakia region. Development of sector concentration economy specialization in the remaining parts of Slovakia corresponded with the European Commission (2004) findings that European integration impact on specialization and concentration had been rather insignificant.