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Managing change: the comeback of post-socialist cities

Sasha Tsenkova a
a
Faculty of Environmental Design, University of Calgary, Alberta, Canada
Online Publication Date: 01 November 2008

To cite this Article Tsenkova, Sasha(2008)'Managing change: the comeback of post-socialist cities',Urban Research & Practice,1:3,291

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Urban Research & Practice

Vol. 1, No. 3, November 2008, 291310

Managing change: the comeback of post-socialist cities

1753-5077
1753-5069
RURP
Urban
Research & Practice
Practice, Vol. 1, No. 3, October 2008: pp. 118

Sasha Tsenkova*
Urban
S.
Tsenkova
Research and Practice

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Faculty of Environmental Design, University of Calgary, Alberta, Canada

The paper explores major trends and patterns of change embedded in the overall process of
economic, social and political transformation that profoundly influence the spatial adaptation
and repositioning of post-socialist cities. It reflects on important issues such as the efforts to
create competitive, socially inclusive and well-governed cities in the post-socialist world. The
research draws much-needed attention to an important set of urban policy issues with wide
implications for the success of the transition process in the region. It explores the links
between the transition to democracy, markets and decentralized governance, and highlights
the most salient characteristics of these multilayered processes on the spatial transformation
in post-socialist cities. The main argument is that the impact of these processes of urban
change has created a mosaic of diverse urban experiences. Despite this diversity, the spatial
transformation has several principal dimensions: (1) new spaces of production/consumption
reflecting globalization and economic restructuring within the hierarchy of cities; (2) social
differentiation in residential spaces associated with growing inequality and the emergence of
new forms of urban poverty; and (3) conflicts and selective urban development associated
with new models of governance and institutional transformation. The exploration of these
transitions through the urban lens emphasizes the importance of strategic urban management to address the unique challenges of post-socialist cities and their dynamic realities.
Keywords: post-socialist cities; urban management; economic change; social differentiation;
democratic governance; suburbanization

Framework for analysis: dimensions of urban change

Post-socialist cities and societies have experienced a dramatic economic, social and political
change. Fifteen years after the start of the transition to markets and democracy, most post-socialist
countries have become functioning market economies, have come close to or exceeded the level
of economic output of the early 1990s, and have moved to decentralized political and administrative power. Progress in economic terms has been uneven, and the pursuit of private sectordriven growth as well as macroeconomic and social reforms has delivered mixed results with
respect to economic performance, provision of basic services, and the effectiveness of social
safety nets. In all countries of the region, inequality and poverty have increased, with significant
implications for cities where most people live and work.
This paper explores some of these trends and patterns of change embedded in the overall
process of economic, social and political transformation that profoundly influence the spatial
adaptation and repositioning of post-socialist cities. It reflects on important issues such as the
efforts to create competitive, socially inclusive and well-governed cities in the post-socialist
world. The paper draws much-needed attention to an important set of urban policy issues with
wide implications for the success of the transition process in the region. It explores the links
*Email: tsenkova@ucalgary.ca
ISSN 1753-5069 print/ISSN 1753-5077 online
2008 Taylor & Francis
DOI: 10.1080/17535060802476525
http://www.informaworld.com

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S. Tsenkova

between the transition to democracy, markets and decentralized governance, and highlights the
most salient characteristics of these multilayered processes on spatial transformation in postsocialist cities.
It is important to position the post-socialist urban experience in the framework of overall
institutional transformation on the one hand, and in the context of rapid economic and political
system change on the other. This undeniable complexity creates unique challenges for planning
and urban policy. The analytical framework of the paper draws on approaches in the urban
literature that use the countrys urban system as the analytical construct to measure and interpret
trends. It is argued that the urban system serves as the primary channel linking the national
economy to the system of global cities (Beaverstock et al. 2000, Yates and Cheng 2002). Viewing
development through the urban lens, the approach explicitly links the changes in the external
environment (national and global), which are much more dramatic and revolutionary, to changes
in the internal environment (the urban system and the city itself), by emphasizing the nature of
the ongoing transformation, reciprocity and diversity. The transformations are associated with
three aspects of the transition process that are particularly important for post-socialist cities: the
transition to democracy (systemic political change), to markets (systemic economic change),
and to democratic governance (Buckley and Mini 2000, World Bank 2000, van Kempen et al.
2005). While these interrelated aspects of the post-socialist transition have been explored at the
national level in a number of studies, very few (Adair et al. 1999, Hamilton et al. 2005, Tsenkova
2006) have acknowledged their impact on the world of post-socialist cities.
The analytical framework advances the notion that the triple transition is a major driver of
urban change. Further, the local responses to global pressures (competition for markets, trade)
and policy reforms at the national level (privatization of industry, deregulation of real estate
markets, and social policy reforms) set the framework for specific changes in the economic,
social, institutional and spatial structure of the city. Finally, since post-socialist cities are
increasingly drawn into a system of global relations, the positioning of their respective nationstates within the global economic system also exercises considerable influence. Therefore the
analytical framework in the paper highlights the important differences in the performance of
nation-states with respect to the three major transitions: to democracy, markets and decentralized
governance. It then relates these transitions to processes of spatial change in three interrelated
domains: (1) economic change (globalization, de-industrialization, growth vs. decline); (2)
social change (demographic transition, income polarization, poverty); and (3) changes in urban
governance (new centrallocal relationships, provision of services, urban planning). The last
aspect of the transition, labeled the quiet revolution of decentralization and devolution of
power to local governments, significantly affects the performance of post-socialist cities.
In spatial terms, other forces behind the dynamics of urban change are land and housing
reforms, property market differentiation and fragmentation, and the increased flow of domestic
and foreign investment (UNECE 1997, Tsenkova 2005). The impact of those factors should be
considered against the background of rapidly changing roles of traditional institutions, actors
and relationships in the urban development process. Within the new market reality, urban development has become associated with a wave of investment in land uses offering opportunities for
higher return, selective inner-city redevelopment by the private sector and gentrification of the
inner city neighbourhoods (Hamilton et al. 2005). The sequence and rhythm of these changes
reshapes existing urban systems and urban forms, transforms the social and demographic
composition of neighbourhoods and leads to new urban life styles (Knox 1995). In this context of
dynamic change, globalization and economic restructuring, social differentiation, and changes in
the institutional landscape are powerful contextual determinants of the transformations in the
built environment and in urban policy development and implementation (Hall 1993, Marcuse
and van Kempen 2000, Giddens 2001).

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The impact of these general trends and processes of urban change, however, has created a
mosaic of diverse urban experiences. Despite this diversity, it can be argued that the urban
spatial change in post-socialist cities has several principal dimensions: (1) new spaces of
production/consumption reflecting globalization and economic restructuring within the hierarchy
of cities; (2) social differentiation in residential spaces associated with growing inequality and
the emergence of urban poverty; and (3) conflicts and selective urban development associated
with new models of governance and institutional transformation. These processes of spatial
transformation are reviewed below.

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Globalization, economic restructuring and new spaces of production and consumption

National economies in the post-socialist world have become increasingly integrated within a
global system of production, distribution and exchange. The liberalization of trade, international
flow of capital, the growing influence of transnational corporations, are well-known developments
that have led to fundamental economic restructuring, particularly visible in the post-socialist cities
(Giddens 1990, Castells 1992). The transition from a centrally planned industrialized system of
mass production to a system of flexible accumulation has been accompanied by restructuring of
the welfare state and a transition to pluralist, democratic governance. Globalization has a deep
impact on the restructuring of cities and localities involved in the process. The performance of
cities and regions is increasingly affected by processes and forces external to their geographical
areas, and even to boundaries of their national states (Sassen-Knoob 1994).
Urban restructuring in the post-socialist world is marked by the following trends: increasing
internationalization of metropolitan areas in terms of both capital and labour; de-industrialization
and growth of command and control functions in capital cities; increasing social and economic
polarization within cities; changing power relations between the public and the private sector,
mirrored in deregulation of planning and the emerging competition to attract foreign investment;
and a new emphasis on place promotion and city marketing in the context of growing competition
for investment and jobs (Andrusz et al. 1996, Tsenkova and Budic-Nedovic 2006). Another
important factor affecting economic change in cities is the level of foreign direct investment,
which has advanced steadily over the past decade in line with the countries progress in transition and macroeconomic stabilization. Foreign investment has provided a major boost to market
economies, particularly in the Czech Republic, Estonia and Hungary, where more liberal and
stable environments have attracted strategic investors to enterprise restructuring and technology
transfer.
New challenges have emerged from the profound structural changes in the economy as a
result of transition from planning to markets. The pressure of national and international
economic forces, and the opening-up of previously sheltered sectors to the growing competition
in the global marketplace, has required the urgent adjustment of industries, services and other
economic activities (Adair et al. 1999, World Bank 2000). With the advances of privatization in
strategic sectors energy production, telecommunications, manufacturing the dominance of
the private sector in economic development, as well as the emerging new industrial mix, have
generated new demand for new production spaces. The post-socialist urban economies have
responded differently to the changes in macroeconomic conditions. The consequent rapid adjustment of industries, services and other economic activities has crucial effects on the direction of
growth and change, on future specialization in cities economic bases, on their mix of traditional
manufacturing industries and advanced services. Empirical evidence suggests that in most cities
the economic diversification associated with the transition from industrial to service-oriented,
information-based urban economies has increased.1 During the transition, individual urban areas
have undergone differentiated development, with some losing and others gaining economic

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attractiveness. Capital cities and large urban centres have been privileged in that respect, attracting a large share of the regional investment in banking, retail and information-based technologies. Their economies have managed to sustain a more stable labour market sheltered from high
unemployment, with unemployment rates half to one-third of the national average (van Kempen
et al. 2005, Hamilton et al. 2005).
The economic transition to market-oriented forms of economic development, industrial production and technological advancement is reflected in a series of changes in the urban fabric.
The existing industrial zones have experienced some intensification to accommodate the growing number of new private firms, warehouses and offices. The continued growth of service sector industries has made areas with good exposure and transportation accessibility more attractive
to private sector investors. Some of the industrial zones, however, particularly associated with
manufacturing and heavy industries, have declined. In some cities, the large state enterprises, a
legacy of the socialist past, have gone bankrupt and the industrial landscape has become dominated by abandoned complexes of industrial and administrative buildings. New industrial activities, driven by foreign investment, have generated demand for suburban industrial warehouses,
often beyond the urban edge.
Paralleled by de-industrialization and the shift to service-based urban economies, new industrial development has been directed to secondary cities (CBRE 2005). Cities like Brno, Plzen,
and Ostrava in the Czech Republic; Katowice, Wroclaw, and Lodz in Poland; and Debrecen and
Szeged in Hungary have developed as major industrial hubs, further fuelling the process of
industrial decentralization away from the capital cities (Stanilov 2007). Bratislava has the highest share of industrial stock per 1000 residents, well above the level in Budapest, Prague and
Moscow (Figure 1). The data also indicate a positive relationship between lower vacancy rates
and higher yields, with yields in Moscow exceeding 20%.
But the most dramatic spatial change driven by economic transformations is perhaps manifested in the commercial property markets, which have attracted the largest share of institutional

Figure 1. Industrial stock in post-socialist capital cities.

Source: Authors estimates based on data from CBRE, 2005.

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foreign investment. Shifts in technology and communications have established new office functions, particularly in banking and finance, as a significant component in the economic base of
capital cities. These trends have resulted in dynamic property development of office space in
new suburban office parks and top prices in buoyant office markets (e.g. in Moscow, Budapest,
Prague, and Warsaw). The available office space per capita in several cities in the region is presented in Figure 2. As the data indicate, Bratislava tends to be the leader in terms of office supply, followed by Warsaw and Prague with 1500 sq. m. per 1000 residents. More recently,
institutional investors have shifted their attention to Bucharest and Moscow, where higher yields
and lower vacancy rates have generated better prospects. Overall, less risk-averse investors have
been rewarded by higher returns in the emerging markets of the post-socialist capitals, compared
with those in more mature markets (DTZ 2005).2
The retail sector has also experienced dynamic growth. While the early years of the transition
were marked by a high level of small-scale retail activity, often run out of ground level apartments, garages, basements and other ad-hoc premises, a more recent consolidation of retail profits
was channelled into the construction of new high-end retail spaces in the city centre and densely
populated housing estates (Weclawowicz 1992, Sykora 1994, Tosics 2005). Existing retail spaces
have been restructured to accommodate a diverse and entrepreneurial retail sector, and strip
retailing has established itself as the principal retail activity in pedestrian zones, usually with
exclusive shops and boutiques that cater to the affluent consumer. The increased interest in the
development of shopping malls in the post-socialist cities has created new landscapes of retail,
entertainment, restaurants and hotels, associated with a new urban culture of consumerism and
rising purchasing power. The shopping malls, often in suburban locations, have provided a new,
more sophisticated retail experience compared with the old bazaars, retail strips and open markets. Foreign capital, which presents the majority of investments in the retail market, has been
directed primarily to large-scale projects in the urban periphery (Keivani et al. 2001). Warsaw,

Figure 2. Office supply in post-socialist capital cities.

Source: Authors estimates based on data from CBRE, 2005.

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Figure 3. Shopping centres in post-socialist capital cities.

Source: Authors estimates based on data from CBRE, 2005.

Budapest and Bratislava have over 500 sq. m. of shopping-centre space per 1000 residents, two to
three times higher than Paris and London (see Figure 3).3 This segment of the market offers an
average yield of 8% in the central European capital cities, while the prospects in Moscow, Sofia
and Bucharest tend to be higher, as might be expected in cases of substantially lower supply.
Growing inequality, urban poverty and social differentiation in residential environments
The legacy of centrally directed urbanization driven by industrial growth during socialism has
had powerful consequences for post-socialist cities. This highly urbanised economic system
across the region is much more vulnerable to external shocks and, given the relatively low per
capita income, is difficult to maintain. Over-industrialized cities were hit badly by the massive
closures of unproductive state enterprises. Unemployment and poverty escalated. On the other
hand, some countries in the region have economies much more dependent on agriculture, with
low levels of urbanization, as the data in Table 1 indicate.
Two aspects of these observations have particular significance for the urban future: (1) countries
in the region that have been over-industrialized and over-urbanized may have more severe
economic shifts affecting their urban areas; and (2) countries with less urbanization and less
economic development may face migration to urban areas and rapidly rising urban poverty.
The economic difficulties and social stress have affected patterns of urban growth across the
region. Data indicate that annual urban population growth in most countries will be lower than
1% until 2015, with Estonia and Latvia expected to have negative population growth, in the
range of 0.70.8% per year. Some countries in the Balkans with lower levels of urbanization,
however, are projected to have annual growth rates almost three times the regional average.
Concentration of the population in large urban agglomerations is another characteristic feature

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Table 1.

297

Major urban indicators in selected post-socialist countries.

Albania
Bosnia & Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
FYRMacedonia
Poland
Russian Federation
Slovakia
Slovenia
Serbia & Montenegro

Level of
Urbanization
(% Population)
2000

Urban
Population,
Millions
2000

Projected
Annual
Growth (%)
20002015a

Capital City

Capital City
Share of Urban
Population (%)

41.2
43
69.6
57.7
74.7
68.6
64
69
68.4
62
65.6
77.7
57.4
50.4
52.2

1.2
1.7
5.7
2.5
7.6
0.9
6.4
1.6
2.5
1.2
25.4
114.1
3.0
1.0
5.5

2.1
1.8
0.1
0.5
0.0
0.8
0.0
0.7
0.0
...
0.5
0.2
0.6
0.5
0.8

Tirana
Sarajevo
Sofia
Zagreb
Prague
Tallinn
Budapest
Riga
Vilnius
Skopje
Warsaw
Moscow
Bratislava
Ljubljana
Belgrade

43b
24b
21
16
16
44b
28
47b
22b
47b
9
8
15b
28b
27

Sources: UN-HABITAT, 2001.

Notes: a. Estimates of UN Population Division; b. Authors estimates based on data from National Statistical Offices.

of the region, particularly in the Russian Federation (UN-HABITAT 2001). Capital cities have
become the champions of transition, attracting investment, people and jobs (European Commission
2007). The concentrations of urban population in the capital cities are higher in Latvia, Estonia,
Macedonia and Albania, exceeding 40%.
These demographic developments should be evaluated against the background of rising
income inequality, social distress and growing insecurity across post-socialist cities. The socialist system had a more egalitarian income distribution than the new market-based economic system (Milanovic 1992). It also tolerated lower economic growth for the sake of avoiding income
inequality. Not surprisingly, an attribute of the economic transition was income polarization,
which measured by the Gini coefficient has increased rapidly, with important implications
for social safety nets and access to housing and urban services (Buckley and Mini 2000).
Post-socialist urban economies have experienced rapid economic and social differentiation
resulting in escalating unemployment, degradation in living standards, and growing social problems in the last 15 years. The social cost of the transition from planning to markets has been
high, particularly in the industrialized cities dominated by large state-owned industries where
the socialist legacy has left a much more powerful imprint on the cities economies, societies
and spatial structure. The social problems in post-socialist cities are related to prolonged recessions and to the growth of long-term unemployment (Buckley and Mini 2000). Groups at risk
are the long-term unemployed, large or one-parent families, people with low education, and,
increasingly, ethnic minorities. There are particularly deep poverty pockets among Roma
communities.4 Several trends have emerged (Tsenkova 2006):

The decline of manufacturing industries, the loss of skilled manual middle-income jobs;
The growth of highly skilled and well-paid professionals managing the new post-industrial,
service-driven urban economy;

Parallel development of low-skilled and low-paid service jobs often part of citys informal
sector.

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These economic changes, leading to a two-speed urban economy with low paid service jobs and a
privileged sector of highly paid professionals, coupled with recessions, cut-backs in social welfare and reduced spending on social programs, have contributed to the growing income and social
inequalities. Lack of political commitment to address problems such as structural unemployment
or rising homelessness in a comprehensive manner have aggravated the situation even further,
particularly in countries experiencing economic difficulties and civil war. In the capital cities, the
two-speed economy has major implications for the growing social differentiation in the residential
fabric and the formation of a two-speed housing market. The results are mixed, with problematic
concentrations of the urban poor in run-down inner-city neighbourhoods and/or peripheral public
housing estates and the spatial segregation of the elites in gated communities.
Post-socialist cities have a very distinct residential environment dominated by a high share
of high-density prefabricated multifamily housing built in the urban periphery (Bertaud and
Renaud 1997). It makes up 70% of all housing in Bucharest, 45% in Sofia and 20% in Ljubljana.
By comparison, in Western European cities, fewer than 7% of the people live in housing estates
(EAUE 2003). This was the flagship of socialist housing policies of state-funded, highly subsidized provision of public housing for rent or for sale. Standardized methods of construction,
economies of scale and higher density characterize these uniform urban environments, as shown
in Figure 4. These areas also lack retail and employment opportunities, so residents make long
commuting trips to centres of employment.
At the same time, another characteristic feature of post-socialist cities is the high proportion
of home ownership. Available data are presented in Figure 5. In most of the capital cities in the
region, home ownership exceeds 75%; cities such as Tirana have reached 98%. While Riga and

Figure 4.

Multifamily prefabricated housing in Riga.

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Figure 5. Home ownership in selected capital cities.

Source: Based on data from UN-HABITAT, 2000.

Prague have been the exceptions, privatization in the last five years has transferred another 50%
of Rigas stock into private hands. Given the nature of the housing stock and its dependence on
collective forms of management, in the context of rising utility costs, social differentiation and
poverty, post-socialist cities face a serious challenge to sustain the value of their existing housing assets (see Tsenkova 2003, 2005). Growing social polarization and the elimination of statefunded housing programs underline the pattern of poverty concentration in run-down inner-city
neighbourhoods as well as in peri-urban areas with illegal settlements. These manifestations of
social change, equally dramatic in Budapest, Moscow, Belgrade, Sofia and Tirana, call for a
renewed emphasis on public intervention to reverse the spiral of urban decline (Tsenkova and
Budic-Nedovic 2006).
While the trends outlined here define the least desirable direction of change in residential
environments, the overall transformation of housing areas, both inner city and suburban, is less
uniform across post-socialist cities. Typically, new housing construction has gentrified attractive
inner-city neighbourhoods or has transformed the urban fringe with single family developments.
Just like new office and retail development, new housing has added subsequent rings to the
existing compact urban structure. A number of studies document a pattern of extensive growth
and even urban sprawl driven by higher mobility of urban residents and preferences for single
family living. However, these trends have been more moderate due to limited mortgage lending
and the fragmented nature of the house-building industry. So far, post-socialist cities do not
have the typical master-planned communities, and new suburban developments often lack
adequate infrastructure and services. Some post-socialist cities are characterized by a high level
of informal housing in the peri-urban areas of large cities (e.g. Belgrade, Skopje, Podgorica,
Tirana), which is home to one-third of the residents. Informal developments have become a
socially acceptable response to an urban crisis in the provision of affordable housing, where
illegal connections to existing infrastructure ensure much-needed electricity and water. These
could be squatter settlements on public land or illegal subdivisions outside urban/municipal
boundaries. The quality of housing is generally better, and residents are relatively effective in

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S. Tsenkova

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Figure 6. Illegal subdivision in suburban Pitesti.

Source: Soaita, 2007.

resisting attempts to relocate them. In some cases, as in the city of Piteshti (Romania), they have
negotiated inclusion in the urban boundaries relatively quickly, and leverage investment in roads
and infrastructure. The illegal subdivision emerged following the restitution of agricultural land
on the outskirts to a housing estate. The new owners, mostly residents from the multifamily
housing in the estate, took possession of over 300 plots of land and started to build their dream
home (see Figure 6). Today, close to 105 new houses at various stages of construction boast a
mix of urban and rural lifestyle, and the municipality has hastily approved new plans for annexation of the area (Soaita 2007).
The new institutional context of urban development and governance
The hallmark of the political transition has been the move to democracy and multiparty elections.
The transition to democracy has resulted in the break-up of two federations and the creation of
28 independent states. Many regional urban centres Riga, Tallinn, Vilnius, Zagreb, Ljubljana,
Bratislava, Sarajevo, to name a few were reinvented as national capitals, which signalled
major transformations in their economies and urban structure. Within cities, some of the most
visible manifestations of the transition to democracy appear in the local politics surrounding
municipal elections. The post-socialist cities have created a variety of political structures ranging
from single-tier to multi-tier governments. Most countries lack national urban policies, and the
frequent changes in political regimes no doubt lead to a lack of consistency in party politics at
the national and city levels (see van Kempen et al. 2005 for a discussion of these issues in the
European Union accession countries). These changes have made urban politics less predictable,
and socially and economically more conservative compared to those during socialist times.
Even without explicit urban policies, social redistribution policies, investment strategies,
privatization and economic restructuring increasingly affect localities and influence private sector
investment in cities. Local governments have an important role in shaping these outcomes
through strategic planning, land use planning and city marketing (Adair et al. 1999, Stanilov
2007). In addition, the behaviour of local institutions helps to explain the variety of local
responses in the post-socialist world of cities and the new sources of difference depending on
their locality, competitiveness and ability to manage change.
Within the framework of institutional change, central governments have enhanced local
autonomy by decentralizing power and responsibilities. Local governments have become
principally responsible for urban planning and management. They also have retained statutory

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responsibility for providing and maintaining technical infrastructure and urban social services.
In most cases, municipalities have acquired ownership of the fixed assets of water and sewerage
companies, district central heating systems and public housing (Mitric 1999, Tosics 2005). At
the same time, however, inflation, subsidy restructuring and significant budget cuts have raised
the cost of urban services dramatically. Running schools, hospitals, social care homes and other
social facilities has raised the local governments expenditure and has increased the dependency
on intergovernmental transfers, since the scale of resources needed far exceeds the potential of
any local tax base. Overall, fiscal decentralization in post-socialist Europe has not enhanced the
ability of local governments to raise resources locally and to achieve a sustainable tax base
(UNECE 1997, European Commission 2007). Rather, it has led to a growing number of
unfunded mandates, particularly in the realm of social responsibilities, with long-term implications for urban residents.
The decentralization of governance has devolved critical tasks to the local level, creating a
triple challenge for the provision of adequate infrastructure, management of public transport,
and land use planning (Tsenkova 2005). Limited progress has been made in upgrading the urban
infrastructure, often with increasing private sector involvement and foreign participation. The
lack of adequate funding has eroded the quality of urban services and transportation. Cashconstrained local governments have often resorted to privatizing land, buildings and other
municipal assets. Privatization of infrastructure is underway in many countries, mostly through
concessions and/or competitive contracting of services, however, tariff reforms continue to be
undermined by weak enforcement of payments (Mitric 1999). French companies today provide
district heating in Vilnius, German companies manage the waste management services in a
number of Bulgarian cities, and Austrian firms have concessions for the water supply in Polish
and Slovak towns.
Rates of car ownership have demonstrated explosive growth across the region, with significant
consequences for higher levels of commuting by private car and major implications for intra-city
travel patterns and behaviour. It is interesting to note that despite rapidly rising car ownership
across the region, data from recent transportation surveys indicate that in most capital cities in
post-socialist Europe almost 70% of the trips to work use buses, trams, or trolleys (EAUE 2003,
European Commission 2007). Public transit is still very important in post-socialist cities, but
fiscal constraints have made it particularly challenging for local governments to provide
adequate and affordable services. In some cases (Prague, Sofia), local governments have gone to
the capital markets and issued bonds to secure funding; responses to the fiscal crisis have varied
widely among countries, cities and public transport companies, but were based on subsidy cuts
and passenger fee adjustments. Warsaw has adopted a shock-therapy approach that achieved
70% cost recovery; Budapest raised fares in the metro and suburban rail systems substantially,
which achieved a 35% cost recovery and maintained service levels (World Bank 2000).
With respect to changes in land use planning in the region, studies have found that the new,
market-oriented regimes have adopted a laissez-faire approach to planning, resulting in uneven
urban development. The changed institutional structures in post-socialist cities have given rise
to market-friendly organizations and the promotion of the entrepreneurial city (Tsenkova and
Budic-Nedovic 2006). The new institutional actors often confront old planning rules, legislation
and policies. However, the powerful socialist legacy in land use planning and in financial management has remained embedded in the planning legislation and planning practice (Maier 1994,
Bertaud and Renaud 1997). Planning institutions have struggled to redefine their mandate in the
new and more economically and politically diverse institutional mosaic, and to respond to the
forces reshaping post-socialist cities.
In the aftermath of the economic and political crisis of socialism, followed by the erosion of
nation-states and the welfare state, powerful urban effects have been generated. These urban

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effects have occurred in the context of rapid institutional transformation, where many new urban
development institutions have been established but tend to be immature and in a state of flux.
This institutional incompleteness characterizes local entrepreneurialism and city image-building
in post-socialist cities. The institutional transformation is path-dependent, and does influence the
success and speed of the transition in urban governance. Within the new realities, regional and
urban planning has been transformed into a more democratic participatory process and the
legacy of socialist top-down approach has been abolished. The necessary democratic institutions
and organizations in civil society to support the practical realization of democratic participatory
processes are still under development, with varying degrees of success in different cities. The
ideological shifts in urban planning and urban policy have marked new relationships between
the private sector city and the public sector city. Publicprivate partnerships have emerged as
leading instruments in urban development.
In spatial terms, the transition to democratic, decentralized governance has facilitated two
distinct patterns of spatial restructuring: decentralization and revitalization. Decentralization
trends have been more pronounced for new retail and industrial development. Suburban
locations have offered cheaper land, access to major transport networks, and ample parking to
wholesale and retail businesses, as well as recognized economies of scale for new office parks
(see Stanilov 2007). Cities expand into low-density areas, while some inner-city areas experience
decline. A considerable growth in the construction of single family dwellings and other low-rise
housing provided by decentralized suppliers, often in the urban periphery, has created a new
residential landscape.
Notwithstanding suburbanization pressures, the new market-based economy is the driving
force behind the reorganization of city centres. The development pressure on traditional central
areas has continued with the cluster of service, financial and highly profitable urban functions
replacing economically less viable activities such as housing and public open spaces. The vitality
of the central city core in most capital cities has been re-emphasized; themes such as quality of
urban living (gentrification, new retail and sophisticated entertainment) and enhanced social
control over both public and private spaces within the city have become significant. This postsocialist restructuring of urban spaces is often associated with speculative private sector development for affluent consumers, corporations and multinational companies.
Urban governments have become more innovative in their efforts to mobilize investment
and make their cities more attractive as business and cultural centres, and in most cities old
pedestrian zones and historic towns have received a major facelift. The rebuilding of historic
plazas, buildings and architectural monuments often leverages foreign investment, but also
champions new partnerships for cultural developments used to reinforce the national identity.
One of the many examples is the old town of Vilnius, designated as a UNESCO heritage site,
carefully managed by a special urban development agency (Figure 7).
Other forces driving the changes in spatial structure are land reforms, property market differentiation, and fragmentation of investment flows (Strong et al. 1996). With the new market
orientation, urban development has ridden a wave of investment in land uses offering the highest
returns, and selective redevelopment by the private sector (Tsenkova 2001). Studies indicate that
the regions investment and wealth accumulation through housing and other real estate assets has
been concentrated in cities (Adair et al. 1999, Ghanbari-Parsa and Moatazed-Keivani 1999). However, private development, exclusively profit-motivated, often leads to conflicts displacement of
old residents in gentrified neighbourhoods, exclusion of the urban poor in run-down unserviced
urban areas, or a simple take-over of public urban land and its illegal use for retails, business and
even resource extraction purposes, as the extreme example in Albania indicates (Figure 8).
The new urban planning institutions are not necessarily equipped to deal with these
conflicts. Recent urban planning initiatives in post-socialist cities are characterized by their

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Figure 7.

Vilnius Old Town transformed into a prestigious historical centre.

neo-liberal orientation, inspired by the desire to streamline and deregulate the excessively
bureaucratized, slow and complicated process of urban planning approval. The comprehensive planning of the socialist era has been subject to a devastating critique on the basis that
comprehensive plans were neither practically feasible under market conditions, nor politically viable. However, new master plans or urban general plans, approved to guide urban
development have seen multiple revisions to accommodate strategic investors or on the
basis of short-term bargaining rather than long-term goals and objectives. The whole process has become ridden with conflicts, particularly in areas with competing development
needs (Simpson and Chapman 1999).

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304

Figure 8.

Oil well in the public spaces of a housing estate in Albania.

The comeback of post-socialist cities: reshaping urban hierarchy

The transition from planning to markets is a process of economic adjustment in which economic
functions are specializing and concentrating. Internationalization is leading to a hierarchy of
functions and a hierarchy of location environments. A number of functions such as command
and control functions of multinational corporations, the top management of services, media, and
culture are grouped in capital cities. Other functions, mostly large-scale industry and services,
are looking for specialized environments. This trend towards concentration is also occurring in
the international trade and transportation sectors, so that flows are bundled in main ports and
destinations.

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Accommodating those trends in the urban environment through optimal locations for all
these functions and through preserving and developing the existing capacity is a major challenge
during the transition. The overall level, size, and significance of this spatial transformation will
depend on differences in the position of post-socialist cities and the differences in their support
base. A distinct hierarchy of cities will be the unavoidable result of these developments. Postsocialist cities and specialized regions will be increasingly competing with each other on a
European and global level. Cities with an insufficient support base of retail and services,
obsolete industrial capacity, will become of secondary importance in the new urban network.
Future urban policies might selectively focus on strengthening the existing capacity of urban
centres and on identifying their competitive edge. This spatial approach promotes the efficient
use of resources and investments in a specific location, its labour force, benefits from economic,
social and environmental diversity, and connections. A new spatial hierarchy has emerged in the
post-socialist world of cities with centres of new development and peripheries (Tsenkova
2006). The globalization of urban economies, reinforced by the political and institutional integration in Europe, has created an atmosphere of growing competition among cities (Hall 1993).
The capital cities have attracted human resources, driven the growth of employment, mainly in
the tertiary sector, and reorganized production and residential activities into new metropolitan
models of urban space.
The first category is that of capital cities and large metropolitan centres. The largest cities
have a leading edge in the competition for top functions. These activities are already concentrating there and related requirements labour market, production services, and communications
are adjusting very quickly to this process. In addition, the metropolitan environment with its
banking and financial institutions, government bodies, business climate and a variety of cultural
and recreation facilities has distinctive advantages. Differences among metropolis and capital
cities are decisive in the competition among cities for top functions and economic activities.5
The urban structure, with its inadequacies backlogs in the supply of office and retail space,
transport problems, congestion, environmental pollution, deteriorating neighbourhoods, etc.
affects the location choices and investment decisions.
The second group is that of cities with a population over 300,000. This category includes a
range of cities with a different size of population, strong industrial and manufacturing capacity,
trade, education and research facilities. They will be struggling to attract new businesses, international companies head offices, important financial institutions, trade fairs, cultural events,
etc. Some of these attempts will be successful, depending on the quality of urban environment,
the location advantages and economic/tax incentives to make investments viable. In the future,
some of those cities may lose the position of relatively independent urban centres due to inefficiencies in urban management, overall economic decline in the support base and considerable
lack of resources to address growing needs for infrastructure investment and social inequalities.
Some functions banking, retail, office development in these cities are lagging behind, thus
contributing to the inadequacy of the urban support base.
Large cities often have a particular specialization as old industrial cities, cultural and tourist
centres, distribution centres, ports, traffic and transportation intersections, and centres with
government functions. Since this group of cities is very diverse, future urban policies might
focus on enhancing the competitiveness of existing functions. In addition, attention to the urban
living environment and its general attractiveness is very important. This is particularly true for
the old industrial and port cities.
The third category includes a large number of smaller cities that can be divided into cities
experiencing economic growth, and declining cities. The first group of cities scores high in the
area of economic structural adjustment and new business development. The latter will need
considerable efforts and resources to improve their urban quality. For both groups, economic

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developments and local economic strategies to stimulate modern industry, retail, and services
are necessary, together with an emphasis on improvement of the living environment and
infrastructure. In some cases, those cities will continue to depend on existing capacities for
large-scale industry steel, basic chemical industries, oil refineries, power production, and
waste processing. Port locations and other intersections of heavy infrastructure also fall into this
category. Questions of environmental protection will be of paramount importance.
An alternative urban hierarchy in the European context is likely to emerge. The underlying
values include economic and social cohesion and balanced competitiveness. A fair number of
post-socialist cities, particularly in the new accession states, have joined the trans-European economic space, and have become a springboard for international investment in their local and
national economies (Faludi 2002). While it is difficult to predict the competitive position of
post-socialist cities in the future European urban hierarchy, some winners have emerged:
Prague, Budapest, Warsaw, Tallinn and Bratislava (European Commission 2007).6 It is reasonable to expect that EU policies embedded in the European Spatial Development Perspective will
translate into local opportunities and activities generating new development trajectories in the
post-socialist cities, which would be as diverse and unique as those characterizing the transition
from socialism to markets and democracy.
Managing urban change
Local government efforts in directing and facilitating the process of economic, social and spatial
restructuring in post-socialist cities have been relatively weak due to constraints in resources,
jurisdiction and powers. While various policy initiatives have been introduced to overcome
existing urban conflicts overdevelopment in the central business district, decay in other parts of
the city, lack of adequate provision of transport and social infrastructure, rapid suburbanization
and illegal housing the effect so far has been marginal and the commitment inadequate. Urban
reforms have taken a back seat in the overall process of economic and social transition (World
Bank 2000, van Kempen et al. 2005). Further, the cooperation and participation of a variety of
institutions and actors is limited; in fact, socialist urban management has been replaced by entrepreneurial rather than participatory governance. The flexible and largely neoliberal approach of
the local governments is far from neutral. In the context of rapid economic, social and political
transition, local and regional administrations compete to attract economic activities and foreign
investment, and frequently change their land use plans to become the winners in this competition (Dear 2000, Soja 2000). Inscribed within the frame of urban and territorial marketing strategies, place promotion in the post-socialist world of cities has acquired a new significance
(Buck et al. 2005, Tsenkova and Budic-Nedovic 2006).
Despite significant constraints with respect to resources and powers, there is considerable
scope for locally designed and implemented policies to manage the process of urban restructuring (Marcuse and van Kempen 2000, Thorns 2002). Investment in key urban components
might include infrastructure development, selective urban renewal, and management of
urban growth (e.g. the strategic planning efforts in Riga, Prague, Sofia and Budapest). The
approach offers a lot of advantages under fiscal austerity. The non-interventionist approach
is based on the notion that markets would automatically provide solutions to the growing
number of unresolved urban problems and crises. This policy alternative is becoming the
choice for some local governments due to budget constraints, lack of capital and inability to
facilitate the adjustment process and to pursue local economic development strategies (e.g.
Bucharest and Tirana). Some local authorities, however, resort to this approach due to general
opposition to economic restructuring and the difficulties imposed on traditional industries and
labour markets.

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In reviewing these trends together, what stands out is that transformation and change have
been central to the post-socialist urban experience in the past 15 years. Questions that focus on
the speed and complexity of that change are central to the future of these cities, as are the questions about the multiplicity of interrelated economic, social, institutional and spatial outcomes of
the transition. Exploring and reflecting on these transitions through the urban lens necessitates
the development of theoretical frameworks that adequately capture the dynamics and the diversity of urban phenomena in post-socialist cities (Bater 2001, Thorns 2002). Urban analysis needs
to recognize change and continuity, acknowledge the importance of particular places and localities, and understand the complexity of everyday life in post-socialist cities, as well as to capture
the institutional and policy mechanisms that are evolving. While urban analysis of past trends
might be helpful in predicting the future, the nature of transformations in post-socialist cities and
their constant adjustment to dynamic realities creates unique challenges for urban management.
Two clusters of issues seem particularly important.
The first cluster of issues relates to economic competitiveness and growth. As the postsocialist countries and cities are emerging from prolonged economic recessions, and in
some cases economic shocks, the need for appropriate policies and strategies to foster economic revival and growth is likely to benefit from research on the determinants of successful economic development. In the context of increasing regional and global competition,
urban management approaches might be able to explore a variety of opportunities that are
suitable for cities of various sizes, local resources and capacities. This requires the rethinking of policies that promote urban competitiveness, social cohesion and better governance
(Buck et al. 2005). A related set of urban policies that enhance the competitiveness of cities
and ensure adequate quality of life pertain to the provision of urban services. While these
services in post-socialist cities have been rapidly privatized due to fiscal austerity, the
short- and long-term effects of privatization are not well known. Local governments are not
capable of securing such services, given their limited revenues; the privatization is likely to
lead to differentiated access and increased disparities between affluent and poor residents
(Buckley and Mini 2000, Tsenkova 2005). Better insight into the fiscal impacts of urban
development and its relationship to the supply of urban services may support hybrid solutions that would be more appropriate in the future.
The second cluster of issues relates to urban change caused by decline economic, demographic, and social as well as poverty. What will be the implications for the provision of
social services, urban infrastructure, public transport and the creation of wealth-generating
opportunities in post-socialist cites where people have to face the consequences of rapid economic adjustment, closure of state industries, escalating unemployment and deprivation? For
those left behind, the new welfare state provides less generous social safety net and support
systems. The effects of urban poverty are visible, but not well documented and measured in
their multidimensionality (i.e., homelessness, erosion of social capital, crime). More importantly, urban management approaches need to consider policies and programs to alleviate poverty, place poverty on the political agenda and mobilize more adequate public and fiscal
support for new social policies (Jones and Ravenga 2000, Mehlbye 2000). In particular,
exploring and evaluating the viability of various policy instruments to assist the urban poor
with access to affordable housing is of great immediate value in the context of increased
economic and social polarization.
In conclusion, post-socialist cities offer a world of complexity and increasing uncertainty
with respect to future urban management. Research and critical reflection upon the direction
of that change, its diversity and appropriateness, requires urgent attention to ensure economic viability, improve built environment and enhance social conditions and cohesion in
these cities.

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Acknowledgments
The author acknowledges the support of the Social Sciences and Humanities Research Council of Canada
for this research, and the constructive comments of Dr Nedovic-Budic from University of Illinois at
Urbana Champaign on an earlier version of the paper.

Notes
1.
2.

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3.
4.
5.

6.

In the case of Sofia, 80% of the citys GDP in 2002 was generated by services; in Vilnius, this share is
close to 70%.
The regional dynamics of foreign investments in the property markets of Central and Eastern Europe
show a continuing pattern of capital concentration in the top three performers of the region Hungary,
Poland, and the Czech Republic. In 2005, these countries accounted for over 90% of the total investment accumulated since 1998 (CBRE 2005).
Shopping centre space in London is 210 sq. m. per 1000, and in Paris 350 sq. m. per 1000 (JL Lasalle 2005).
Capital cities, however, have poverty rates below the national average. For example, the 1998 survey
data in 14 large cities in the region showed poverty rates lower than 5%. Vilnius and Belgrade had
higher concentrations of poor people, exceeding 15% (UN-HABITAT 2000).
The State of European Cities Report (European Commission 2007) identified that the capital cities in
the Baltic States, Romania and Poland were among the fastest-growing cities in Europe. For instance,
Tallinns growth (almost 10% per year) is strongly related to the Estonian growth rate of close to 8%
over the same period.
When using a broader measurement basis for economic competitiveness (the Lisbon Benchmark),
Estonia ranks highly, while several capitals such as Prague and Budapest also perform well. The
weakest cities on the Lisbon benchmark were found in Poland, Romania, and Bulgaria (European
Commission 2007).

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