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Multicausal theory of local economic development and the Arctic

by Markku Tykkyläinen

This paper seeks to explain the processes of restructuring in remote rural communities in the 1990s. The elements of a multicausal theory of local developmentare presented and the applicability of this development theory to the conditions of the Arctic is discussed. The empirical material for this paper was derived from investigations of fishing villages on the White Sea in Russia and a former mining community in Northern Finland. The paper attempts to answer the question, how does an arctic location influence the contents of a development theory. Other case studies have been conducted in Australia, Bulgaria, Hungary, Ireland, Poland, Sweden, the United States and Vietnam. This paper presents some of the findings of the entire research project and attempts to apply the theorization conducted in the project to the Arctic conditions.
In the narrowest sense, the Arctic refers to areas north of the tree line (Sugden 1982, 18). The tree line is an important boundary, because it effectively represents the northernmost limit of agriculture and it territorially demarcates indigenous cultures, such as the Inuits and Nenets. In the wider usage, the Arctic refers to the Circum Polar North, but frequently it is also used to refer to the northernmost parts of North Europe (Heininen et al. 1995, 14). The regional entities such as the North Calotte and Barents Regions seem to be established as the 'regions' of the North in the northernmost Europe, reflecting the widely-accepted European socio-economic definition of the Arctic. According to a recent EU publication (Hansen et al. 1996), the European Arctic encompasses Iceland, the Circum Polar areas of Norway, Sweden and Finland, the Murmansk Oblast, the coastal zones of the White, Barents and Kara Seas and the islands of the Arctic Ocean. This delimitation does not follow either the boundaries of the administrative areas or the tree line, and interestingly, the area reaches as far south as the northern shores of Lake Onega. This demarcation reflects a European perspective to the Arctic, which links the areas from the northern coastal zone of Russia to North Calotte and the North Atlantic domain.
To date, the coverage of local development theories, if applied in explaining local development in the Arctic, cannot be considered as very exhaustive. Theories have often relied on various explanations of dependence, external modernization and core-periphery relations. The social movements against these trends are labelled under the headings of self-reliance, basic needs and eco-development (Heininen et al. 1995). Firstly, development theories have not been very geographical in nature because they have not been able to take into account the spatial variety of economic, social and natural conditions of development. Secondly, human activity is a self-determining, voluntary process with conflicts, contradictions and choices. Such essences of development processes limit the general applicability of any development theory to explaining socio-spatial booms and busts in the Arctic.
This research project began from an 'independent' standpoint - that is, without relying on past explanations of development - and attempted to develop a theory from the analysis of several case studies within different institutional environments (Neil and Tykkyläinen 1998). Local development was investigated in a comparative spatial and socio-economic context and the conclusions were derived from individual studies and from the comparison of the results. Two out of 13 case study regions were located in the Arctic, as defined above according to the European criterion of demarcating the Arctic. The two Arctic case studies were the cases of Kolari in Finnish Lapland (Jussila and Järviluoma 1998) and Virma and Gridino on the White Sea (Varis 1998).
All case studies were conducted in localities where the economic base was formed by agriculture, the production of ores and basic metals, the manufacturing of wood products, tourism or the service sector. The locales of the case studies varied in structure from rural areas of post-socialist states to very sophisticated communities in advanced market economies. Except for the four case studies in East-Central Europe, all the cases analysed development in peripheral settings and many of the local communities were located in a single-industry environment, which is also often the situation in the Arctic.
Elements of a multicausal theory
The preliminary work undertaken for this project concluded by suggesting that, in order to understand local restructuring in any given context, it is necessary to take into account a combination of factors which profoundly influence local development (Tykkyläinen and Neil 1995). These factors are likened to a bundle of attributes, processes and actions influencing development. It was concluded that the four causal effects, which are general, sectoral, political and local factors, along with the role of human agency (as the individual factor) proved to be fundamental in explaining development (Fig. 1).
The factors reflect numerous kinds of causal processes which influence the development of a community. The factors also reflect the variety of circumstances in which local economic development takes place. As an example of the manifestation of the general factors, the principles of neoliberal economic doctrine were widely implemented in many countries in the late 1980s and the early 1990s. Hence, economic liberalism dominated the economic climate in many rural communities. Neoliberal doctrine has two kinds of effects on the Arctic: it unlocks the natural resources of the Arctic for exploitation; and, when required, it legitimates the reduction of social transfers because they bias the optimal allocation of production factors.
The instruments and measures which have regulated development, the political factors, are usually introduced by a state. For example, it has been a result of national policy that privatization has proceeded slower for the northern natural resource-based companies in Russia than elsewhere in the vast country. Similarly, it was a political decision as to how the squeeze of public spending proceeded in the Northern parts of the Nordic welfare states in the 1990s. The opening up of East-West cooperation in the Barents Region is an example of the decisive influence of political factors in the Arctic.
When economies develop, some sectors grow faster than others, resulting in spatial implications. Sectoral factors often explain why certain types of regions lag behind in development or why others rapidly develop. The communities in the Arctic are usually small and their economic base is narrow. The two villages on the White Sea were both formerly dependent on fishing which decisively influenced people's life in villages. Similarly, in the case of Kolari, the opening and closure of an iron mine greatly influenced the development of the vast municipality. Further, the closure of the mine launched a series of regional policy measures designed to reorientate the economic structure of the municipality towards tourism. Clearly, Arctic industrial communities are very susceptible to sectoral booms and busts, which need to be taken into account in regional and spatial planning.
The local factor is a bundle of locally-derived processes and agencies which act at the local level, such as locally-dependent policy, local initiatives, locally-specific projects and grassroots actions, etc. The local factor also constitutes the attributes of a place, such as the natural resources and the environment. The research revealed the decisive role of the local factor, as a representation of social capital. Each community possesses a socio-economic legacy of its own, but this legacy is not fixed. It can be developed by education, training and research.
Local factors are usually deemed as a locality effect (Duncan 1989), but such an effect may materialize defectively because communities in the Arctic are very small and are often spatially scattered. The research revealed that the network nature of social relations needs to be increasingly taken into account in defining what 'local' is. This is a very relevant question in the Arctic where a great variety of settlement structures exist - from the Arctic cities and one-resource towns to spatially-scattered communities of hunting and reindeer-herding cultures.
Individuals are both actors of development and recipients of the benefits of development. They are the fifth, responsive factor (or rather agency) of restructuring. This individual factor must be interpreted in the broadest sense, constituting human behaviour and the various coalitions of individuals aiming at fostering development. Most of the case studies did not emphasize traditional collective action as a response to a socio-economic crisis, but rather individuals, groups, enterprises and ad hoc organizations as prime actors of development. Certain 'layers' of the population, such as staff and managers of local companies for instance, are active in furthering industrial development, but it is often difficult to anticipate who will be the actors of development.
The basic premise of the presented conceptualization of the factors affecting communities is that various external factors pressure communities to change. This means that the general, political and sectoral factors, exert pressures on villages, towns and rural areas to restructure and, in more general terms, influence the development of a community. These factors attempt to filtrate various possible outcomes to each place. In other words, the impacts of the above-mentioned factors vary by place as each place consists of unique social and physical circumstances and spatial relations. Individuals and communities react to these pressures, usually by attempting to be innovative. Innovative behaviour, in turn, lends to the development policy of a community. The influence of the various factors (and the interaction of them with actors) produces different spatial outcomes called spatial filtering. With reference to Sayer's structure of causal explanation (Sayer 1992), contingent conditions are not only local, but they are dependent on spatial relations within all the bundles of factors.
The role of human agency
The role of human agency is fundamental in the reactions to these processes. For instance, a large corporation made a market-based decision to begin to mine in Kolari, and it was subsequently a political decision to support the transformation of the local economic structure towards tourism after the mine has closed. The Vuohijärvi, Finland case study reveals the significance of a suitable coalition of actors and competent individuals in fostering development (Kortelainen 1998). The case study of two villages on the White Sea reveals the varying significance of community action, national policies and individuals in spawning development. Development is bound to place, time, opportunities and human actions. Thus, no ideal, fixed model of local economic development will ever be suitable for all communities.
Human activity is everyday livelihood and is shaped by the economic viability of a community, however, the economic viability of a community should not be the only criterion in assessing development. Simultaneously, human activity is an evolutionary process which creates economic and social practices and, finally, structures. The local development processes are both reflexive and learning processes with associated effects and feedback (Fig. 2). A development process may also be adaptive, for instance, in a case where a community is gradually waning because the economic base of a community is no longer viable. The case of Virma on the White Sea is an exemplary example of this kind of development. Adaptive development should not be underestimated or belittled as such development may actually provide for 'a good life' for those who stay there.
Fig. 2 points out that human agency both directly and indirectly steers the outcomes of development. Development is also a matter of choice: how to innovate and how to adapt. The contents of all innovative, developmental processes are, in the end, dependant on human behaviour. The individual factor is a necessary, but not alone a sufficient, condition for development. Individuals, groups and partnership organizations can affect development significantly but not without limitations, as the case studies indicate.
In the 1990s, the power of human agency was proved, when former socialist countries liberalized their economies and accessibility to the Russian Arctic decisively improved. This transformation is a more complex process than it seems on the surface. There is a bundle of political factors, such as changes in national governance (for instance, property rights, trading quotas, the regulation of business practices by legislation, etc.) which all influence the development of a community. Again, people can influence the formulation of the practical policy measures however, as has been seen in the Russian North, institutions change slowly.
The case studies show the necessary conditions of locally-derived causal effects and their dependence on the actions of local people and the local circumstances. On the other hand, sluggish development of the Russian Arctic demonstrates how the inherited institutional, service and organizational structures hamper development (Tykkyläinen and Jussila 1998). Initiatives and the opportunities and obstacles of development vary locally.
Human agency, comprising a complex web of actors, is central in creating conditions and acquiring benefits from sectoral transformation. For instance, companies continuously investigate attributes of geographical space by searching for more profitable locations and markets, and sectoral restructuring also means spatial restructuring. If this kind of industrial development has been set as a goal in the Arctic, local people in arctic communities should be on the pulse of this transformation in order to create various options for development.
The conditions of innovative behaviour
The case studies demonstrate that through a progressive response to the pressures of competition, communities can compete by enhancing their social capital and by developing their innovativeness. This is a seed-bed for all socio-economic activities. Up-to-date social capital is usually the best guarantee for keeping a resource business in a community, and, if that strategy does not succeed, social capital can facilitate the acquisition and development of compensating businesses in the community. This strategy alone does not necessarily hold in the very harsh environments at Canadian Arctic mines (e.g. Kendall 1992) or at mines located in deserts (Houghton 1991). Thus, the enhancement of social capital is not necessarily bound to only the remote locality itself where production takes place, but also to the present and forthcoming settlement options of employees. Social capital should be seen from the perspectives of commuting individuals and translocal community networks.
Arctic communities and the Arctic regional economies are increasingly being characterized by translocal interaction. Advanced telecommunication and transport connect remote communities more efficiently than ever before to the advanced core economies. When economic systems become more open, as has been happened in Europe and in the European Arctic, many inputs of social capital (training, skills, technology, etc.) are acquired extralocally. The external linkages must be recognized in each local community as a crucial factor of development.
Business ideas and especially capital inputs are seldom local in origin. Although all communities from those in the Arctic to the metropolises of the core areas are increasingly linked together, it is important that each community is competitive and remain proactive in development - the kind of development they wish to have. The studies of transitional countries especially have indicated that the innovative potential of a community is dependent on its everyday living conditions, not only in terms of education and training, but also in terms of the overall social and cultural milieu which continually produces and stimulates its innovative development. This social capital, labour and a social milieu, are a crucial productive force which should be emphasized when planning for development in the Arctic.
Several case studies of the research project demonstrate the decisive importance of organizational innovations in development. This is especially true in the Russian Arctic. The preconditions for successful development are the existence of efficient and appropriate legislation and economic organizations (such as legal forms of companies, tax system, duties and the fair operation of public and local authorities) at all levels. Developing business organizations require up-to-date institutions and business environments. Innovation is a broad concept which intersects general, political, sectoral and local factors, and thus, the preconditions for innovative development are created by the entire society.
Each Arctic site, whether it is a reindeer-herding range, a fishing ground, a mining area or a place of scenic beauty, is a unique case providing a space of habitation and a potential for development. A site linked to a community has to have its local-specific advantages to provide for everyday life and livelihood. And furthermore, a community, or rather the individual members of such a community, must be proactive in order to develop their living conditions. Development is the successful combination of active participation and discovered opportunities.
Local proactivity and responses to challenges vary from community to community as the case studies of the research portray. In most cases, people have formed social and emotional ties to the social networks and places where they live, these dependencies decreasing people's willingness to change life radically in order to continue to stay in a community. Such dependencies require special consideration in local policy and development measures.
The case studies reveal that the actors reacting to the pressures of restructuring number but a small handful of the entire community. These actors comprise both local and external individuals and newly-formed groups and ad hoc organizations, who have developed the responses to restructuring. Restructuring usually supersedes the borders of a single community and brings together new resources (skill, funds, etc.). It is not realistic to expect that a traditional community - a local authority or local residents - will operate as a collective and coherent organization in the restructuring phase. The consequence of the heavy pressure to restructure is usually disorder rather than increased cohesion. Individuals who search for means of livelihood and better lives or who try to develop more profitable configurations of capital and labour to avoid unemployment and decreasing welfare are usually creative inducers of development.
Signs of new spatial forms of communities
One of the case studies in the research project also illustrates how fundamentally information technology and globalization may change community structures (Tykkyläinen 1998). It is important to recognize the rapid transformation of business and social life towards the information society. Transformation also increases the significance of the concept of 'community' in the social sciences, because part of everyday life takes place in such networks of social relations.
The process of restructuring is reorganizing the spatial forms of communities in the Arctic. A rural community is traditionally sited in an area where natural resources are located, but communities are increasingly dawning new spatial forms because of commuting and advanced telematics. Hence, domiciles and resource sites are ceasing to coincide together. This trend is not considered as positive for the Arctic (Heininen et al. 1995, 26), nevertheless such practices are increasing. Although rural communities can be identified by their traditional scope, they are clearly facing a new era of network structure. One corollary is that as the spatial form of a community becomes more complex, increased adaptability and 'spatial flexibility' are called for from the part of the public organizations which provide services and promote development.
New working practices such as compressed working schedules are emerging. Much work is done and much leisure time spent in virtual environments maintained by computer-mediated communications. People are increasingly linked to each other by telecommunications, and this networking is a necessity and reality of working life among people in resource communities.
The case studies indicate that this networking is also becoming a basis for new rural settlement structures, which it is important to take into account when planning 'locally'. The direction of spatial development is clear: towards networking, work in cyberspace, ad hoc organizations, post-modern lifestyles, and new spatial identities and settlement structures. Is it an opportunity or a threat for the people in the Arctic? Resource business is an avid developer of intelligent production and management technologies which increase remote management and the geographical fragmentation of production and services. Who are entitled to answer the questions of how arctic communities should be developed? People living there, people ready to migrate to the North, young or old people or the indigenous people? The answer is not easy and the opinions of the desired path of development are not uniform.
The Arctic communities are especially sensitive to external impacts such as those caused by swings of the world economy, the booms and busts of single resource-based industries, the squeeze of public sector spending and the impacts of remoteness. The new social and spatial formations are becoming increasingly influenced by telecommunications and advanced technology. This is perhaps the greatest challenge for arctic livelihood in the near future.
Multicausality is certainly a valid beginning point for developing a more specific Arctic development theory. Arctic communities have their specific social and political structures and agencies which influence the outcomes of development. A development theory for the Arctic should emphasize the role of local and external human agencies as creators of structures and action. Simultaneously, such a theory should also comprehend the options of change in the arctic conditions. How various impacts influence arctic communities and what the local responses should be in the Arctic, are key issues in creating a development theory.
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Fig. 1 Factors affecting communities and human response.
Fig. 2 Human agency and development