Booming, busting - turning, surviving? : socio-economic evolution and resilience of a forested resource periphery in Finland

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uef.fi

PUBLICATIONS OF

THE UNIVERSITY OF EASTERN FINLAND Dissertations in Social Sciences and Business Studies

Dissertations in Social Sciences and Business Studies

PUBLICATIONS OF

THE UNIVERSITY OF EASTERN FINLAND

Traditionally, resource peripheries are characterised as rather static localities which

development have strongly been determined by a boom and a bust of a major resource cycle that has led into devolutionary downturn

by declining employment and depopulation.

The thesis questions this traditional insight of resource peripheries merely as declining,

static-like communities by focusing on evolutionary renewal and resilience taking

place on the periphery.

MAIJA HALONEN

DISSERTATIONS | MAIJA HALONEN | BOOMING, BUSTING – TURNING, SURVIVING? | No 205

MAIJA HALONEN

BOOMING, BUSTING – TURNING, SURVIVING?

Socio-Economic Evolution and Resilience of a Forested Resource Periphery in Finland

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BOOMING, BUSTING – TURNING, SURVIVING?

SOCIO-ECONOMIC EVOLUTION AND RESILIENCE OF A FORESTED RESOURCE PERIPHERY IN FINLAND

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Maija Halonen

BOOMING, BUSTING – TURNING, SURVIVING?

SOCIO-ECONOMIC EVOLUTION AND RESILIENCE OF A FORESTED RESOURCE PERIPHERY IN FINLAND

Publications of the University of Eastern Finland Dissertations in Social Sciences and Business Studies

No 205

University of Eastern Finland Joensuu

2019

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Grano Oy Jyväskylä, 2019

Editor-in-chief / Editor: Markus Mättö Sales: University of Eastern Finland Library

ISBN: 978-952-61-3199-3 (print.) ISBN: 978-952-61-3200-6 (PDF)

ISSNL: 1798-5749 ISSN: 1798-5749 ISSN: 1798-5757 (PDF)

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Author’s address: Department of Geographical and Historical Studies University of Eastern Finland

JOENSUU FINLAND

Doctoral programme: Past, Space and Environment in Society Supervisors: Professor Markku Tykkyläinen, Ph.D.

Department of Geographical and Historical Studies University of Eastern Finland

JOENSUU FINLAND

Professor Juha Kotilainen, Dr.

Department of Geographical and Historical Studies University of Eastern Finland

JOENSUU FINLAND

Reviewers: Professor Esa Hämäläinen, Ph.D.

Brahea Centre / Department of Geography and Geology University of Turku

TURKU FINLAND

Associate professor Linda Lundmark, Dr.

Department of Geography Umeå University

UMEÅ SWEDEN

Opponent: Associate professor Linda Lundmark, Dr.

Department of Geography Umeå University

UMEÅ SWEDEN

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Halonen, Maija

Booming, busting – turning, surviving? Socio-economic evolution and resilience of a forested resource periphery in Finland

Joensuu: University of Eastern Finland, 2019 Publications of the University of Eastern Finland Dissertation in Social Sciences and Business Studies; 205 ISBN: 978-952-61-3199-3 (print)

ISSNL: 1798-5749 ISSN: 1798-5749

ISBN: 978-952-61-3200-6 (PDF) ISSN: 1798-5757 (PDF)

ABSTRACT

The aim of this thesis was to increase the understanding of socio-economic evolution and resilience of resource peripheries. The case study used Lieksa as an example, but the results are intended to be applicable and comparative in the context of resource peripheries. The interpretations proceeded from a description to deeper findings explaining different aspects of the evolution and resilience and presenting causal arguments. The descriptive rural research focusing on the restructuring of resource peripheries has a long history with rich verbal and detailed explanations, but a comprehensive systematic modelling of the long-term changes and causalities has played a side role. Through conceptual theorising, the research explored how the global, national, and local co-evolution of technologies, economic progress and institutions shape the place-specific socio-economic evolution and the resilience of the periphery. First the process of evolution and resilience was scrutinised in significant turning points and phases, after which concluding answers to the research questions were made.

The thesis stems from four research questions. First, how can evolution and resilience be theorised by the conceptual modelling of long-term industry life cycles?

The conceptual modelling required putting together external impulses and internal responses that result in outcomes––multi-causal mechanisms that drive the evolution and the actors who rotate these mechanisms, make the selections, and assist and produce the resilience reactions on the way to evolutionary outcomes. The benefit of the conceptual modelling was that interpretations were reached by using the same systematic logic, which ensures the consistency of the results and makes the results more comparable between different phases.

Second, how does co-evolution of mechanisms produce dynamic evolution? The results support the common process of evolution on peripheries, where the impulses of local evolution are significantly externally produced, assisted, or hindered, but credit should also be directed to the internal responses. There is no doubt that the assumptions towards devolution would be groundless, since many jobs and people are lost along the decline. In essence, these devolutionary processes should be seen as a part of the long-term process, when something old is destroyed on the way to new structures, which is a fundamental character of evolutionary mutation. ‘Visible evolution’ takes place after mutating renewal which could be illustrated with the growth of one industry while a previous one is declining. The ‘invisible evolution’

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was taken place after mutating renewal in surviving or new firms within industries that were also confronting devolution in terms of redundant labour or firm closures.

Third, how is resilience related to evolution? The results show that resilience is a fundamental part of the process of evolution, but the resilience should not be confused with the evolutionary outcomes. Although the new growth presents an evolution after ideal resilient adaptation, it cannot be claimed that the appearance of resilience is impossible when the outcome presents decline. In the case of ‘invisible evolution’, the presence of resilience is observed through the reactions of local individual or collective actors who survive through the turbulent times or even benefit from the change. The resilience should concern their ability to be flexible and to function, reorient and renew the structures and the ways they are acting, but which will easily be buried under the declining outcomes. Whatever the outcome is, the resilience of the locals cannot be claimed to be produced only locally but inherently assisted or hindered by the external mechanisms that are under the agency of external actors. In general, the more failures and disruptions that appear in other actors or mechanisms of the local socio-economic system, the more resilient the local actors themselves are pressured to be.

Forth, and finally, how is evolution able to be predicted and managed by locals? As there are so many different dynamic mechanisms and interacting actors involved with one phase, it rose doubts about whether these processes can be predicted by anyone, let alone managed by locals. It is worth noting that typically only some references regarding the future direction can be foreseen, but definitely not the eventual outcome of the co-evolution. Even if the last turning point implied an ability to see forward and manage the future by the local reaction, the further impulses of the evolution are still caused by and managed by external mechanisms and actors. As always, there are surprises coming––most surely as a form of an extreme shock, the fistful of random triggers, the unpredicted rotation of the mechanisms and reaction of actors. No one can say exactly how, when, and in which format these surprises appear, let alone predict what the outcome will be.

Keywords: Evolutionary Economic Geography, Long Wave Theory, Industry Life Cycles, Regional Resilience, Forested Resource Periphery, Case Study, Finland

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Halonen, Maija

Kukoistuksesta syöksylaskuun – käänteiden kautta selviytymiseen? Suomalaisen metsäisen resurssiperiferian sosioekonominen evoluutio ja resilienssi

Joensuu: Itä-Suomen yliopisto, 2019.

Publications of the University of Eastern Finland Dissertation in Social Sciences and Business Studies; 205 ISBN: 978-952-61-3199-3 (nid.)

ISSNL: 1798-5749 ISSN: 1798-5749

ISBN: 978-952-61-3200-6 (PDF) ISSN: 1798-5757 (PDF)

TIIVISTELMÄ

Väitöskirjan tavoitteena on lisätä ymmärrystä resurssiperiferioiden sosioekonomises- ta evoluutiosta ja resilienssistä. Tutkimuksen kohteena oleva periferia sijaitsee itäises- sä Suomessa, missä syrjäiset yhdyskunnat ovat kohdanneet merkittäviä muutoksia 1900-luvun alkupuolelta lähtien. Tapaustutkimukseksi valittua Lieksaa hyödynnetään esimerkkinä resurssiperiferiasta, jonka perusteella tehtävät tulokset on tarkoitettu ole- van hyödynnettävissä muita resurssiperiferioita tarkastelevissa tutkimuksissa. Kuvai- levalla maaseutututkimuksella on Suomessa pitkät perinteet ja resurssiperiferioiden rakennemuutosta onkin kuvattu runsain sanallisin kääntein ja yksityiskohtaisin seli- tyksin. Näitä runsaspolvisia kuvauksia vähemmälle huomiolle on jäänyt paikallisen evoluution jäsentynyt mallintaminen nykypäivän teoreettisia käsitteitä hyödyntäen.

Väitöskirjassa selvitetään käsitteellisen teoretisoinnin avulla, kuinka globaalien, kan- sallisten ja paikallisten teknologioiden, talouden ja instituutioiden yhteisevoluutio muokkaa resurssiperiferian paikallisesti erityispiirteistä resilienssiä ja sosioekono- mista evoluutiota.

Käsitteellinen mallintaminen edellytti evoluution moottoreina vaikuttavien mekanismien määrittämistä sekä niiden toimijoiden tunnistamista, jotka valintoja tekemäl- lä ohjaavat mekanismien kulkua. Käsitteellisen mallintamisen etu oli, että se ohjasi tekemään tulkinnat saman systemaattisen logiikan mukaisesti, mikä vahvisti tulosten johdonmukaisuutta. Tutkimuksen tulokset tukevat aiempia tutkimushavaintoja, joi- den mukaan resurssiperiferioiden evoluutio on vahvasti ulkoapäin tuotettua, autettua tai heikennettyä, mutta tämän lisäksi osa kunniasta on osoitettava paikalliselle vasta- kaiulle. Yhä uudelleen ja uudelleen, äärimmäiset shokit, teknoekonomiset revoluutiot ja megatrendit, tavanomaiset teknoekonomiset prosessit ja institutionaaliset muutok- set ravistelevat paikallista evoluutiota, mutta ilman paikallisia riippuvuussuhteita, varantoja ja kykyjä sekä toimijoiden reaktioita muutos ei olisi mahdollista.

Väitöskirjan perusteella ei voida väittää, etteikö resurssiperiferiasta olisi löydet- tävissä devoluutionaarisia piirteitä, joihin viittaavat erityisesti muutoksen mukana menetetyt työpaikat ja poismuuttaneet ihmiset. Nämä devolutionaarisesti mielletyt prosessit ovat myös osa pitkän aikavälin kehityskulkua, jonka myötä osa vanhoista rakenteista tuhoutuu samalla kun evolutionaarinen mutaatio vie kohti uusia rakenteita. ’Ilmeistä evoluutiota’ voidaan havaita esimerkiksi silloin kun uusi toimiala alkaa kasvaa mutta vastaavasti jokin entisistä laskea. ’Huomaamatonta evoluutiota’ puoles- taan esiintyy silloin kun osa yrityksistä tai muista toimijoista kykenee selviytymään

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ja mahdollisesti uudistumaan kokonaisuudessaan laskevalla toimialalla tai muulla yhdyskunnan osa-alueella.

Tulokset osoittivat, että resilienssi on olennainen osa evoluutioprosessia, mutta resilienssiä ei pidä sekoittaa evolutionaariseen lopputulokseen. Viimekädessä resilienssi kulminoituu paikallisten toimijoiden kautta – siis reaktioiden ja toiminnan myötävaikutuksesta, jonka avulla toimijat selviytyvät turbulenttien ajanjaksojen yli tai hyötyvät muutoksista. Resilienssi viittaa tällöin paikallisten toimijoiden kykyyn joustaa ja ylläpitää toimintaansa, uudelleenorientoitua sekä uudistaa rakenteita ja toimintatapojansa selviytyäkseen muutoksista, mutta nämä ihmisiin palautuvat resi- lienssipiirteet peittyvät herkästi laskevien lopputulosten alle. Paikallinen resilienssi ja sitä seuraava kehityskulku ei kuitenkaan ole riippuvaista vain paikallisesta toimin- nasta vaan mitä suuremmassa määrin ulkoisten toimijoiden käsissä olevien mekanismien yhteisvaikutuksesta. Tulosten perusteella voidaan todeta, että mitä enemmän epäonnistumisia ja häiriöitä ilmenee muiden toimijoiden ja mekanismien kohdalla, sitä enemmän painetta kohdistuu paikallisiin toimijoihin. Ollakseen resilienttejä, hei- dän tulisi olla vankkarakenteisesti horjumattomia, sietää haavoittuvuutta ulkoisten impulssien jyllätessä, jatkuvasti toimia, uudistua ja kimmota eteenpäin toistuvista häiriöistä huolimatta.

Koska kuhunkin kehitysvaiheeseen on sekaantunut useita risteäviä ja toisiinsa vaikuttavia mekanismeja samoin kuin toimijoita, on epärealistista olettaa, että tulevaisuuden kehityskulut olisivat paikallisten toimijoiden ennustettavissa saati sitten hallittavissa. Vaikka viimeisin käännekohta viittaakin paikallisten kykyyn ennustaa ja jopa hallita tulevaisuuden kehityskulkua, tulevat impulssit ovat pitkälti riippuvaisia ulkoisista mekanismeista ja toimijoista. Kuten tähänkin saakka, yllätyksiin on syytä varautua – aiheutuvatpa ne sitten äärimmäisistä shokeista, satunnaisten alkusysäys- ten sarjasta taikka mekanismien ja toimijoiden odottamattomista käänteistä. Kukaan ei voi täsmällisesti ennustaa miten, milloin ja missä muodossa yllätykset ilmaantuvat, vielä vähemmän ennustaa millainen lopputulos on.

Avainsanat: evolutionaarinen talousmaantiede, talouden pitkät syklit, toimialan elinkaari, alueellinen resilienssi, metsäinen resurssiperiferia, tapaustutkimus, Suomi

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ACKNOWLEDGEMENTS

Ten years ago, I began my journey as a PhD student, and now it is time for compliments. First of all, I wish to express my deepest gratitude to my supervisors Markku Tykkyläinen and Juha Kotilainen for such intensive and straightforward supervising and dialogical working methods during this whole project. Special thanks are also given to three persons: Eero Vatanen who taught a sense of proportion and the nuances of statistics, and Pirkkoliisa Ahponen and Pertti Rannikko without whom my journey as PhD student would never have started. In addition, Ilkka Eisto, who has since departed, was a significant influence in the early phase of this process.

An international research project “Transformation of resource towns and peripheries” had a major impact on the implementation of this thesis. Herewith, I wish to thank Greg Halseth for editing and for organising the whole book project.

I would like to thank Esa Hämäläinen and Linda Lundmark for the thorough pre- examination that furthered the completion of this dissertation. In addition, I wish to thank Linda Lundmark for commenting from a Nordic perspective and for agreeing to serve also as an opponent.

Good working conditions have been enabled by the Karelian Institute with the assistance of the former and current directors Petri Kahila, Heikki Eskelinen and Pekka Suutari. I have valued highly the warm and well-functioning working atmosphere on account of which the greatest thanks are given to Lea Kervinen, Merja Ikonen, Nora Huurinainen and Saija Miina. My work has also been influenced and financially supported by the Department of Geographical and Historical Studies, of which Minna Tanskanen is the head, and assisted by the Department of Social Sciences with Eeva Jokinen as head. Funding from foundations has been a crucial enabler of the work, and I would like to specifically thank the Kone Foundation, the North Karelia Regional Fund of the Finnish Cultural Foundation, The Finnish Concordia Fund and the Kyösti Haataja Foundation.

Because of the nature of this case study, it would not have been possible without the collaboration of the people working and living in Lieksa. I wish to thank Asko Saarelainen who had a significant role in the early exploration of the community and in finding the first interviewees. Greatest thanks are given to the interviewees whose interviews have constructed a rich ensemble of data for the thesis and the forthcoming research project. I would also like to thank different authorities of the town for finding and delivering the detailed data from Lieksa.

I have come across different kinds of colleagues along this path––most of them have had an indirect but significant influence on my journey. To begin with, Kati Pitkänen, Maarit Sireni and Laura Assmuth—you could never guess what kind of turning point triggers you gave in 2011 and 2013. Furthermore, one day of map guidance from Maija Toivakka (née Sikiö) has saved me so many times over these years. Equally important was the aid from Simo Rautiainen when he provided maps for the book project. Nora Schuurman, your example as a scientist has been respectfully inspiring and the discussions with you have been deeply thought-provoking. Mari Kattilakoski, you I wish to thank for the lively natter and scientific debate which have mentally and practically boosted this journey. In addition, fragmented encounters with Natalia Taksami, Driss Habti, Juha Halme, Pasi Saukkonen, Sarolta Németh, Teemu Makkonen, Iiris Lehto, Katja Hyvönen, Tanja Kähkönen, Olga Sidorenko, Jukka Sihvonen, Emma

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Metso and with many others have enriched this process. Thanks are in order for all of you––not forgetting the “sähly”-players of the time slot booked on Fridays that literally have kept me sane.

My warmest thanks go to my family: to my grandmother Tyyne Pietilä to whom I dedicate this dissertation, to my parents Terttu and Eero Halonen from whom I learned that things tend to work themselves out, to my godparents Arja and Matti Halonen who understand the power of silent but perceivable support, to my brother Mikko Halonen who once asked “Why is rural research needed?” and to other relatives having roots in Lieksa such as Pirkko and Veikko Pehkonen. My deepest thanks go to my beloved son Taavi who so nicely let me work at home and to my dearest Ville who patiently listened and practically supported me along the path. Together the two of them made it possible for me to finish this journey.

Joensuu, 6 September 2019 Maija Halonen

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LIST OF TABLES

Table 1. Conceptual framework, question, and main findings of articles I–V ... 21 Table 2. Method and data by article (I–V) ... 45

LIST OF FIGURES

Figure 1. Case study Lieksa among coniferous dominated countries (Data sources: European Commission 2003; ArcGIS Hub 2015; National Land Survey of Finland 2016) ... 19 Figure 2. Alternative directions of evolution (redeveloped from Edenhoffer

& Hayter 2013) ... 28 Figure 3. Modelling of the conceptual scope (Art. I–V) showing the process

of the evolution and resilience of the local socio-economic system ... 30 Figure 4. Five long waves and a proposed sixth wave (sources: Allianz

Global Investors 2010; Perez 2010; Wilenius 2014) ... 32 Figure 5. Processual circle of methodology and methods of the case study

(Art. I–V) ... 44 Figure 6. Four phases with turning points based on industry life cycles ... 49 Figure 7. Evolution and resilience by sectoral scopes in a phase I.

(≈1900s–1950s) ... 51 Figure 8. Evolution and resilience by sectoral scopes in a phase II.

(≈1960s–mid-1980s) ... 53 Figure 9. Evolution and resilience by sectoral scopes in a phase III.

(≈mid-1980s–1990s) ... 56 Figure 10. Evolution and resilience by sectoral scopes in a phase IV.

(≈2000s->) ... 59

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1 INTRODUCTION

1.1 OLD RESOURCE PERIPHERIES WITHIN DEVELOPED ECONOMIES IN CHANGE

Resource peripheries around the world have typically been specialised in resource extraction (Hayter 2003). They can be understood as local resource communities dependent on the exploitation and processing of natural resources available in a specific location (Kotilainen 2018, 326). As these natural resources tend to locate in rural areas, these resource communities are founded distant from the centres. The common characters of peripheries, such as a relatively small population, a weak urban system, and considerable distance from major markets (Polèse & Shearmur 2006), define the structures of these communities. The resource peripheries which socio-economic development has grounded on the exploitation of natural resources for centuries and which locate in relative isolation but within developed countries (Halseth 2017) are here understood as old resource peripheries in advanced economies.

This is seen as a frame that defines these communities in relation to their history, their environment, and the centres (cf. Knuuttila & Rannikko 2009, 49–50). Traditionally, resource-based industries, distance from economic centres, and a lack of power have characterised peripheries as rather static local economies compared with prosperous economies at the centres (Copus 2001; Hayter et al. 2003; Fujita & Mori 2005). The development of resource peripheries has strongly been determined by a boom and a bust of a major resource cycle which has led into restructuring (Clapp 1998; Markey

& Heisler 2010; Ryser et al. 2014) with declining employment and depopulation (e.g. Bryant & Joseph 2001; Polèse & Shearmur 2006; Lehtonen & Tykkyläinen 2014).

Because of the demographic isolation, the lack of power, difficulties in diversification and the stepwise decline, vulnerability has become a characteristic of many resource peripheries (Freudenburg 1992). By vulnerability, the resource peripheries are here seen as being exposed to the damaging effects of externally originated and controlled shocks from economic and market events to long-lasting transformation processes (Hudson 2009; Tykkyläinen 2015).

However, as much as the ‘periphery’ is seen as reflecting the permanent state of the local economy (cf. Kühn 2015), neither the structures of its economic environment nor the local economy within the periphery are seen as immutable by their nature. The static position of peripheries has already been compromised, which has required paying more attention to the changing characters of the peripheries (Kortelainen & Rannikko 2015; Kühn 2015). As the concept of restructuring already implies, these communities have confronted processes with transformation leading to new, different kinds of socio-economic structures (Neil & Tykkyläinen 1998, 7). The thesis seeks to contribute to periphery research by questioning traditional insight of resource peripheries merely as declining, static-like communities by focusing on this mutable side of development that implies evolutionary renewal taking place on the periphery. The evolutionary renewal is understood here to result from the co-evolution of economic progress, the deployment of new technologies, and the institutional constructions that mutate the spatial economic systems (cf. Boschma & Frenken 2011, 302; Martin & Sunley 2015b, 724). Technologies, institutions, and economic progress are here seen as

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mechanisms formed at different scales whose joint effect leads to a mutation of local socio-economic structures (modified from Kotilainen et al. 2015). The co-evolution of mechanisms is seen as causing the variety between places (MacKinnon et al. 2009, 141) and influencing the adaptation of places in response to changes in their external environment (cf. Martin & Sunley 2007, 578). Considerable emphasis has been placed on specific conditions and actions that influence the ways in which local economies can respond to pressures to change, whether through competitive advantage, adaptive capacity, or other survival strategies (see Tykkyläinen 1999; Dawley et al. 2010; Martin 2012). Specific conditions refer to a wide range of characters that define the local institutions and resource endowments, national and regional contexts, and relative position and connections to other spatial scales (Hayter 2017).

As the specific conditions of peripheries tend to lead to different industrial and geopolitical development paths than the cores, mainstream theories of economic geography have rarely been seamlessly adaptable to peripheries (Hayter et al. 2003;

Kortelainen & Rannikko 2015). The examination of peripheries has required special attention to differentiated institutional perspectives and path-dependent development patterns (Hayter et al. 2003; Isaksen 2015). Especially the institutional interface with the external environment is seen as substantial when investigating the peripheries;

but this has commonly been overlooked in core-based studies having stress on endogenous industrial development (Isaksen 2015; Hayter & Nieweler 2018; Ryser et al. 2018). Herewith, the mechanisms that improve local resilience in adaptation should be seen as resulting from policies implemented in various scales (see Kotilainen et al. 2015, 64) rather than exclusively following from the reactions of local firms and industries (Martin 2012). Since the current trend strongly associates resilience with mechanisms that ensure growth in a local economy (Gong & Hassink 2017, 209), it poorly comports with the adaptation of resource peripheries that are characterised by decline. This raises a question of how to interpret the resilience from the perspective of the resource peripheries specifically and generally leads to a rethinking of the different sides of evolution that shape the adaptation.

1.2 AIM AND RESEARCH QUESTIONS

The aim of this thesis is to increase the understanding of socio-economic evolution and resilience of resource peripheries. Socio-economic evolution refers to a process where social consequences are seen as driven by economic changes. The changes in employment are taken as the main way to reflect the socio-economic evolution, which thence has had influence on other social consequences such as the changes in population structures. The research theorises the socio-economic evolution of a resource periphery in the long-term, which refers to changes having taken place from the early 20th century until now, in the early 21st century. It does so by exploring the technological, economic, and institutional turning points and the processes of adaptation along the path. As in the latest research focusing on peripheries, the evolution is examined through the traditions of restructuring with booms and busts, but attention is turned to the multidimensional character of evolution (Jacquet & Kay 2014; Ryser et al. 2014).

Special interest is applied to co-evolutionary changes in mechanisms within and out- side of the local economy, which are typical perspectives for evolutionary economic geography (EEG) (see Hodgson 2009; MacKinnon et al. 2009; Bathelt & Glückler 2014;

Hassink et al. 2014; Martin & Sunley 2015b; Pike et al. 2016). Views on the restruc-

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turing of peripheries and EEG studies are enriched by the interpretation of local or regional resilience that is scrutinised through the evolutionary process of ‘adaptive resilience’ (see Martin 2012). This combination engenders different approaches regarding resilience and thus provides different methods of reaching the heterogeneity of resilience of the local economy (cf. Gong & Hassink 2017).

The thesis focuses on a periphery Lieksa located in eastern Finland, where the remote communities have experienced major changes since the early 20th century.

The spatial structure represents a pattern typical of Nordic sparsely populated areas, which are among the least accessible in Europe––eastern Finland representing the most extreme case of disperse settlement patterns (Gløersen et al. 2005, 6). In spite of the domination of sparsity, the case reflects the industrial evolution in industrialised northern Europe but with a strong connection to the extraction of natural resources (cf.

Kotilainen et al. 2015, 54). Herewith, Lieksa is paralleled with the mixture of forested resource and manufacturing peripheries found in Sweden (see Hedlund 2016); on a national scale, only in the Finnish context, it is also located relatively far from larger cities in the northern inland and suffers high unemployment, but its employment in manufacturing is higher than on other resource peripheries.

The case study uses Lieksa as an example, but the results are intended to be comparative and applicable in the context of other resource peripheries. Comparison is primarily executed by contrasting the results of the case Lieksa with earlier research literature regarding the restructuring of resource peripheries. This former research on peripheries comprise a skeleton for the contextual concepts, which are constructed on the basis of the previous findings from case studies that reflect the socio-economic development in northern resource peripheries.

The descriptive rural research focusing on the restructuring of resource peripheries has a long history with rich verbal and detailed explanations, but a comprehensive systematic modelling of the long-term changes and causalities has played a side role.

To produce novelty in the thesis, the conceptual modelling is created by reorganising and joining former theoretical and contextual material, and empirical findings from the case study (cf. Swedberg 2012). The creation of conceptual modelling is relevant for two practical reason; by the modelling, the comparison between different industries and phases can be executed according to the same systematic logic, but it is also intended to be applicable to other research for scrutinising the evolution and resilience of resource peripheries and for making systemised comparison between cases.

The thesis contributes to the previous research by linking multi-causal mechanisms and by connecting the concepts typical of both contexts together––advanced centres and rural peripheries. EEG and resilience studies are regarded as originated from general aspatial concepts, which are relevant in explaining the evolution and adaptation, but which, however, without place- and time-specific redefinition do not stem properly with the changes taking place on resource peripheries. The connection between EEG and resilience has also be seen unclear and the use of resilience in explaining adaptation and renewal has been questioned (Hassink 2010, 55). Herewith explaining of their relation, specifically the role of resilience in evolution, is seen as requiring special attention. In contrast, the long wave theory and industry life cycle model inherently explain evolution; however, long wave theory is primarily applied to explain aspatial evolution originated from advanced economic centres (e.g. Perez 2013; Wilenius & Casti 2015), whereas the industry life cycle model is also exploited to explain place-specific evolution in resource communities (e.g. Kortelainen 1996;

Edenhoffer & Hayter 2013). The investigation of how global long waves can be used

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to explain the place-specific industry cycles of the resource periphery is identified as a research area, which has received rather little attention––as a research gap, which this thesis seeks to fill. When setting evolution and resilience of the resource periphery to such multi-causal and complex frame, it makes wonder about the role of local actors in this ensemble. As presented throughout the northern countries such as Canada, Sweden and Finland, locally-driven endogenous growth policies arise as the ruling one, but which policies have also received criticism from regional perspective (e.g.

Nuur & Laestadius 2010; Kortelainen 2010, 353–356; Hayter & Nieweler 2018; Ryser et al. 2018). At least the decline on the periphery is seen as an impossible task for locals to turn if the contemporary forces of technological evolution, social modernisation and globalisation are against it (see Hedlund 2017, 62–63). The thesis adds its contribution to this debate by presenting the limits and the prospects of local actors.

Through conceptual theorising, the research seeks to explore how the global, national, and local co-evolution of technologies, economic progress, and institutions shape the place-specific socio-economic evolution and resilience of the periphery.

It does so by first scrutinising the process of evolution and resilience in the most significant turning points of the resource periphery, after which conclusions to these research questions can be made:

1. How can evolution and resilience be theorised by the conceptual modelling of long-term industry life cycles?

2. How does co-evolution of mechanisms produce dynamic evolution?

3. How is resilience related to evolution?

4. How is evolution able to be predicted and managed by locals?

1.3 POSITIONING THE CASE OF LIEKSA AS A NORTHERN RESOURCE PERIPHERY

In general, the resource periphery may apply to a wide range of communities for which existence is based on the traditional extraction of natural resources through agriculture, forestry, fishing, or mining, but it can also be connected with communities which utilise oil, chemicals, iron, or steel as a source of living (Neil & Tykkyläinen 1998, 4). As such, these communities have their origin in the staples of raw resource commodities (Markey et al. 2012, 93). In this thesis, the focus is set on traditional boreal ones, more precisely on forested peripheries for which the booming pace has been highly guided by the possibility to expand the exploitation of forests when the demand for wood-based products has heavily increased. The frame is further narrowed to advanced economies in the global North that are dominated by coniferous forests (needled- and mixed-leaved), which mostly concerns the sparsely populated areas in Canada, the Nordic countries, and the northern parts of Russia (Fig. 1). In research pertaining to resource peripheries in these countries, the periphery or the community has referred to a wide-ranging geographical scale. The scale has varied from local resource villages (e.g Piipponen 2000; Kortelainen & Rannikko 2015) and municipalities or small towns (e.g. Halseth et al. 2017; Halonen et al. 2015) to wider regions associated with districts (e.g. Markey & Heisler 2010; Markey et al. 2019), the whole province (e.g. Hayter 2000), or even geographically interconnected areas of provinces (Stedman et al. 2005). As Kortelainen and Rannikko (2015) note, the

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communities, which refer to the local scale, are not completely comparable with the wider regions that already inherently may be rather heterogenic. Thus, comparisons must be done carefully. In outline, the cases from Northern peripheries are seen as useful in order to find out the typical patterns of development but also differences regarding evolution in a case study.

Figure 1. Case study Lieksa among coniferous dominated countries (Data sources: Europe- an Commission 2003; ArcGIS Hub 2015; National Land Survey of Finland 2016)

As the thesis scrutinised the existence of evolution and adaptation by paying attention to changes in the context- and place-specific structures of a certain periphery, the phenomenon was examined through an in-depth case study (cf. Tykkyläinen 2000, 24–

25). Two main criteria were set for choosing the case study periphery. Firstly, the case should be able to be associated with the characteristics that replicate an old developed resource periphery in the North. Secondly, the historical examination of this case study should reveal turning points that reflect the restructuring and evolutionary adaptation of the periphery (cf. Hayter 2017). The town of Lieksa was chosen as a case as it fulfils these main criteria. It can be positioned as an old forest-based resource periphery situated in forested Fennoscandia. It is located within an advanced economy, albeit in relative isolation from the centres at the national scale in Finland and the supra- national scale in Europe (Fig. 1). As regional centre Joensuu is located approximately 100km away from the centre of Lieksa, it is also located beyond the regular commuting trips around the nearest city centre. This is seen as a common character of distant peripheries in eastern Finland (cf. Gløersen et al. 2005, 6), but similar pattern has also been found from Sweden––particularly in the context of manufacturing peripheries (Hedlund 2016). As locating beyond the regular commuting area, Lieksa cannot be calculated among those resource communities that have benefited from the favourable location when they have confronted major disruption in their main economic activity (cf. Kortelainen 1992, 38). It is primarily dependent on jobs located in the immediacy of the town, which has been a deeply challenging situation. Because the probability of new jobs decreases steeply after a 15–35km zone away from city centres, Lieksa as an outermost municipality from the city centre locates in an area where the growth of new jobs is very unlikely (see Lehtonen & Tykkyläinen 2012). As a whole, the Lieksa municipality is 4,000km², but about 80% of its 11,500 inhabitants (Statistic Finland 2018) lives at the centre (63°19’ N, 30°01’ E). The centre is nationally classified as a local centre in rural areas with a relatively intense structure and jobs numbering more than 2,000. The centre is surrounded by a commuter belt that concentrates on primary production in agriculture; after this begins a sparsely populated area with extensive

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1.4 PERSPECTIVES OF THE ARTICLES INTO THE QUESTIONS

The synthesis of this thesis is based on two scientific articles (Arts. I & V) and three scientific chapters in a series from the scientific book (Arts. II–IV). The chapters are also referred to as articles from now on. The articles analyse the socio-economic evolution and resilience of the case study Lieksa from specific but also overlapping perspectives (Table 1). The restructuring of peripheries is seen as a context-conceptual framework that specifies the subject of the examination and emphasises place-specific approaches.

The theory-conceptual framework in all five articles is built around evolutionary economic geography and evolutionary (regional) resilience with an emphasis on industry life cycles and long economic cycles shaped by renewing techno-economic paradigms and institutions. These concepts exist in all articles, but the focus differs as the first articles (Arts. I–II) tend to emphasise the industry life cycles and techno- economic changes while the latter articles (Arts. III–V) focus more on the institutional changes. All the articles answer the question relating to the co-evolution of economic progress, technologies, and institutions, but from different perspectives. Similarly, both ‘socio’ and ‘economic’ approaches are linked throughout the articles, but an emphasis on ‘economic’ dominates the first two articles while ‘socio’ receives more attention especially in the last two articles. The processual and overlapping approach is also utilised in methodical implementation, where the focus proceeds from general global–local structures (Arts. I–II) to more elaborated local approaches (Arts. III–V).

This enables the describing of the evolution and resilience as the outcomes of the evolutionary process but also the scrutinising of the explanations and qualified details behind these outcomes as well as the reactions and attempts which may not be realised as generalised structures. The articles are published in scientific journals focusing on rural issues in Europe (Art. I, European Countryside) and geography with a northern dimension (Art. V, Fennia) and in a scientific book centred around the transformation of rural peripheries in developed economies (Arts. II–IV, Transformation of Resource Towns and Peripheries: Political Economy Perspectives).

The interpretations of the socio-economic evolution and resilience proceed from a description of the phenomenon to deeper explanatory findings explaining different aspects of the evolution and resilience and presenting causal arguments identified by descriptive analysis (cf. Yin 2003, 6). The main results of each article are presented in Table 1, showing the basis for the intrinsic purpose of the thesis with an objective to use the case study to more deeply explain the common questions that take place in a specific place (cf. Stake 1995, 3). Here the common questions concern evolution and resilience which occur on the case study periphery.

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Table 1. Conceptual framework, question, and main findings of articles I–V Title Conceptual

framework Focused questions for understanding

Main findings I Industry

life cycles of a resource town in Finland:

the case of Lieksa

Industry life cycles in the frame of evolution and resilience involving links with economic progress and institutional changes

What are the local industry life cycles? How do they reflect the development of a Finnish resource-based town?

-Five industry cycles: evolution has been cyclic and overlapping based on natural resources, assembly industries and service production

-Political interventions have influence on the growth of the cycles but have not been able to lay long-term foundations for new industries

-Increase in employment does not always represent growing economic competitiveness or economic renewal

II Global – local links and industrial restructuring in a resource town in Finland:

the case of Lieksa

Long waves shaped by techno-economic paradigms and new industry cycles resulting from evolution and resilience involving links with economic progress and institutional changes

How do the techno-economic paradigms relate to the evolution of the resource periphery?

-The periphery has been part of the global pulses of trade and technology, but there have been various place-based and state-led factors which have affected local development

-Industry life cycles do not match long wave theory without place-specific and industry-specific interpretation

-The delay between the long wave in earlier advanced economies and the time when those waves reached the periphery is observable throughout the timeline III Industrial

labour in a resource town in Finland:

the case of Lieksa

Institutional changes affecting resilience and industry cycles involving links with economic progress

How have the changes regarding the collective actors shaped the structure of employment and businesses on the periphery?

-Peripheries in developed countries tend to face pressure towards process improvements resulting in decreased employment -The economic structure may be character-

ised as thin, path dependent and diversified at the same time

-Competitiveness in resource peripheries is still greatly dependent on their natural assets, and it can be relatively sustainable if natural resources are renewable

-The peripheries in advanced economies are too costly in terms of global competition to generate growth in the great majority of manufacturing industries

IV Resource town transitions in Finland:

local impacts and policy responses in Lieksa

Evolutionary resilience and institutional changes including links with economic progress

How have various strategies been implemented to address the adverse impacts of economic restructuring and population change?

-The growth of one industry cycle after the decline of another can be seen as a visible expression of resilience

-Resilience of a local community is not only generated by local-scale actors but by national-scale policies, which have had an essential impact on the capacities that support the ability to survive

V Long-term adaptation of a resource periphery as narrated by local policymakers in Lieksa

Local professional experience and assessment of institutional changes and resilience including links with evolution, industry cycles and economic progress

How do local public actors present the evolution and depict the changes in adaptation?

Different kinds of renewal can be found despite decline

The evolutionary resilience of actors manifests as changing reactions to different external disturbances

The behaviours, interpretation and expectations of the actors present more multidimensional and dynamic reflections on resilience than growth-centric examination

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The analysis began by conceiving the description of structural changes in employment and population and by formulating the descriptive illustration of the evolution of industrial life cycles based on the changes in employment by sectors (Art.

I). The basic boom–bust pattern used especially with the cases from Canada (see Clapp 1998; Edenhoffer & Hayter 2013; Markey & Heisler 2010; Ryser et al. 2014) reflected the outcomes of expansion to the periphery through the increased use of natural resources, which peaked as a bust of both the labour force and population in the early 1960s.

Although the evolution of industries describes cyclical evolution of long duration in one sense, the development is not understood as cyclical based on the normal fluctuations of trade cycles but having more severe and multidimensional impact on a community’s development. For this reason, the booms and busts of industries are not seen here as resulting only from increased demand after economic expansion, or by contrast from declining demand after economic recession. The booms and busts here are parallel with the growth and decline of industry cycles, which result from the much more complex co-evolution of different mechanisms than normal economic up- and downswings. This first article revealed multidimensional evolution with five existing and one potential increasingly overlapping industry life cycles from the early 19th century onwards. The evolution of the local economy showed expanding diversity in a way that earlier industries mostly remained as new ones developed.

Instead of the local perspective of local industry cycles, long wave theory emphasised the global diffusion of technologies and institutions (Art. II). As shown in article II, Lieksa has been part of these global pulses of trade and technology, but there have been various place-based and state-led factors which have affected local development (Tykkyläinen et al. 2017). Thus, the local industry life cycles did not match with long wave theory without place-specific and industry-specific interpretation. The delay between the long wave in advanced economies and the time when those waves reached Lieksa was observable in each wave. The utilisation of the new techno-economic paradigm in Lieksa emphasises the suitable progress of the market combined with national-level policies having both economic and social objectives. This comparison also revealed two place-specific development patterns where there was no match between the long waves and local industry cycles. The first, the growth of the local service sector, was mainly followed by an expansion of the Nordic welfare society that had no connections to long waves. The second described a selective nature of diffusion of the long waves, as the ICT (information and communications technology) boom did not generate a new growth cycle in Lieksa, unlike other parts of Finland.

While the industry cycles and long waves focused on industrial and techno-centric impacts on labour, the third article concentrated on the institutions and employees that created and changed the structures of labour (Art. III). The gradual decline of employment that began in the late-1980s seemed to be caused by a mix of the difficulties of local firms to stay competitive, the national recession in the early 1990s, a collapse of the Soviet markets, the downward trends of production in advanced economies and pressures to increase competitiveness through process innovations.

The article indicated the importance of making a distinction in terms of technological improvements between products and production, from which the latter has been dominating the local economy. It is noteworthy that governmental regulation has played a central role in local adaptation, which also assisted in the creation of new employment, but this role has gradually diminished since the mid-1980s (Halonen et al. 2017). As such, it presents a rather typical trend in old resource peripheries

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within developed countries which refer resource peripheries in northern countries such as Canada and Finland (e.g. Markey & Heisler 2010; Halseth 2017; Halseth &

Ryser 2017; Hayter & Nieweler 2018). The analysis of the main employees confirmed the observations of the path dependency of the significant forest industries that compose the major cluster on the periphery. The industrial structure was comprised mostly of small-scale firms, but the economy seemed to be reliant on a few core, increasingly externally owned firms, which is typical characteristic of thin economies (cf. Isaksen 2015). In the end, the case showed that in the long-term the town was greatly dependent on its natural assets as the peripheries in advanced economies are too expensive to generate growth in the great majority of manufacturing industries in the global context.

The references to resilience have been part of the analysis in each of the articles, but the fourth article played a role in summarising and interpreting the different sides of resilience based on articles I–III and the findings of article IV. Many devolutionary processes can be observed which reflected the hindered resilience in the form of economic reorientation and renewal. In spite of the devolution and the weaknesses of adaptation, the deeper analysis revealed the multidimensional characters of evolutionary resilience that could be observed through the case study.

For instance, the growth of one industry cycle after another had declined presented the ‘visible renewal’ that manifests resilience. As such, the results verify the need to pay attention to the different approaches and the heterogenic nature of resilience (cf.

Gong & Hassink 2017). From the first article to the last, the significance of global–local links was seen as changing according to global markets, changes in the industries and firms, and transformations of the national development policies (Halonen et al.

2015; Kotilainen et al. 2017), which substantially influenced the local resilience. As the findings indicated, the industrial evolution emerged from the interplay between various factors in different spatial scales whereby the possibilities of locals to influence it seemed to be limited (cf. Tykkyläinen et al. 2017). The role of the state was found to be major in assisting institutional and economic conditions for local resilience (Kotilainen et al. 2017), but without this support, new crises have appeared rather quickly or the previous crisis has deepened (Halonen et al. 2017).

The last article (Art. V) focused on the evolution after the first boom and supplemented the findings of articles I–IV. In all, two bust times were found following two types of recovery. If there were any reflections about the growth in employment after the bust, it visibly manifested recovery (cf. Carlsson et al. 2014). During the first recovery from the late 1960s, growth could be observed, as the amount of employment increased in two sectors. During the second recovery from the late 1990s, the amount declined in all sectors, but growth was shown through an increased percentage of employment. As in article IV, the busts were seen as resulting from external changes in technologies and markets, and the findings buttressed the changes on the role of state.

The first recovery was seen as assisted by the formal policies of the state government, but the second bust was seen as deeper because of the failure of support. Herewith the findings are rather similar to findings in ten Norwegian case peripheries examined by Carlsson et al. (2014), who concluded that without external financial or instrumental support the exploiting of innovation or the creation of new types of diversification would have been difficult on northern peripheries.

Local policymakers were confronting the pressure on them to take responsibility for the economic renewal but at the same time they have been facing the old institutional structures that had not improved their capacity to meet expectations towards them

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(Halonen 2019). The last actor-centric article revealed the behaviours, interpretation, beliefs, and expectations of actors, which manifested more multidimensional and dynamic reflections on the resilience than the typical industry-based examination.

In general, the adaptation of local policymakers appeared as reactions to external changes, but these reactions varied from phase to phase (Art. V). The resilience was not defined by the absolute success or growth of industries, but as a strategy for surviving through the turbulent time. The resilience was seen as the ability to function and maintain the core industrial performance but also as the acceptance of devolutionary processes. The importance of holding onto a forward-looking orientation seemed to be creating propitious conditions for flexibility to adapt to changes and support the renewal when the window of opportunity opens. Surviving through the most turbulent times and maintaining the ability to function have made resilience become observable in terms of increased tolerance towards vulnerability––the uncertainties of the economic future and the difficulties of locals to influence it (Halonen 2019).

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2 CONCEPTUAL THEORISING

2.1 BOOMING AND BUSTING RESOURCE PERIPHERIES

When scrutinising the evolution of old northern resource peripheries, stumbling upon booms and busts seems inevitable. Here the booms and busts are also taken as a starting point. However, they are generalised to manifest the growth and decline in employment in spite of the cause, not simply in relation to the economic up- or downturn. The basic pattern of the resource cycle, more generally known as the industry life cycle model, begins with a pioneering phase when the resource is found and exploitation is started (Clapp 1998; Edenhoffer & Hayter 2013). The pioneering is followed by growth that describes the rapid expansion of the community, which sooner or later reaches a plateau phase of maturing that later turns into decline usually with some kind of rationalisation (Edenhoffer & Hayter 2013; Fig. 2). The major boom of a resource periphery is here understood to be referencing the chain effect that leads to voluminous growth of the community. This boom is usually triggered by the considerable increases in demand for a certain natural resource, which in propitious circumstances accelerate the extraction of this resource (see Clapp 1998; Edenhoffer

& Hayter 2013, 141). To expand the extraction, more workforce and a new kind of infrastructure are needed, which also tend to lead the population into growth that further sets new demands for local services (Jacquet & Kay 2014; Deacon & Lamanes 2015). This was very much the case in Lieksa after the World War Two (WWII), when the extraction of forestry heavily increased and defused the growth in the community (Halonen et al. 2015). As a result of the boom, both employment and production (in terms of ‘economic’) and population and services (in terms of ‘socio’) rather rapidly expand, but nearly without fail a bust will follow.

This is helpfully explained by the theoretical insights of Harold Innis. He used Canadian single-industry towns as a basis of his thinking about staple industries (Hayter & Barnes 1990; Hayter 2000, 24–25), but the concept has also been applied to describe the development of resource communities in Finland (Katajamäki 1988, 7–10;

Kortelainen 1996; 39–40; Rytteri 2010). What can be seen as differing from neoclassical mainstream economics is the emphasis on geography as physical resource base and on socio-spatial relationships; technology that facilitates the extraction, transport, and communication; and institutions that shape the structures of resource extraction, from physical infrastructure to the regulation of markets (cf. Argent 2017, 20–22). The staple thinking can also be seen as a way to challenge the idea of linear development, where resource-intensive and high export-orientation is seen only as a temporary step towards a more advanced and diversified socio-economic society (Markey et al.

2005, 51).

Since the boom mainly originates from foreign demand and is usually enabled by externally invented new technologies and constructed transportation, the peripheries become linked into the global market system (Kortelainen 1996, 39), as happened after some delay in Lieksa (Tykkyläinen et al. 2017). As described by Argent (2017, 22), this

‘export mentality’ appears as a double-edged sword for resource peripheries because of rather one-sided economic structures from the perspective of peripheries. On the one hand, these external links create the opportunity for resource communities to evolve,

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but on the other hand, the external links make resource communities vulnerable to external changes. This is because the communities usually become dependent on non-local or even foreign investments and sensitive to demands and prices in more powerful foreign centres with more advanced technologies and economic structures (Barnes et al. 2001; Markey et al. 2012, 94; Ryser et al. 2018). In adverse circumstances, the ending of necessary investments or changes in the markets diminish the economic opportunities relating to the staple industry. As the natural-based staple products are sensitive to the overexploitation of the resource, it may also diminish the utilisation of the original resource in the long-term, or in the most extreme cases lead to a complete shake-out that ends the extraction of the resource (cf. Clapp 1998).

The major bust is here seen as following severely shocking disruptions such as a collapse in demand; the overexploitation of the resource; or disruptions in market access, transportation, or production technologies (Kortelainen & Rannikko 2015;

Halseth 2017). Herewith the causes are numerous, varying from international and national to local factors which may or may not be directly connected to the original resource sector (Neil & Tykkyläinen 1998, 7). In Lieksa, the major bust in employment and population in the 1960s could be seen as triggered by the remarkable changes in production technologies (Rannikko 1987, 53–64; Halonen et al. 2015), which was common for these neighbouring Nordic countries as in Sweden increase of tractors and chainsaws replaced largely the employment in agriculture and forestry (Hedlund 2017, 32–35). However, the bust was deepened by societal changes such as urbanisation, modernised industrialisation and later transferring into post-industrial society (Halonen et al. 2015). As an immediate result of the bust, the staple sector confronts usually different kinds of industrial adjustment with the rationalisation and the increasing efficiency of production that leads into declining employment, sometimes, into inevitable closures (Edenhoffer & Hayter 2013; Kortelainen &

Rannikko 2015; Kotilainen et al. 2015). Over the bust, the whole resource community is at risk of drifting into the staple trap because of its biased economic structure that causes difficulties in compensating for the beleaguered staple sector when the crisis arrives (cf. Rytteri 2010). The staple trap mainly refers to this structural vulnerability of a staples-dependent economy (Markey et al. 2019) when the resource periphery just remains as it is without any new investments or diversification (see Markey et al. 2012, 94). In the case when resource community just remains without any mutation, is here understood as a stage of devolutionary stagnation; thus seen here as in opposition to an evolutionary process of transformation with change, adaptation, and renewal (Boschma & Martin 2007).

When the bust arrives, the resource community face a pressure to restructure and find ways to avoid the staple trap. Kortelainen (1992, 37–38) identified two paths that have assisted in moving forward after the bust, and both are understood here as possible ways to renew. The first path is implemented through the staple sector, which might turn into regrowth by new investments and assistance of the possible cluster (Fig. 2: a). If the regrowth includes improving changes in production or processes, the regrowth could be seen as a ‘visible renewal’ within industry (Fig. 2: a). The problem is that because the staple industries tend to be focused on increasing the productivity, the result is more commonly decline rather than growth, which leads to the bust of the whole community if it is dominated by such a staple industry (cf. Tykkyläinen 1989).

However, in spite of the job losses resulting from rationalisation, these staple sectors have gained rather robust positions through which they might be able to create new paths by new investments (see Edenhoffer & Hayter 2013). This kind of new path may

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not present growth but less sharp or even smoothened decline in employment. As the renewal stays hidden under the declining cycle, it is called ‘invisible renewal’ (Fig. 2 b).

The other path leads to withdrawal from the domination of the original staple sector and reorientation before the new growth that manifests one type of ‘visible renewal’

(Fig. 2: b + d). This has been typical in industrial resource communities which have turned from manufacturing to more service-oriented communities (Kortelainen 1992, 38) but can also represent a shift from resource-based manufacturing to other types of manufacturing (Halonen et al. 2015). The complete shift from the staple industry to another kind of industry is not here understood as a diversification of the local economy but as a shift from an old staple industry to a new staple industry (Fig. 2: c -> d). Transformation from staple economy to an economy where at least two different kinds of industry are present in parallel, however, is understood as a diversified economy (Fig. 2: a or b + d). For instance, the transformation from solely primary industries towards tourism is understood as ‘visible renewal’ by diversification (see Tykkyläinen 1998b; 338–340). In the long-term, the more diversified local economies are seen to be more resilient than single-industry economies because when one industry confronts disturbances and fails as a result, other industries or businesses of other kinds most likely continue and hold up the community (Markey et al. 2005, 46). In sectoral shifts or diversification to other industries, the outcome could present a gradual decline (Fig. 2: b) or even a shake-out for the old staple businesses (Fig. 2:

c), but alongside the regrowth or new growth of another sector the renewal in the community becomes visible (Fig. 2: b or c + d).

However, renewal by reorientation is here understood as being possible also within an industry when single firms adapt to changes by niche development, micro specialisation, increasing the degree of processing or developing the manners of production (cf. Tykkyläinen 1998b; 338–340; Edenhoffer & Hayter 2013). These types of firm-based renewals can be created in spite of the possible decline in employment.

Since the renewal cannot be seen as a new or regrowth cycle, the firm-based renewal is called ‘invisible renewal’. If the renewal is understood as a form of evolution, the evolution cannot be understood consistently with the growth but also as a smoothening decline in the case of ‘invisible renewal’ (Fig. 2: b). Herewith, the decline may simultaneously manifest devolution in terms of redundant labour or closed firms but evolution in terms of ‘invisible renewal’ taking place in remaining or new firms that still offer employment, albeit less than the industry used to offer.

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Figure 2. Alternative directions of evolution (redeveloped from Edenhoffer & Hayter 2013)

2.2 CONCEPTUAL MODELLING OF EVOLUTION AND RESILIENCE IN A PERIPHERY

As the purpose is to reach an understanding of the causes behind the evolution of a local economic system, both the non-local and local factors are taken under consideration (Martin & Sunley 2015b, 721). In essence evolution is here seen as resulting from the interplay between external impulses and internal responses that create and renew the economic environment of the resource periphery and thus push the process of mutation forward (Fig. 3). External impulses are comprised of extreme shocks, techno-economic paradigms and megatrends, customary techno-economic progress and institutions which are here seen as non-local mechanisms, which are primarily produced through the interaction of non-local actors such as state authorities and firms operating in the global markets. In contrast, internal responses are mainly in the hands of local actors such as individual decision makers, local public authorities and firms, but which responses are highly connected with local path and place dependencies, and local human and non-human capacities.

The economic landscape refers to the pattern of economic differentiation between places (Martin & Sunley 2006, 410) which has been seen as resulting in the spatial organisation of economic production (Boschma & Martin 2010, 6). In this thesis, resource-based production in peripheries is seen as such a pattern of economic differentiation. How this resource-based pattern changes is a crucial question for investigating the evolution of peripheries. The answer cannot be reached without scrutinising the economic renewal and the ways in which the staple trap can be avoided. Both perspectives––the evolution of a local community within its wider economic environment and evolution in a local community (cf. Essletzbichler &

Rigby 2007, 560-566)––are open to examination. The interest is set in the processes of

Booming, busting - turning, surviving? : socio-economic evolution and resilience of a forested resource periphery in Finland

uef.fi

Dissertations in Social Sciences and Business Studies

MAIJA HALONEN

MAIJA HALONEN

BOOMING, BUSTING – TURNING, SURVIVING?

BOOMING, BUSTING – TURNING, SURVIVING?

Maija Halonen

BOOMING, BUSTING – TURNING, SURVIVING?

ABSTRACT

TIIVISTELMÄ

ACKNOWLEDGEMENTS

CONTENTS

LIST OF TABLES

LIST OF FIGURES

1 INTRODUCTION

1.1 OLD RESOURCE PERIPHERIES WITHIN DEVELOPED ECONOMIES IN CHANGE

1.2 AIM AND RESEARCH QUESTIONS

1.3 POSITIONING THE CASE OF LIEKSA AS A NORTHERN RESOURCE PERIPHERY

1.4 PERSPECTIVES OF THE ARTICLES INTO THE QUESTIONS

2 CONCEPTUAL THEORISING

2.1 BOOMING AND BUSTING RESOURCE PERIPHERIES

2.2 CONCEPTUAL MODELLING OF EVOLUTION AND RESILIENCE IN A PERIPHERY