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Industrial specialisation and geographic concentration: Two sides of the same coin? Not for the European Union

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Author Info
Karl Aiginger (Austrian Institute of Economic Research, and University of Linz)
Stephen W. Davies (University of East Anglia)

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Abstract

Some recent studies have shown that specialisation of countries has tended to increase, while regional concentration of countries has tended to decrease. This seems to be counterintuitive at first glance. In this paper, we use the entropy index - as the indicator of structural change with the neatest aggregation properties to show how this divergence can happen. The main purpose of the paper is methodological, but we also apply the methodology to a specific case study: Manufacturing in the European Union since 1985. We confirm for this interesting period that increasing industrial specialisation has been offset by faster growth in the smaller Member States, with the net effect that industries have become somewhat less geographically concentrated. In terms of economic geography the evidence is in line with the second part of the inverted U-curve (where decreasing transport costs eventually foster de-concentration). This is no contradiction to increasing specialisation of countries in specific industries as predicted by many models in the old as well as the new trade theory.

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Publisher Info
Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): VII (2004)
Issue (Month): (November)
Pages: 231-248
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Handle: RePEc:cem:jaecon:v:7:y:2004:n:2:p:231-248

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Related research
Keywords: structural change; geographical concentration; industrial specialisation; European integration; entropy;

Find related papers by JEL classification:
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
F15 - International Economics - - Trade - - - Economic Integration
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Encaoua, David & Jacquemin, Alexis, 1980. "Degree of Monopoly, Indices of Concentration and Threat of Entry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 87-105, February. [Downloadable!] (restricted)
  2. Midelfart-Knarvik, K.H. & Overman, H.G. & Redding, S.J. & Venables, A.J., 2000. "The Location of European Industry," European Economy - Economic Papers 142, Commission of the EC, Directorate-General for Economic and Financial Affairs (DG ECFIN).
  3. Esteban Rossi-Hansberg, 2005. "A Spatial Theory of Trade," American Economic Review, American Economic Association, vol. 95(5), pages 1464-1491, December. [Downloadable!]
  4. Marius Brülhart, 1995. "Industrial Specialisation In The European Union: A Test Of The "New Trade Theory"," Economics Technical Papers 955, Trinity College Dublin, Department of Economics.
  5. Karl Aiginger & Michael Pfaffermayr, 2004. "The Single Market and Geographic Concentration in Europe," Review of International Economics, Blackwell Publishing, vol. 12(1), pages 1-11, 02. [Downloadable!] (restricted)
  6. Yvonne Wolfmayr-Schnitzer, . "Economic Integration, Specialisation and the Location of Industries. A Survey of the Theoretical Literature," WIFO Working Papers 120, WIFO. [Downloadable!]
    Other versions:
  7. Mary Amiti, 1999. "Specialization patterns in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(4), pages 573-593, December. [Downloadable!] (restricted)
    Other versions:
  8. Karl Aiginger & Wolfgang Leitner, 2002. "Regional concentration in the United States and Europe: Who follows whom?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 652-679, December. [Downloadable!] (restricted)
  9. Paul Krugman, 1992. "Geography and Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610868, December.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Brulhart, Marius & Traeger, Rolf, 2003. "An Account of Geographic Concentration Patterns in Europe," Discussion Paper Series 26155, Hamburg Institute of International Economics. [Downloadable!]
    Other versions:
  2. Frances Ruane & Xiaoheng Zhang, 2007. "Where do MNEs Expand Production: Location Choices of the Pharmaceutical Industry in Europe after 1992," Papers WP211, Economic and Social Research Institute (ESRI). [Downloadable!]
  3. Esteban Rossi-Hansberg, 2005. "A Spatial Theory of Trade," American Economic Review, American Economic Association, vol. 95(5), pages 1464-1491, December. [Downloadable!]
  4. George Petrakos & Dimitrios Kallioras & Ageliki Anagnostou, 2006. "Determinants of Industrial Performance in the EU-15 Countries, 1980-2003," ERSA conference papers ersa06p134, European Regional Science Association. [Downloadable!]
  5. Michael H. Stierle & Ulrike von Schütz, 2003. "Regional specialisation and sectoral concentration: an empirical analysis for the enlarged EU," ERSA conference papers ersa03p317, European Regional Science Association. [Downloadable!]
  6. George Petrakos & Georgios Fotopoulos & Dimitrios Kallioras, 2006. "Peripherality and Integration: Industrial Growth and Decline in the Greek Regions," ERSA conference papers ersa06p133, European Regional Science Association. [Downloadable!]
  7. Natércia Godinho Mira, 2008. "Indústria transformadora portuguesa: especialização das regiões e/ou concentração geográfica de indústrias?," CEFAGE-UE Working Papers 2008_13, University of Evora, CEFAGE-UE (Portugal). [Downloadable!]
  8. Karl Aiginger & Wolfgang Leitner, 2002. "Regional concentration in the United States and Europe: Who follows whom?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 652-679, December. [Downloadable!] (restricted)
  9. Joeri Gorter & Albert Van der Horst, 2005. "New Economic Geography, Empirics, and Regional Policy," ERSA conference papers ersa05p236, European Regional Science Association. [Downloadable!]
    Other versions:
  10. Frances Ruane & Xiaoheng Zhang, 2007. "Location Choices of the Pharmaceutical Industry in Europe after 1992," The Institute for International Integration Studies Discussion Paper Series iiisdp220, IIIS. [Downloadable!]
  11. d'Artis Kancs, 2007. "Does Economic Integration Affect the Structure of Industries? Empirical Evidence from the CEE," LICOS Discussion Papers 19507, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
    Other versions:
  12. Eleonora Cutrini, 2005. "The Balassa Index meets the Theil Index - a Decomposition Methodology for Location Studies," ERSA conference papers ersa05p123, European Regional Science Association. [Downloadable!]
  13. David C. Maré, 2005. "Concentration, Specialisation and Agglomeration of firms in New Zealand," Working Papers 05_12, Motu Economic and Public Policy Research. [Downloadable!]
  14. Cornel Oros & Camelia Romocea Turcu, 2008. "How Does Sector Concentration Evolve At Country And Region Levels? The European Case," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 10(24), pages 273-282, June. [Downloadable!]
  15. Sergio Lodde, 2007. "Specialization and Concentration of the Manufacturing Industry in the Italian Local Labor Systems," Working Paper CRENoS 200716, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  16. Frances Ruane & Anne Marie Gleeson & Julie Sutherland, 2005. "Promoting Industrial Clusters: Evidence from Ireland," The Institute for International Integration Studies Discussion Paper Series iiisdp89, IIIS. [Downloadable!]
  17. Audretsch, David B & Dohse, Dirk & Niebuhr, Annekatrin, 2008. "Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany," CEPR Discussion Papers 6945, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  18. Nicole Höhenberger & Claudia Schmiedeberg, 2008. "Structural Convergence of European Countries," cege – Center for European, Governance and Economic Development Research Discussion Papers 75, cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany)., revised 28 Jul 2008. [Downloadable!]
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