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The Economic Geography Effects of Trade Liberalisation on the National Regions of Spain

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Henk J.E.M. Brand

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Abstract

This paper examines the effects of EU trade liberalisation on changes in the structure and econcentration of manufacturing industries in Spain. To achieve this objective, the analysis develops a simple three-region model to classify a country's administrative regions into Core regions, Adjaccent regions, and Periphery regions. The significance of this three-region CAP model is that it can be extended into a multi-regional CAP-model to provide a framework for analysing the forces of agglomeration and dispersion at the national regional levels where the shocks of economic intergration are intially felt. The model allows for the identification of CAP clusters within a country thereby revealing multi-agglomerate production structures and changes in their composition due to the endogenous forces of trade liberalisation. Since the CAP model is a national regional model, in contrast to a national geographic model as found in the empirical literature, it has necessitated the development of a new regional industry concentration measurement. The measurement is called the 'manufacturing labour-land concentration ratio', which simultaneously reveals relative and absolute regional industry concentration. This ration facilitates the analysis and comparison of regional manufacturing concentration per CAP cluster, the characterisitics of industries locating in each region type, and the characteristics of the CAP regions that attract specific industries. Finall, this paper addresses the empirical findings of Midelfart et al., (2000), that the 'spatial distribution of European manufacturing appears to be driven by developments in Southern Europe.' Their outcomes suggest a strong geograpic competition effect in Spain that outweighs the agglomeration effect of the geographic core. empirical analysis of this study appears to support the self-sufficiency theory of Venables and Limao (2002) based on a country's location, endowment of primary factors of production, commodity characteristics of transportation intensity, and factor endowments.

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Paper provided by Department of Economics, University of Glasgow in its series Working Papers with number 2004_8.

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Date of creation: Sep 2004
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Handle: RePEc:gla:glaewp:2004_8

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Web page: http://www.gla.ac.uk/departments/economics/

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F15 - International Economics - - Trade - - - Economic Integration
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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  1. P Krugman & A Venables, 1993. "Intergration," CEP Discussion Papers 0172, Centre for Economic Performance, LSE.
  2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
  3. D Puga, 1996. "The Spread of Industry: Spatial Agglomeration in Economic Development," CEP Discussion Papers 0279, Centre for Economic Performance, LSE. [Downloadable!]
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  4. Rodney D. Ludema & Ian Wooton, 1997. "Regional Integration, Trade, and Migration: Are Demand Linkages Relevant in Europe?," Working Papers 9704, Department of Economics, University of Glasgow, revised Jul 1997. [Downloadable!]
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  5. Donald R. Davis & David E. Weinstein, 1998. "Market Access, Economic Geography, and Comparative Advantage: An Empirical Assessment," NBER Working Papers 6787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Brülhart, Marius, 1996. "Regional Integration, Scale Economies and Industry Location in the European Union," CEPR Discussion Papers 1435, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Forslid, Rikard & Wooton, Ian, 1999. "Comparative Advantage and the Location of Production," CEPR Discussion Papers 2118, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Krugman, Paul & Venables, Anthony J., 1993. "Integration, Specialization and Adjustment," CEPR Discussion Papers 886, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Forslid, Rikard & Haaland, Jan I. & Ulltveit-Moe, Karen-Helene, 1999. "A U-Shaped Europe? A Simulation Study of Industrial Location," CEPR Discussion Papers 2247, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Venables, Anthony J. & Limao, Nuno, 2002. "Geographical disadvantage: a Heckscher-Ohlin-von Thunen model of international specialisation," Journal of International Economics, Elsevier, vol. 58(2), pages 239-263, December. [Downloadable!] (restricted)
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  11. Davis, Donald R, 1998. "The Home Market, Trade, and Industrial Structure," American Economic Review, American Economic Association, vol. 88(5), pages 1264-76, December. [Downloadable!] (restricted)
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  12. Davis, Donald R. & Weinstein, David E., 1999. "Economic geography and regional production structure: An empirical investigation," European Economic Review, Elsevier, vol. 43(2), pages 379-407, February. [Downloadable!] (restricted)
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  13. 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).
  14. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October. [Downloadable!] (restricted)
  15. Glenn Ellison & Edward L. Glaeser, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May. [Downloadable!] (restricted)
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  16. Forslid, R. & Haaland, J.I. & Knarvik, K.H.M., 1999. "A U-Shaped Europe? A Simulation Study of Industrial Location," Papers 19/99, Norwegian School of Economics and Business Administration-.
  17. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
  18. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  19. Krugman, P. & Venables, A.J., 1995. "Globalization and the Inequality of Nations," Papers 430, Industrial Institute for Economic and Social Research.
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  20. Krugman, Paul & Venables, Anthony J., 1990. "Integration and the Competitiveness of Peripheral Industry," CEPR Discussion Papers 363, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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