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Does Economic Integration Affect the Structure of Industries? Empirical Evidence from the CEE

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  • d'Artis Kancs

Abstract

In this paper we study how European integration would affect the industry location and sectoral specialisation of local economies in the CEE accession countries. The theoretical framework of our study is based on the new eco- nomic geography, which allows us to predict not only the post-integration spe- cialisation patterns, but captures also other general equilibrium eects, such as transition to market economy, which turn out to be highly significant in CEE. Our empirical results suggest that the CEE specialisation pattern would be distinct from the old EU member states. First, the EU integration would reduce regional specialisation in CEE. Second, the bell-shaped specialisation pattern predicted by the underlying theoretical framework is inverse in CEE. We could explain a large portion of these dierences by CEE-specific processes, such as integration of the CMEA. These distortions are higher in those regions, which were more integrated in the CMEA. Our simulation results also suggest a convergence in the specialisation across the CEE regions.

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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 19507.

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Date of creation: 2007
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Handle: RePEc:lic:licosd:19507

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Keywords: Economic geography; transport costs; European integration; monop- olistic competition.;

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  1. Rikard Forslid & Jan I. Haaland & Karen Helene M. Knarvik & Ottar Maestad, 2002. "Integration and transition: Scenarios for the location of production and trade in Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 93-117, March.
  2. Karl Aiginger & Stephen W. Davies, 2004. "Industrial specialisation and geographic concentration: Two sides of the same coin? Not for the European Union," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 231-248, November.
  3. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  4. Ottaviano, Gianmarco Ireo Paolo & Puga, Diego, 1997. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," CEPR Discussion Papers 1699, C.E.P.R. Discussion Papers.
  5. Julda Kielyte, 2008. "Estimating Panel Data Models in the Presence of Endogeneity and Selection," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 51(2), pages 1-19.
  6. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
  7. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
  8. repec:fth:iniesr:430 is not listed on IDEAS
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Cited by:
  1. Curran, Louise & Zignago, Soledad, 2012. "EU enlargement and the evolution of European production networks," Research in International Business and Finance, Elsevier, vol. 26(2), pages 240-257.
  2. d'Artis Kancs & Julia Kielyte, 2010. "European Integration and Labour Migration," EERI Research Paper Series EERI_RP_2010_27, Economics and Econometrics Research Institute (EERI), Brussels.
  3. James Anderson, 2001. "Migration, FDI, and the Margins of Trade," EERI Research Paper Series EERI_RP_2001_05, Economics and Econometrics Research Institute (EERI), Brussels.

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