Advanced Search
MyIDEAS: Login

Opening Economy and Regional Development - Comparative Advantage and Agglomeration Forces as Location Factors in Finland

Contents:

Author Info

  • Widgrén, Mika
  • Kotilainen, Markku
  • Nikula, Nuutti
  • Kaitila, Ville

Abstract

The study examines the developments in production structures in Finnish regions and the differences in regional income levels and the causes that affect them in an integrating global economy as well as the challenges facing regional policies. The increasing openness of the world economy, the increasing competition it causes and its effect on Finland’s regions is the central task of this study. We combine the classical theory of international trade based on comparative advantage about the specialisation of countries with the approach of the new economic geography and agglomeration forces about the specialisation of regions inside countries. The study is a pioneer in Finland because similar analysis of regional production structures and specialisation has not been done before. We find that the so-called agglomeration forces drive the location of production in Finland. These regional agglomeration forces are the economic size of the region and closeness to markets (so-called market potential), distance between companies producing intermediate and final products, scale effects, and the educational level and R&D activities. Centralisation of production also requires that workforce is willing to relocate and that the productivity growth in core areas is faster than on average. Because labour mobility is such a central requirement for production agglomeration the study also examines migration within Finland in the past 50 years. For regional policies the conclusion of the study is that agglomeration forces should not be constrained if they lead to and are caused by faster productivity growth in core regions. In Finland there are significant differences in public sector services per capita in different regions so that regions with low wage and tax revenues have more public sector services in per capita terms than the core regions. This means that it is very hard to stop migration flows using the community tax equalisation scheme.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.etla.fi/wp-content/uploads/2012/09/dp1113.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1113.

as in new window
Length: 79 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:rif:dpaper:1113

Contact details of provider:
Postal: Lönnrotinkatu 4 B, FIN-00120 HELSINKI
Phone: +358 (0)9 609 900
Fax: +358 (0)9 601 753
Web page: http://www.etla.fi/
More information through EDIRC

Order Information:
Email:

Related research

Keywords: egional economy; agglomeration forces; comparative advantage; new economic geography;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rif:dpaper:1113. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kaija Hyvönen-Rajecki).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.