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Determinants of Industrial Location Patterns in CEECs

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  • Antje Hildebrandt
  • Julia Wörz

Abstract

We describe concentration tendencies in individual manufacturing industries in Central and Eastern European countries and identify relevant factors causing these patterns. Using output and employment data for 14 manufacturing industries over the years 1993-2002, we observe an increase in concentration of industrial activity (both in output and employment terms). This is opposed to the general trend prevailing in Western Europe over the same period. Using panel estimation techniques, we explain these developments by factors derived from traditional trade theory (differences in endowments or technologies), new trade theory (expenditure patterns, scale economies) and new economic geography (backward and forward linkages, transport costs). Concentration is driven by differences in human capital and the local concentration of demand. While output concentration is strongly influenced by productivity differentials, concentration of the labour force is strongly related to wage differences. Differences in productivity levels influence output concentration patterns in all industries, while the relevance of other factors varies across industries.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 32.

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Date of creation: Nov 2004
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Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:32

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Related research

Keywords: location of industry; relative and absolute concentration; Central and Eastern Europe;

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References

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  1. Klaus Gugler & Michael Pfaffermayr, . "Convergence in Structure and Productivity in European Manufacturing?," WIFO Working Papers 127, WIFO.
  2. Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, vol. 16(1), pages 155-155, May.
  3. Marius Brülhart, 1998. "Trading Places: Industrial Specialization in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 36(3), pages 319-346, 09.
  4. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  5. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  6. K.H. Midelfart & H.G. Overman & S.J. Redding & A.J. Venables, 2000. "The location of European industry," European Economy - Economic Papers 142, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  7. Vasily Astrov, 2004. "Wirtschaftsentwicklung in den MOEL durch deutliche Konvergenz geprägt," wiiw Research Papers in German language 2004-05, The Vienna Institute for International Economic Studies, wiiw.
  8. Combes, Pierre-Philippe & Overman, Henry G., 2003. "The Spatial Distribution of Economic Activities in the EU," CEPR Discussion Papers 3999, C.E.P.R. Discussion Papers.
  9. Karl Aiginger, . "Do Industrial Structures Converge? A Survey on the Empirical Literature on Specialisation and Concentration of Industries," WIFO Working Papers 116, WIFO.
  10. Mary Amiti, 1999. "Specialization patterns in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(4), pages 573-593, December.
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Cited by:
  1. Pierella Paci & Erwin R. Tiongson & Mateusz Walewski & Jacek Liwinski & Maria M. Stoilkova, 2007. "Internal Labor Mobility in Central Europe and the Baltic Region," World Bank Publications, The World Bank, number 6598, October.
  2. Gianfranco De Simone, 2008. "Trade in Parts and Components and the Industrial Geography of Central and Eastern European Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(3), pages 428-457, October.

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