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Trade and the location of industries in the OECD and European Union


  • Michael Storper
  • Yun-chung Chen


Trade and location theory identifies forces that could lead to locational dispersion (comparative advantage) or locational concentration (scale economies) in the face of globalizing markets, each with different consequences for specialization and the adjustment costs associated with integration. However, these forces can play themselves out in very complex ways if locational change principally affects intermediate production. Moreover, effects of history may be important, if locational patterns which exist prior to integration reflect either strong external economies or, as we argue, strong institutionalized capacities to respond to more open markets. This could especially be the case in the context of Europe, whose territories are generally less specialized than the states of the USA. To see how these different effects are operating today, empirical measurement is required. Using a data set which allows changes in locational distribution of manufacturing industries in the OECD to be measured, we show that Europe does not seem to be 'Americanizing' its economic geography. Many sectors are actually spreading out in Europe, implying that the effects of history have remained strong up to this point. Specialization increases are weak in most European economies as well. The OECD has a more complex picture of spread and concentration. Some of the implications for further research on agglomeration, intra-industry trade, and integration are brought out in the conclusion. Copyright 2002, Oxford University Press.

Suggested Citation

  • Michael Storper & Yun-chung Chen, 2002. "Trade and the location of industries in the OECD and European Union," Journal of Economic Geography, Oxford University Press, vol. 2(1), pages 73-107, January.
  • Handle: RePEc:oup:jecgeo:v:2:y:2002:i:1:p:73-107

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    References listed on IDEAS

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    Cited by:

    1. Gilles Duranton & Michael Storper, 2008. "Rising trade costs? Agglomeration and trade with endogenous transaction costs," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 292-319, February.
    2. Beyer, Jürgen, 2006. "Verfestigte institutionelle Vielfalt? Die komparativen Vorteile koordinierter Ökonomien und die Internationalisierung von Unternehmen," MPIfG Working Paper 06/8, Max Planck Institute for the Study of Societies.
    3. Andres Rodriguez-Pose & Nicholas Gill, 2004. "How does trade affect regional inequalities?," ERSA conference papers ersa04p478, European Regional Science Association.
    4. Combes, Pierre-Philippe & Overman, Henry G., 2004. "The spatial distribution of economic activities in the European Union," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 64, pages 2845-2909 Elsevier.
    5. repec:got:cegedp:106 is not listed on IDEAS
    6. Brulhart, Marius & Traeger, Rolf, 2005. "An account of geographic concentration patterns in Europe," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 597-624, November.
    7. Krenz, Astrid & Rübel, Gerhard, 2010. "Industrial localization and countries' specialization in the European Union: An empirical investigation," Center for European, Governance and Economic Development Research Discussion Papers 106, University of Goettingen, Department of Economics.
    8. Kandogan, Yener, 2014. "The effect of foreign trade and investment liberalization on spatial concentration of economic activity," International Business Review, Elsevier, vol. 23(3), pages 648-659.
    9. Nicole Palan, 2010. "Measurement of Specialization – The Choice of Indices," FIW Working Paper series 062, FIW.
    10. CRESPO, Nuno & FONTOURA, María Paula, 2010. "Determinant Factors Of Structural Similarity At The Regional Level: Evidence From Portugal," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(1).
    11. Rodriguez-Pose, Andres & Gill, Nicholas, 2006. "How does trade affect regional disparities?," World Development, Elsevier, vol. 34(7), pages 1201-1222, July.
    12. Marlies Hanna Schütz & Nicole Palan, 2016. "Restructuring of the international clothing and textile trade network: the role of Italy and Portugal," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-29, December.
    13. Jurgen Essletzbichler & Kazuo Kadokawa, 2010. "The Evolution of Regional Labour Productivities in Japanese Manufacturing, 1968-2004," Regional Studies, Taylor & Francis Journals, vol. 44(9), pages 1189-1205.
    14. Marlies Schütz & Nicole Palan, 2015. "Restructuring the International Textile Production and Trade Network. The Role of Italy and Portugal," FIW Working Paper series 156, FIW.
    15. repec:krk:eberjl:v:2:y:2014:i:2:p:7-19 is not listed on IDEAS
    16. Sklias, Pantelis & Tsampra, Maria, 2012. "Towards an analytical framework of regional integration in Western Balkans," MPRA Paper 36504, University Library of Munich, Germany.
    17. Natalia Vechiu & Farid Makhlouf, 2014. "Economic integration and specialization in production in the EU27: does FDI influence countries’ specialization?," Empirical Economics, Springer, vol. 46(2), pages 543-572, March.
    18. Sklias, Pantelis & Tsampra, Maria, 2011. "Assessing regional integration and business potential in the Western Balkans," MPRA Paper 36341, University Library of Munich, Germany.
    19. Astrid KRENZ & Gerhard RÜBEL, "undated". "Explaining Industrial Localization and Countries´ Specialization in the European Union: An Empirical Investigation," EcoMod2009 21500056, EcoMod.
    20. Mónica Rivera, 2014. "Trade patterns in the process of European integration: Evidence for the intraindustrial exchanges of a Mediterranean peripheral region," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 227-249, January.
    21. Nuno Crespo & Maria Paula Fontoura, 2008. "Regional Integration and International Economic Geography in the Portuguese Case - an update," Working Papers Department of Economics 2008/51, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

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