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European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions

Author

Listed:
  • Miren Lafourcade
  • Elisenda Paluzie Hernandez

    (Universitat de Barcelona)

Abstract

In this paper we use a gravity model to study the trade performance of French and Spanish border regions relatively to non-border regions, over the past two decades. We find that, controlling for their size, proximity and location characteristics, border regions trade on average between 62% and 193% more with their neighbouring country than other regions, and twice as much if they are endowed with good cross border transport infrastructures. Despite European integration, however, this trade outperformance has fallen for the most peripheral regions within the EU. We show that this trend was linked in part to a shift in the propensity of foreign investors to move their affiliates from the regions near their home market to the regions bordering the EU core.

Suggested Citation

  • Miren Lafourcade & Elisenda Paluzie Hernandez, 2005. "European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions," Working Papers in Economics 145, Universitat de Barcelona. Espai de Recerca en Economia.
  • Handle: RePEc:bar:bedcje:2005145
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    Citations

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    Cited by:

    1. Annekatrin Niebuhr, 2008. "The impact of EU enlargement on European border regions," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 3(3/4), pages 163-186.
    2. Timo Mitze, 2010. "Estimating Gravity Models of International Trade with Correlated Time-Fixed Regressors: To IV or not IV?," EERI Research Paper Series EERI_RP_2010_22, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Ghemawat, Pankaj & Llano, Carlos & Requena, Francisco, 2009. "Rethinking regional competitiveness: Catalonia's international and interregional trade, 1995-2006," IESE Research Papers D/802, IESE Business School.
    4. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
    5. Bergs, Rolf, 2010. "Cross-border co-operation and European economic integration: an empirical analysis," MPRA Paper 25413, University Library of Munich, Germany.
    6. Rolf Bergs, 2012. "Cross-border Cooperation, Regional Disparities and Integration of Markets in the EU," Journal of Borderlands Studies, Taylor & Francis Journals, vol. 27(3), pages 345-363, December.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F15 - International Economics - - Trade - - - Economic Integration

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