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Factor Endowments and Production in European Regions

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  • Stephen Redding
  • Mercedes Vera-Martin

Abstract

This paper analyses patterns of production across 14 industries in 45 regions from 7 European countries since 1975. We estimate a structural equation derived directly from Heckscher-Ohlin theory that relates an industry's share of a region's GDP to factor endowments and relative prices. Factor endowments are found to play a statistically significant and quantitatively important role in explaining production patterns. The explanation is most successful for aggregate industries, such as Agriculture, Manufacturing, and Services, and works less well for disaggregated industries within Manufacturing. We find no evidence that increasing European integration has weakened the relationship between factor endowments and production patterns within countries.

Suggested Citation

  • Stephen Redding & Mercedes Vera-Martin, 2001. "Factor Endowments and Production in European Regions," CEP Discussion Papers dp0501, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0501
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    3. Néstor Duch, 2005. "Vertical linkages, agglomeration and the organization of production in European regions," Working Papers 2005/6, Institut d'Economia de Barcelona (IEB).
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    5. Néstor Duch, 2005. "Vertical linkages, agglomeration and the organization of production in European regions," Working Papers 2005/6, Institut d'Economia de Barcelona (IEB).
    6. Gregory T. Papanikos, 2004. "The Determinants of Employment Creation in Small Regional Firms," International Regional Science Review, , vol. 27(2), pages 187-204, April.

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    More about this item

    Keywords

    Factor Endowments; Heckscher-Ohlin; specialization; European integration;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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