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Factor Endowments and Production in European Regions

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  • Redding, Stephen
  • Vera-Martin, Mercedes

Abstract

This Paper analyses patterns of production across 14 industries in 45 regions from seven European countries since 1975. We estimate a structural equation derived directly from neoclassical trade theory that relates an industry?s share of a region?s GDP to factor endowments, relative prices and technology. Although factor endowments play a statistically significant and quantitatively important role in explaining production patterns, the Heckscher-Ohlin model is rejected against more general alternatives that allow for regional variation in relative prices and technology. Factor endowments are more successful at explaining patterns of production in aggregate industries (Agriculture, Manufacturing, Services) than in disaggregated industries within Manufacturing.

Suggested Citation

  • Redding, Stephen & Vera-Martin, Mercedes, 2003. "Factor Endowments and Production in European Regions," CEPR Discussion Papers 3755, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3755
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    2. Kozo Kiyota, 2023. "Spatially uneven pace of deindustrialisation within a country," The World Economy, Wiley Blackwell, vol. 46(7), pages 2187-2230, July.
    3. Bradford, Scott C. & Das, Satya & Saha, Anuradha, 2022. "Country size, per-capita income, and comparative advantage: services versus manufacturing," MPRA Paper 115091, University Library of Munich, Germany.
    4. Néstor Duch, 2005. "Vertical linkages, agglomeration and the organization of production in European regions," Working Papers 2005/6, Institut d'Economia de Barcelona (IEB).
    5. Metin Badem & Harun Hurma, 2025. "Evaluation of the Profitability and Competitiveness of Strategic Products with the Policy Analysis Matrix: The Case of Tekirdağ, Türkiye," Sustainability, MDPI, vol. 17(11), pages 1-20, June.
    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.
    7. Walker, Sarah, 2012. "The (Rail)road to Structural Change: Transportation Costs, Integration, and Production Specialization," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124614, Agricultural and Applied Economics Association.
    8. 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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    Keywords

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    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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