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Regional specialization and trade patterns in Europe

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  • Frias, Isidro
  • Iglesias, Ana
  • Neira, Isabel

Abstract

In the present paper we will study the effects of the construction of an internal market in Europe in 1992. The question to be answered is whether some regions in Europe have improved their positions in the internal EU trade from a better exploitation of their comparative advantages (productivity, factors endowment,...) and scale economies, as far as regions have two main reasons for trade: specialization in those activities they do the best and the exploitation of scale economies. The evolution of inter industrial trade will reveal whether the expectations of some qualified economist of a deeper specialization of northern European regions in human capital-intensive industries and in labour-intensive industries in the southern regions were correct. Besides, the development of intra industrial trade in this decade will prove if the benefits of scale economies were bigger in the south, where they were less exploited at the outset. Finally, we will also analyse the role of foreign direct investment (which can be observed as another way of exports and shares with trade the causal factors) in the reinforcement of specialization patterns across Europe. In this connection, we identify and analyse the evolution of trade patterns in Europe in the 1990´s through the utilization of Grubel-Lloyd index. Secondly, we utilize several indicators of comparative advantages (sectors average productivity, labour costs, human capital endowment, etc.) and of firms size to study whether they have also undergone some changes as a result of the internal market formation. Although the lack of regional data can make us formulate this analysis for countries rather than for regions, whenever necessary we will supplement it with the patterns of regional specialization within the countries, as far as the regional location of export industries can shed some light on this issue.

Suggested Citation

  • Frias, Isidro & Iglesias, Ana & Neira, Isabel, 2000. "Regional specialization and trade patterns in Europe," Economic Development 46, University of Santiago de Compostela. Faculty of Economics and Business. Econometrics..
  • Handle: RePEc:eaa:ecodev:46
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    References listed on IDEAS

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    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. Guisan, M.Carmen & Frias, Isidro, 1996. "Economic growth and social welfare in the European regions," Economic Development 9, University of Santiago de Compostela. Faculty of Economics and Business. Econometrics..
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
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    6. Iglesias, Ana & Frias, Isidro & Vazquez, Emilia, 2001. "Un analisis econometrico de la concentracion industrial en las regiones españolas," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 1(1).
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    2. Styliani Christodoulopoulou, 2014. "The effect of currency unions on business cycle correlations: the EMU case," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(2), pages 177-222, May.

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