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Does a Wait and See Approach to European Integration Shelter the Industrial Base of Small Countries?

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Abstract

This paper compares the effect of economic integration on industry location for a small country that goes ahead with an integration process, such as the European, and a country adopting a wait and see strategy. Theoretical results, derived from a three-region new economic geography model, are compared to stylised facts on European manufacturing production. The result is that further integration could strengthen the industrial base of small countries that go ahead with integration.

Suggested Citation

  • Forslid, Rikard, 2004. "Does a Wait and See Approach to European Integration Shelter the Industrial Base of Small Countries?," Research Papers in Economics 2004:2, Stockholm University, Department of Economics.
  • Handle: RePEc:hhs:sunrpe:2004_0002
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    Keywords

    Agglomeration; economic integration; multiregion-model;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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