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Industrial Specialisation In The European Union: A Test Of The "New Trade Theory"

Listed author(s):
  • Marius Brülhart

Industry location in the European Union is examined in order to explore the relevance of the "new" theories of trade and economic geography. The analysis is based on a set of highly disaggregated intra-industry trade indices for 1961-1990, complemented by sectoral employment statistics for EU countries and regions. It is found that, as predicted by the "new" theories, increasing-returns industries are strongly concentrated at the economic core of the EU and display low levels of intra-industry trade. High-tech industries are also highly localised, but show no centre-periphery gradient and no specific pattern of intra-industry trade. The main potential for future specialisation appears to remain in sectors sensitive to labour costs, which are still relatively dispersed and have high levels of intra-industry trade. Employment in these industries is shifting towards the EU periphery. "Classical" determinants of international specialisation are thus expected to dominate the impending adjustment process in EU manufacturing.

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Paper provided by Trinity College Dublin, Department of Economics in its series Economics Technical Papers with number 955.

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Date of creation: 1995
Handle: RePEc:tcd:tcduet:955
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