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Determinants of Manufacturing Location in EU Accession Countries

  • Simonetta Longhi

    ()

  • Peter Nijkamp

    ()

  • Iulia Traistaru

    ()

Since 1990, Central and Eastern European countries have experienced increased integration with the European Union which has led to a reallocation of resources across sectors and space. The spatial implications of this process have been little investigated so far. Have regional production structures changed over the last decade? How specialized/diversified are regions? How concentrated/dispersed are industries? What are the determinants of manufacturing location patterns? This paper identifies and explains patterns of regional specialization and manufacturing concentration in Bulgaria, Estonia, Hungary, Romania and Slovenia. We find that patterns of manufacturing relocation are country-specific. In Bulgaria, manufacturing activities have moved from regions bordering other accession countries and regions bordering countries outside the EU enlargement process to regions bordering the EU and non-border regions. In Estonia, manufacturing activities have increased their share in regions bordering other accession countries and decreased their shares in regions bordering the EU. In Hungary, manufacturing activities have moved from non-border regions and regions bordering countries outside the EU enlargement to regions bordering the EU and regions bordering other accession countries. In Slovenia, manufacturing activities have moved from regions bordering countries outside the EU enlargement to regions bordering the EU. Our research results suggest that high specialization of regions is associated with proximity to accession countries and advanced accession, with proximity to EU markets and lagged accession and with proximity to countries outside the EU enlargement area. Low specialization relates to proximity to EU markets and advanced accession and to proximity of other accession countries and lagged accession. With respect to manufacturing concentration patterns, we find that highly concentrated industries are those with large economies of scale, high technology and high wages. Industries with low technology and low wages appear to be dispersed. Both factor endowments and proximity to industry centers ? capital regions and EU markets ? explain the emerging economic geography in EU accession countries. Other things being equal, industries are attracted by large markets. Industries with large economies of scale tend to locate close to industry centers. Labour intensive industries locate in regions endowed with a large labour force while research oriented industries are attracted by regions endowed with researchers. Key words: European integration, Location of industrial activity, Regional specialization, Industrial concentration, EU accession countries JEL classification: F15, R11, R12

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p310.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p310
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