Regional Integration, Scale Economies and Industry Location in the European Union
نویسندگان
چکیده
We analyse the effects of increasing returns and regional integration on industry location and trade. Theoretically, we show that regional integration can induce a non-monotonic locus of industry location inside the customs union, with initial dispersion to the periphery and later concentration in the core. Relationships of locational dispersion with scale economies (monotonically negative) and with regional integration (non-monotonic) also apply to equilibrium levels of intra-industry trade (IIT). Empirical evidence for the EU conforms to the theoretical predictions. Industrial specialisation among EU countries increased in the 1980s. Employment in scale-intensive industries tends to be concentrated at the centre of the EU. An IIT growth reversal is detected for the scale-intensive industries, which supports the non-monotonicity predicted by the model. Acknowledgements: We are grateful to Karolina Ekholm, Dermot McAleese, Assar Lindbeck, Diego Puga, Geoff Reed and Tony Venables for valuable comments. This research was supported by the Stimulation Plan for Economic Sciences in the European Union (SPES-CT91-0058) and by the Swedish Council for Research in the Humanities and Social Sciences (HSFR). * Corresponding author: School of Economic Studies, University of Manchester, Oxford Road, Manchester M13 9PL. ([email protected]) Regional Integration, Scale Economies and Industry Location in the European Union
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