Specialization Patterns of European Countries

This paper investigates patterns of structural change and specialization of Western European Countries for the period 1970 to 2005. We therefore assign individual countries to clubs, i.e. groups of countries which share common features, and analyze the development of both the clubs and their individual countries over time. Our results also show that structural convergence in Western Europe is mainly due to the convergence of Central European countries, while the three clubs, North, Central, and South Europe, are drifting apart from each other over time and the within-club heterogeneity of the North and South European countries remains largely constant. As expected, we find structural change in all countries, as they are shifting away from traditional manufacturing industries. Yet while Central and North European countries specialize in emerging high-tech manufacturing industries and high-skill services from the 1990s onwards, South European countries are not able to catch up. JEL classification: O 11 F 14 F 15 P 27