Regional Specialisation and Concentration in the EU

Martin Hallet
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Martin Hallet: Directorate-General for Economic and Financial Affairs

Chapter 3 in Regional Convergence in the European Union, 2002, pp 53-76 from Springer

Abstract: Abstract Spatial issues have received renewed interest in economics following the development of the new economic geography. At the same time, there is a general concern that the process of European integration would lead to higher regional specialisation making regions more prone to adverse shocks and increasing adjustment costs in the case of a relocation of firms. In particular, the warning by Krugman (1993) to EMU participants to learn the “lessons of Massachusetts”, i.e. the need for a highly specialised region to have efficient adjustment mechanisms as a reaction to a shock to its leading sector when the nominal exchange rate is not available in a monetary union, has received major attention. He predicted that Europe, once it has completed a single market with a single currency, would soon have the same degree of regional specialisation as the US. While trade and specialisation is a basic theoretical concept in economics, which already Adam Smith identified as the main source of the wealth of nations, it is all the more surprising that the empirical evidence on spatial patterns of specialisation following the integration of economies is very scarce and inconclusive. Due to problems of data availability, this holds in particular for the regional, sub-national level in Europe. The objective of this paper is to provide some new empirical results on these issues.

Keywords: Peripheral Region; Trade Cost; Monetary Union; Market Service; Nominal Exchange Rate (search for similar items in EconPapers)
Date: 2002
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DOI: 10.1007/978-3-662-04788-0_3

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