INDUSTRIAL SPECIALISATION IN THE EUROPEAN UNION: A TEST OF THE "NEW TRADE
THEORY"
JEL Classification F1, R12
Marius Brülhart
Department of Economics, Trinity College, Dublin 2, Ireland
Abstract
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.
Acknowledgements
Special thanks to Dermot McAleese and Paul Walsh for
valuable comments. This paper has also benefited from suggestions made by Bob
Hine, Jacob Kol, Chris Milner, Christian Montet, Lucy O'Shea, Johan Torstensson
and Leona Walker. Part of the research was financed by the Stimulation Plan for
Economic Sciences of the European Union (SPES-CT91-0058). Earlier versions of
the paper have been presented at the SPES Workshop, University of Nottingham,
September 1994, and at the "Journées AFSE" in Nantes, June 1995.