EU Integration and Outsiders a Simulation Study of Industrial Location

Abstract

This paper focuses on the location effects of preferential trade areas (PTA) on non-members. More specifically, using a CGE model calibrated to real data, it focuses on the impact of tighter European integration on outsider regions. We argue that because theoretical models analysing PTAs have very few contact points with reality, further research is needed to evaluate whether the effects highlighted by these models -catastrophic agglomeration and non-monotonic relocation, for example -are theoretical aberrations of highly specific models, or important effects that help us explain real world events. In our 14-sector, 10-region model, we find broad confirmation for the theoretical PTA models, and in particular for the Puga-Venables effects. We find that tighter European integration has a significant impact on Central and Eastern European countries, but the impact on the other regions of the world is rather small. Our findings do however, suggest that the simple models of economic geography analysing PTAs miss important elements. The most important of these are comparative advantage and real trade costs. JEL Classification codes: ___, C68, F10, F12, F15, R12

Manufacturing Wages in the Enlarged Eu: The Role of Neighbour‐country Effects*

“…However, a country's human capital endowment does not determine wages in Metallic Products, Mineral Products and Textiles & Clothing. This result is not surprising, given that these sectors have a relatively low skill intensity (Baldwin et al. , 2000).…”

“…However, a country's human capital endowment does not determine wages in Metallic Products, Mineral Products and Textiles & Clothing. This result is not surprising, given that these sectors have a relatively low skill intensity (Baldwin et al, 2000). In Table 2, the positive impact of an increase of 1 per cent in the share of human capital in a country's population is the greatest in high-skill-intensity sectors, such as Machinery (0.71 per cent) and Transport Equipment (0.74 per cent), and the lowest in low-skill-intensity sectors, such as Leather & Footwear (0.38 per cent) and Wood Products (0.29 per cent).…”

“…3: chemicals (24), leather products (19), machinery (29, 30, 31), metals (27, 28), minerals (26), textiles and clothing (17, 18), transport equipment (34, 35) and wood products (20, 36). These aggregates can be further grouped in four groups distinguished by degree of economies of scale as in Pratten (1988) and skill intensity as in Baldwin et al. (2000): Chemicals, Machinery and Transport Equipment are high‐scale economies and high skill‐intensive, Metals are high‐scale economies and low skill‐intensive, Leather & Footwear, Minerals and Textiles & Clothing are low‐scale economies and low skill‐intensive, and Wood Products are low‐scale economies and high skill‐intensive.…”

Trade and Factor Flows in a Diverse Eu: What Lessons for the Eastern Enlargement(s)?

“…Most of these studies (e.g. Haaland et al , 1999; Midelfart‐Knarvik and Steen, 1999; Baldwin et al , 2000; Midelfart‐Knarvik et al , 2000a, b, 2001; Forslid et al , 2002a, b; Midelfart‐Knarvik and Overman, 2002) carry out a computable general equilibrium simulation analysis of the sectoral relationship between industrial concentration and trade costs in the EU. They conclude that industrial concentration in sectors with high economies of scale and/or high skill intensity (chemicals, machinery, metals, minerals and transport equipment) is U‐shaped with respect to trade costs, while sectors with low economies of scale and/or low skill intensity (leather products, food products, textiles) exhibit a linear behaviour.…”

Ending Restrictions to Migration From the New Eu Member Countries: Sectoral Trade and Real Wage Effects

“…Regressions are run for bilateral trade flows between the three possible pairs-North-East (N-E), North-South (N-S), and South-East (S-E)-and for the real wages of each N, S, and E country group. This is done for four groups of sectors distinguished by degree of economies of scale as in Pratten (1988) and skill-intensity as in Baldwin et al (2000). These four groups are as follows: chemicals, machinery, and transport equipment are high-scale economies and highly skill intensive; metals are high-scale economies and low skill intensive; leather and footwear, minerals, and textiles and clothing are low-scale economies and low skill intensive; and wood products are low-scale economies and high skill intensive.…”