European Integration and Regional Specialization
Carlo MenonCa’ Foscari Venice
LSE
Background
• EU (Krugman’s) paradox: is integration fostering more diversification?
• OCA and asymmetric shocks• Models of endogenous growth and NEG• Intra-industry trade• Empirical issues: Krugman and Locational
Gini indexes, geographical units, tradable/not tradable, service sector, data
Distributive approach• First proposed by D. Quah (1993) as an alternative
to the “β-convergence” test• Based on the representation of the stochastic kernel
operator Mu*, which codify the relation between the probability functions associated to the distribution F at time T and t :
• It can be represented by a Markov-Chain process or by a 3D graph.
• Points of strength: focus on distributional dynamics and multimodality, possibility of applying conditional schemes (i.e. spatial dependency).
)(* tuT fMf
Distributive approach to regional specialization
• For a given industry, analysis of the evolution of the distribution at time t and T of the share of employment in each region, indexed for each period by the average value of all regions
• Stochastic kernel: 3D plot of P(fT|ft)• Possibility of applying different conditional
schemes (national values, spatial contiguity, trade volumes...)
Example: Textile 1990-2001,EU-15, NUTS2
Regional sectoral labour productivity
• Distributive analysis of dynamics of GVA/L for sub-national units, inside each sector (surprisingly rare!)
• Speculating that manufacturing and service sector have different spatial properties, the composition effect may hide relevant results
• First (raw) outcomes: divergence for manufacturing, persistence/divergence
for service sector After applying a “contiguity” conditioning scheme:
clear convergence for manufacturing, persistence for service sector
Next steps and research problems:specialisation
• Locational dynamics of each manufacturing branch
• Spatial properties of service sector• Work on data in order to overcome the NUTS2
classification (toward FUR or continuous space)• Regional Intra-industry trade • Accounting for functional urban specialization
and demanufaturing• Links to other relevant issue of economic
geography (cities hierarchy, convergence...)
Next steps and research problems:sectoral convergence
• Improve the empirical (distributional) approach to regional sectoral labour productivity convergence
• Explore and explain the differences between service and manufacturing
• Shadow effect (negative autocorrelation?)• Overcome the NUTS2 classification (toward
FUR or continuous space)
Thanks
CONVERGENCE
PERSISTENCE
DIVERGENCE