DP2618 Comparative Advantage and Economic Geography: Estimating the Location of Production in the EU

Author(s): Henry G Overman, Karen-Helene Ulltveit-Moe, Anthony J Venables
Publication Date: November 2000
Keyword(s): Comparative Advantage, Economic Geography, Specialization
JEL(s): F10
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2618

We develop and econometrically estimate a model of the location of industries across countries. The model combines factor endowments and geographical considerations, and shows how industry and country characteristics interact to determine the location of production. We estimate the model on sectoral data for EU countries over the period 1980-97, and find that endowments of skilled and scientific labour are important determinants of industrial structure, as also are forward and backward linkages to industry.