DP4505 Does Staying out of the European Integration Process Shelter the Industrial Base of Small Countries?

Author(s): Rikard Forslid
Publication Date: July 2004
Keyword(s): agglomeration, economic integration, multiregion-model
JEL(s): F12, F15, F21, R12
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4505

This Paper compares the effect of economic integration on industry location for a small country that goes ahead with an integration process, such as the European, and a country that stays out. Theoretical results, derived from a three-region new economic geography model, are compared to stylized facts on European manufacturing production. These are consistent with a scenario where further integration strengthens the industrial base of small countries that go ahead with integration.