European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions

In this paper we use a gravity model to study the trade performance of French and Spanish border regions relatively to non-border regions, over the past two decades. We find that, controlling for their size, proximity and location characteristics, border regions trade on average between 62% and 193% more with their neighbouring country than other regions, and twice as much if they are endowed with good cross border transport infrastructures. Despite European integration, however, this trade outperformance has fallen for the most peripheral regions within the EU. We show that this trend was linked in part to a shift in the propensity of foreign investors to move their affiliates from the regions near their home market to the regions bordering the EU core.direct investment, border regions, gravity, trade, european integration, foreign

Industrial agglomerations and wage gradients: the Spanish economy in the interwar period

This paper gives new evidence on the relationship between integration and industrial agglomeration in the presence of scale economies, by testing directly one of the predictions that can be derived from Krugman (1991), that is, the existence of regional nominal wage gradients and its transformation following changes in trade regimes. Our case study analyzes the effects of the substitution of an open economy by a closed economy regime, exactly the opposite process studied by Hanson (1996, 1997). In Spain, during the interwar period, protectionist policies would have favored the loss of centrality of the coastal location (Barcelona) and the relative rise of central locations (such as Madrid). Our results indicate the existence of a wage gradient centered in Barcelona during the interwar period (1914-1930) and its weakening after 1925.economic history of spain, wage gradients, industrial location, protectionism

Were Spanish migrants attracted by industrial agglomerations? An analysis for the interwar years in the light of the new economic geography

In this paper we examine whether access to markets had a significant influence on migration choices of Spanish internal migrants in the inter-war years. We perform a structural contrast of a New Economic Geography model that focus on the forward linkage that links workers location choice with the geography of industrial production, one of the centripetal forces that drive agglomeration in the NEG models. The results highlight the presence of this forward linkage in the Spanish economy of the inter-war period. That is, we prove the existence of a direct relation between workers localization decisions and the market potential of the host regions. In addition, the direct estimation of the values associated with key parameters in the NEG model allows us to simulate the migratory flows derived from different scenarios of the relative size of regions and the distances between them. We show that in Spain the power of attraction of the agglomerations grew as they increased in size, but the high elasticity estimated for the migration costs reduced the intensity of the migratory flows. This could help to explain the apparently low intensity of internal migrations in Spain until its upsurge during the 1920s. This also explains the geography of migrations in Spain during this period, which hardly affected the regions furthest from the large industrial agglomerations (i.e., regions such as Andalusia, Estremadura and Castile-La Mancha) but had an intense effect on the provinces nearest to the principal centres of industrial development.market potential, industrial agglomerations, migrations

Agglomeration and labour productivity in Spanish industry: a long-term analysis

This paper analyzes the relationship between spatial density of economic activity and interregional differences in the productivity of industrial labour in Spain during the period 1860-1999. In the spirit of Ciccone and Hall (1996) and Ciccone (2002), we analyze the evolution of this relationship over the long term in Spain. Using data on the period 1860-1999 we show the existence of an agglomeration effect linking the density of economic activity with labour productivity in the industry. This effect was present since the beginning of the industrialization process in the middle of the 19th century but has been decreasing over time. The estimated elasticity of labour productivity with respect to employment density was close to 8% in the subperiod 1860-1900, reduces to a value of around 7% in the subperiod 1914-1930, to 4% in the subperiod 1965-1979 and becomes insignificant in the final subperiod 1985-1999. At the end of the period analyzed there is no evidence of the existence of net agglomeration effects in the industry. This result could be explained by an important increase in the congestion effects in large industrial metropolitan areas that would have compensated the centripetal or agglomeration forces at work. Furthermore, this result is also consistent with the evidence of a dispersion of industrial activity in Spain during the last decades.agglomeration economies, regional disparities, spanish economic history

Integracion economica y localizacion industrial. Cataluna, la fabrica de Espana: cuando y por que?

In this paper we analyse the determinants of the localisation of industrial activity in Spain during the second half of the XIX century. In particular, we try to determine possible changes in the importance of the factors that explain industrial location in order to study the effects of economic integration in Spains industrial geography. To his aim, firstly we review the historical analysis of the changes experienced by Spains industrial geography during this period. Secondly, we summarise the different theories that explain location patterns. Thirdly, an empirical analysis of the geographic concentration of industries and industry location is performed. Fourthly, we carry out an econometrical analysis of the determinants of industrial location in two points of time, 1856 and 1893. Our results are consistent with trade theories. During the second half of the XIX century, Spain becomes an integrated economy, labour and capital mobility are favoured and hence, relative differences in factor endowments lose importance in explaining the pattern of industrial concentration. On the contrary, economic integration increased the importance of scale economies and proximity to the market as forces favouring the agglomeration of economic activities.economic history of spain, economic integration, industrial concentration, new economic geography