Industry Concentration Patterns in the European Union: Does the East Mirror the West?

Abstract

This article analyses the changes in industry concentration in the European Union (EU) using two regional samples: the EU-15 for the period 1980-2004 and the Central/Eastern European Countries (CEECs) for the period 1990-2004. We compute Brülhart and Traegers entropy index (2005) for agriculture, manufacturing, and services. To assess the statistical significance of the differences between sub-periods, we use a block-bootstrap procedure. Our results show a change in industry concentration patterns in the EU-15 and the CEECs, corroborating the findings of economic-geography models, namely, that the decline in transaction costs alters economic concentration patterns. However, those findings also show that an initial concentration phase is followed by a second phase characterised by redispersion at high levels of economic integration. Our results do not confirm that theoretical conclusion. Moreover, our results reveal that, while concentration patterns are changing, they are not converging between Western and Eastern European countries.Economic-geography Models, European Union, Industry Concentration