New trade theories and industrial location in the EU: a survey of evidence

Abstract

'New' trade theories and the 'new economic geography' theories make a number of predictions about the characteristics of the industries we should expect to become geographically concentrated and the characteristics of the countries where these locate. This paper surveys empirical studies that have evaluated these new trade theories in the light of the EU's experience. Consistent with new trade theories, empirical studies suggest that geographically concentrated industries are subject to scale economies and have a high proportion of intermediate inputs in final production; and they concentrate in countries that have access to large markets.