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An Account of Geographic Concentration Patterns in

Marius Brülhart Rolf Traeger

HWWA DISCUSSION PAPER 226 Hamburgisches Welt-Wirtschafts-Archiv (HWWA) Hamburg Institute of International Economics 2003 ISSN 1616-4814 Hamburgisches Welt-Wirtschafts-Archiv (HWWA) Hamburg Institute of International Economics Neuer Jungfernstieg 21 - 20347 Hamburg, Telefon: 040/428 34 355 Telefax: 040/428 34 451 e-mail: [email protected] Internet: http://www.hwwa.de

The HWWA is a member of:

• Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz (WGL) • Arbeitsgemeinschaft deutscher wirtschaftswissenschaftlicher Forschungsinstitute (ARGE) • Association d’Instituts Européens de Conjoncture Economique (AIECE) HWWA Discussion Paper

An Account of Geographic Concentration Patterns in Europe

Marius Brülhart* Rolf Traeger**

HWWA Discussion Paper 226 http://www.hwwa.de

Hamburg Institute of International Economics (HWWA) Neuer Jungfernstieg 21 - 20347 Hamburg, Germany e-mail: [email protected]

* DEEP-HEC, University of Lausanne ** United Nations Economic Commission for Europe, Geneva. Any opinions ex- pressed in this paper are those of the authors and do not necessarily reflect those of UNECE or its member countries.

An earlier version of this paper was presented at the 1st HWWA Workshop on Current Developments in Regional Research which took place in Hamburg 25-26 November, 2002.

The authors would like to thank Philip Lane for helpful comments and Martin Hallet for the generous provision of data. Financial support from the Swiss National Science Foundation (grant 612-65970) and from the UK Economic and Social Research Council (ESRC grant L138251002) is gratefully acknowledged.

This discussion paper is assigned to the HWWA’s research programme “European Inte- gration and Spatial Development”. Marius Brülhart is a research associate of this pro- gramme.

Edited by the Department Head: Dr. Konrad Lammers HWWA DISCUSSION PAPER 226 May 2003

An Account of Geographic Concentration Patterns in Europe

ABSTRACT

Using entropy indices and associated bootstrap tests, we describe the distribution of economic sectors across Western European regions over the 1975-2000 period. We de- compose geographic concentration into its within-country and between-country compo- nents. In addition, we estimate centre-periphery gradients in sectoral location patterns and the impact of EU membership on countries’ internal geography. It is found that manufacturing has become gradually more concentrated, although the locational bias towards central regions has become weaker. Conversely, market services have been re- locating towards centrally located regions. EU integration appears to have strengthened countries’ internal concentration trends.

JEL-Classification: R12, R14, F15 Keywords: geographic concentration, EU regions, centre-periphery gradients, entropy indices, bootstrap inference

Correspondence address: Marius Brülhart Départment d’économétrie et économie politique Ecole des HEC, Université de Lausanne CH – 1015 Lausanne E-mail: [email protected] http://www.hec.unil.ch/mbrulhar/ 4Lqwurgxfwlrq

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^56` Kdggdg/ Odzuhqfh dqg Udyl Ndqexu +4<<3, Krz vhulrxv lv wkh qhjohfw ri lqwud0 krxvhkrog lqhtxdolw|B Hfrqrplf Mrxuqdo/ 433= ;990;;41

^57` Kdoohw/ Pduwlq +5333, Uhjlrqdo vshfldolvdwlrq dqg frqfhqwudwlrq lq wkh HX1 Hxurshdq Frpplvvlrq Hfrqrplf Sdshuv/ Qr1 4741

^58` Khoj/ Urgroir/ Sdror Pdqdvvh/ Wrppdvr Prqrfhool dqg Ulffdugr Uryhool +4<<8, Krz pxfk +d,v|pphwu| lq HxurshB Hylghqfh iurp lqgxvwuldo vhfwruv1 Hxurshdq Hfrqrplf Uhylhz/ 6<= 434:043741

^59` Khoolzhoo/ Mrkq I1 +4<<:, Qdwlrqdo erughuv/ wudgh dqg pljudwlrq1 Sdfl f Hfr0 qrplf Uhylhz/ 5= 49804;81

^5:` Lpev/ Mhdq dqg Urpdlq Zdf}lduj +5336, Vwdjhv ri glyhuvl fdwlrq1 Dphulfdq Hfrqrplf Uhylhz/ iruwkfrplqj1

^5;` Ndohpol0R}fdq/ Vheqhp> Ehqw H1 Vruhqvhq dqg Ryhg \rvkd +5336, Ulvn vkdulqj dqg lqgxvwuldo vshfldol}dwlrq= uhjlrqdo dqg lqwhuqdwlrqdo hylghqfh1 Dphulfdq Hfrqrplf Uhylhz/ iruwkfrplqj1

57 ^5<` Nuxjpdq/ Sdxo +4<<4, Jhrjudsk| dqg Wudgh1 PLW Suhvv1

^63` Plghoiduw Nqduyln/ Nduhq K1> Khqu| J1 Ryhupdq> Vwhskhq M1 Uhgglqj dqg Dq0 wkrq| M1 Yhqdeohv +5333, Wkh orfdwlrq ri Hxurshdq lqgxvwu|1 Hxurshdq Frp0 plvvlrq Hfrqrplf Sdshuv/ Qr1 4751

^64` Ploov/ Mhuh| D1 dqg Vruxvkh ]dqgydnlol +4<<:, Vwdwlvwlfdo lqihuhqfh yld errw0 vwudsslqj iru phdvxuhv ri lqhtxdolw|1 Mrxuqdo ri Dssolhg Hfrqrphwulfv/ 45= 4660 4831

^65` Pxqghoo/ Urehuw D1 +4<8:, Lqwhuqdwlrqdo wudgh dqg idfwru prelolw|1 Dphulfdq Hfrqrplf Uhylhz/ 7:= 65406681

^66` Qrupdq/ Ylfwru G1 dqg Dqwkrq| M1 Yhqdeohv +4<<8, Lqwhuqdwlrqdo wudgh/ idfwru prelolw| dqg wudgh frvwv1 Hfrqrplf Mrxuqdo/ 438= 47;;048381

^67` RHFG +5334, RHFG whuulwruldo rxworrn1 Sdulv1

^68` Ryhupdq/ Khqu| J1> Vwhskhq Uhgglqj dqg Dqwkrq| M1 Yhqdeohv +5334, Wkh hfrqrplf jhrjudsk| ri wudgh/ surgxfwlrq dqg lqfrph= d vxuyh| ri hpslulfv1 FHSU Glvfxvvlrq Sdshu &5<:;1

^69` Shul/ Jlrydqql +4<<;, Whfkqrorjlfdo jurzwk dqg hfrqrplf jhrjudsk|1 LJLHU Zrunlqj Sdshu &46

^6:` Txdk/ Gdqq| +4<<9, Uhjlrqdo frqyhujhqfh foxvwhuv dfurvv Hxursh1 Hxurshdq Hfrqrplf Uhylhz/ 73= <840<8;1

^6;` Sxjd/ Glhjr +4<<<, Wkh ulvh dqg idoo ri uhjlrqdo lqhtxdolwlhv1 Hxurshdq Hfr0 qrplf Uhylhz/ 76= 63606671

^6<` Vkruurfnv/ Dqwkrq| I1 +4<;3, Wkh fodvv ri dgglwlyho| ghfrpsrvdeoh lqhtxdolw| phdvxuhv1 Hfrqrphwulfd/ 7;= 94609581

^73` Vkruurfnv/ Dqwkrq| I1 +4<;5, Lqhtxdolw| ghfrpsrvlwlrq e| idfwru frpsrqhqwv1 Hfrqrphwulfd/ 83= 4<605441

^74` Vkruurfnv/ Dqwkrq| I1 +4<;7, Lqhtxdolw| ghfrpsrvlwlrq e| srsxodwlrq vxe0 jurxsv1 Hfrqrphwulfd/ 85= 469<046;81

^75` Vorwwmh/ Gdqlho M1 +4<<3, Xvlqj jurxshg gdwd iru frqvwuxfwlqj lqhtxdolw| lqglfhv= Sdudphwulf yv1 qrqsdudphwulf phwkrgv1 Hfrqrplfv Ohwwhuv/ 65= 4<604<:1

^76` Vwrushu/ Plfkdho> \xq0fkxqj Fkhq dqg Ihuqdqgr Gh Sdrolv +5335, Wudgh dqg wkh orfdwlrq ri lqgxvwulhv lq wkh RHFG dqg Hxurshdq Xqlrq1 Mrxuqdo ri Hfr0 qrplf Jhrjudsk|/ 5= :6043:1

^77` Yhqdeohv/ Dqwkrq| M1 +4<<<, Wudgh olehudolvdwlrq dqg idfwru prelolw|= Dq ryhuylhz1 Lq= Ulffdugr Idlql hw do1 +hgv1, Pljudwlrq= Wkh frqwuryhuvlhv dqg wkh hylghqfh/ Fdpeulgjh Xqlyhuvlw| Suhvv1

58 Wdeoh 4= Uhodwlyh frqfhqwudwlrq ri vhfwruv/ 4<:805333 4 +hpsor|phqw/ 569 uhjlrqv,

5 6 Vhfwru Dyj JH+4, JH+4,:8Ã33 JH+4,:8Ã;: JH+4,;:Ã33 Vkduh Djulfxowxuh 317:7 3135< 3133; 31354 313: Pdqxidfw1/ hqhuj| 31388 31353-- 31337 31349-- 3157 Edqnlqj/ lqvxudqfh 31386 31337 031345 31349 3137 Qrq0pnw vhuylfhv 31374 031356 031355 031334 3155 Wudqvsruw/ frppxqlf1 31369 031376-- 031369-- 03133:- 3138 Glvwulexwq 31364 3133: 31335 31337 3146 Rwkhu pnw vhuylfhv 31363 031338 03133; 31336 3149 Frqvwuxfwq 31358 3134< 031345- 31364-- 313: 4 --2- ghqrwhv uhmhfwlrq ri K3 wkdw JH+4, @ 3> edvhgrqerrwvwuds<8(2<3( frq ghqfh lqwhuydov +43/333 uhsolfdwlrqv, 5 Dyhudjh dqqxdo JH+4, lqgh{ +hpsor|phqw zhljkwhg, ryhu 4<:805333 shulrg 6 Vhfwru vkduh lq wrwdo hpsor|phqw ryhu wkh ixoo vdpsoh shulrg

59 Wdeoh 5= Uhodwlyh frqfhqwudwlrq ri pdqxidfwxulqj vhfwruv/ 4<;304<<8 4 +jurvv ydoxh dgghg/ 449 uhjlrqv,

5 6 Vhfwru Dyj JH+4, JH+4,;3Ã<8 JH +4,;3Ã;: JH+4,;:Ã<8 Vkduh Ruhv/ phwdov 316;< 0313888 0313884- 0313337 3137 Wh{wlohv/ forwk1/ irrwz1 316:< 31497<-- 313867-- 314448-- 313; Wudqvsruw ht1 31496 3134<9 313549 0313353 3143 Fkhplfdov 31485 313336 3133;8 03133;5 3143 Qrq0phwdoolf plqhudov 31475 3134:4 313349 313489 3139 Plvf1 pdqxi1 31444 0313377 0313397 313353 313< Pdfklqhu|/ hohfwurqlfv 3143< 031338: 3134;3-- 031356;-- 3164 Sdshu surg1 31437 3133<; 0313355 313453 313; Irrg/ gulqn/ wredffr 313;5 313447 313359 3133;; 3146 Wrw1 pdqxi1 31376 313356 3133:4-- 031337; 4133 4 --2- ghqrwhv uhmhfwlrq ri K3 wkdw JH+4, @ 3> edvhgrqerrwvwuds<8(2 <3( frq ghqfh lqwhuydov +43/333 uhsolfdwlrqv, 5 Dyhudjh dqqxdo JH+4, lqgh{ +JYD zhljkwhg, ryhu 4<;304<<8 shulrg 6 Vhfwru vkduh lq wrwdo hpsor|phqw ryhu wkh ixoo vdpsoh shulrg

Wdeoh 6= Wrsrjudsklf frqfhqwudwlrq ri vhfwruv/ 4<:805333 +hpsor|phqw/ 569 uhjlrqv,

4 5 Vhfwru Dyj JH+4, JH+4,:8Ã33 Rwkhu pdunhw vhuylfhv 4136< 031349 Wudqvsruw/ frppxqlfdwlrq 4135; 03147;-- Edqnlqj/ lqvxudqfh 4133; 031357 Glvwulexwlrq 31<6; 031385 Qrq0pdunhw vhuylfhv 31;<3 031473- Pdqxidfwxulqj/ hqhuj| 31;9; 031494-- Frqvwuxfwlrq 31:6; 3133; Djulfxowxuh 317<3 31437-- Wrwdo hpsor|phqw 31;43 031335 4 Dyhudjh dqqxdo JH+4, lqgh{ +duhd zhljkwhg,/ 4<:805333 5 --2- ghqrwhv uhmhfwlrq ri K3 wkdw JH+4, @ 3> edvhg rq errwvwuds <8(2<3( frq ghqfh lqwhuydov +43/333 uhsolfdwlrqv,

5: Wdeoh 7= Fhqwuh0shulskhu| judglhqwv/ 4<:8053334 +569 uhjlrqv, a a a 5 Vhfwru \hdu   433 U0vt +I m K3= w0wÃ{@3, { 5i45> 46j { @58 4<:8 6179-- 315< Djulfxowxuh 4<;: 6163-- 315< 615 5333 6169-- 315: 314 314 4<:8 04138-- 3156 Pdqxidfwxulqj/ hqhuj| 4<;: 031;:-- 314: 918- 5333 0317:-- 3138 881:-- 6519-- 4<:8 0314< 3134 Frqvwuxfwlrq 4<;: 3148- 3135 4518-- 5333 3169- 3137 719- 4;13-- 4<:8 0315;-- 3137 Glvwulexwlrq 4<;: 0313: 3133 4318-- 5333 03149 3134 61; 41: 4<:8 03134 3133 Wudqvsruw/ frppxqlfdwlrqv 4<;: 03143 3133 414 5333 03154- 3135 819- 616 4<:8 04146-- 314< Edqnlqj/ lqvxudqfh 4<;: 0413<-- 3157 315 5333 04148-- 3153 318 314 4<:8 03188-- 3143 Rwkhu pdunhw vhuylfhv 4<;: 03197-- 314; 41; 5333 031;7-- 3163 4614-- <14-- 4<:8 0315: 3134 Qrq0pdunhw vhuylfhv 4<;: 03144 3133 :15-- 5333 3163- 3136 <91<-- 8318-- 4 vhh ht1 +43,> --2- ghqrwh vwdw1 vljql fdqfh dw <<(2<8(/ Zklwh0fruuhfwhg 5 I 0vwdwlvwlf rq Zdog whvw ri htxdolw| ri a dfurvv |hduv/ wdnlqj dffrxqw ri furvv0htxdwlrq huuru fryduldqfh

5; Wdeoh 8= HX phpehuvkls dqg lqwud0frxqwu| uhodwlyh frqfhqwudwlrq Ghshqghqw yduldeoh @ lqwud0frxqwu| Wkhlo lqgh{ +hpsor|phqw/ 49 frxqwulhv, +uhsruwhg frh1 @ hvwlpdwhg frh1 - 433,= Lqghs1 yduv= Djulf1 Pdqxi1 Frqvwu1 Pnw vhuy1 Qrq0pnw v1 Il{hg hhfw= E 7816Æ <18Æ 817 5717Æ 4416Æ GN 6<16Æ 619 4;16Æ 5418Æ 541;Æ G 4915 :18Æ :1: 5519Æ 5717Æ JU 05716 7:18Æ 6814Æ 6817Æ 8816Æ H 61: 5313Æ 4:19Æ 4;13Æ 5:1:Æ I 5715 4515Æ 4<1<Æ 5715Æ 531;Æ LUO 0413 4713Æ 4:17Æ 531<Æ 5413Æ L 06317 5418Æ 5614Æ 551<Æ 581<Æ QO 915 91: 4717Æ 5918Æ 531;Æ D 641<Æ 0516Æ :19Æ 4318Æ <16Æ S 4<14 0713 471<Æ 8:14Æ 631;Æ VI 031: 918Æ 71<Æ <14Æ :19Æ V 5418Æ 519 81;Æ 817 :19Æ XN <418Æ <14Æ 4918Æ 541<Æ 5419Æ Q <17 31: 0714 51<Æ 51:Æ FK <14Æ 051<Æ 319Æ 416Æ 317Æ HX hhfw 0313< 314:Æ 3155 315:Æ 315:Æ U5 31<< 31<< 31:7 31;9 31<; Qrwhv= Sudlv0Zlqvwhq JOV uhjuhvvlrqv zlwk sdqho0fruuhfwhg vwdqgdug huuruv/ dvvxplqj frqwhpsrudqhrxv furvv0sdqho fruuhodwlrq> lqwhudfwlrqv ri {hg hhfwv zlwk |hdu yduldeoh lqfoxghg exw qrw uhsruwhg> 749 rev1> Æ ghqrwhv <<( vwdwlvwlfdo vljql fdqfh1

5< Wdeoh 9= HX phpehuvkls dqg lqwud0frxqwu| F0S judglhqwv e Ghshqghqw yduldeoh @ iw +hpsor|phqw/ 49 frxqwulhv, +uhsruwhg frh!flhqwv @ hvwlpdwhg frh!flhqwv - 433, Lqghs1 yduv= Djulf1 Pdqxi1 Frqvwu1 Pnw vhuy1 Qrq0pnw v1 Il{hg h1= E 6516Æ 71: 4616 0651:Æ 04719Æ GN 561<Æ 519 471<Æ 06419Æ 04616 G 4:1;Æ 518 813 05;14Æ 0819 JU 4319 41< 91; 04:1;Æ 0619 H ;1< 71< 4913Æ 04:14Æ 0;14 I ;15 71< 4919Æ 06317Æ 0;1: L 0314 81: 4815Æ 06414Æ 0<16 QO 471<Æ ;18 ;18 06516Æ 04414 D 4714Æ 417 818Æ 05818Æ 0519 S 5818Æ 4615Æ 6517Æ 0:815Æ 04:1:Æ VI 4<14Æ 04919Æ 441; 04513Æ 04915Æ V 713 061<Æ :18Æ 0715 0416 XN 4613 ;16 441< 05;17Æ 0441< Q :18Æ 0;17Æ 4514Æ 0517 0317 FK 441;Æ 04316Æ 413 319 0;1;Æ HX hhfw 3135 416Æ 315 0317Æ 0314 U5 31<< 31<; 31:5 31;6 317: Qrwhv= Sudlv0Zlqvwhq JOV uhjuhvvlrqv zlwk sdqho0fruuhfwhg vwdqgdug huuruv +vhh Ehfn dqg Ndw}/ 4<<8,> lqwhudfwlrqv ri {hg hhfwv zlwk |hdu yduldeoh lqfoxghg exw qrw uhsruwhg> 6<3 revhuy1 Æ ghqrwhv <<( vwdwlvwlfdo vljql fdqfh1

63 Iljxuh 4= Vhfwru vkduhv lq wrwdo hpsor|phqw/ 4<:805333

Iljxuh 5= Uhodwlyh frqfhqwudwlrq ri vhfwruv +Wkhlo lqgh{/ hpsor|phqw,/ 4<:805333

64 Iljxuh 6= Zlwklq0frxqwu| vkduh lq ryhudoo uhodwlyh frqfhqwudwlrq +hpsor|phqw,/ 4<:805333

Iljxuh 7= Zlwklq0frxqwu| vkduh lq ryhudoo uhodwlyh frqfhqwudwlrq ri pdqxidfwxulqj vhfwruv +JYD,/ 4<;304<<8

65 Iljxuh 8= Wrsrjudsklf frqfhqwudwlrq ri vhfwruv +Wkhlo lqgh{/ hpsor|phqw,/ 4<:80 5333

Iljxuh 9= Zlwklq0frxqwu| vkduh lq ryhudoo wrsrjudsklf frqfhqwudwlrq +hpsor|phqw,/ 4<:805333

66 Iljxuh := Vhfwrudo idfwru frqwulexwlrqv wr wrsrjudsklf frqfhqwudwlrq +hpsor|0 phqw,/ 4<:805333

67 D Dsshqgl{ 4= Gdwd

D14 Gdwd vhw 4

 Vrxufh= Fdpeulgjh Hfrqrphwulfv Uhjlrqdo Gdwdedvh +edvhg rq Hxurvwdw*v UHJLR dqg qdwlrqdo vrxufhv,

 Yduldeoh= hpsor|phqw

 Wlph glphqvlrq= dqqxdo dyhudjhv/ 4<:805333

 Vhfwruv= djulfxowxuh> pdqxidfwxulqj dqg hqhuj|> frqvwuxfwlrq> glvwulexwlrq> wudqvsruw dqg frppxqlfdwlrqv> edqnlqj dqg lqvxudqfh> rwkhu pdunhw vhuylfhv> qrq0pdunhw vhuylfhv +; vhfwruv/ edvhg rq QDFH0FOLR fodvvl fdwlrq,

 Uhjlrqdo euhdngrzq= 569 uhjlrqv/ vhh Wdeoh D4

 Qxpehu ri revhuydwlrqv= 7

D15 Gdwd vhw 5

 Vrxufh= Kdoohw +5333, +edvhg rq Hxurvwdw*v UHJLR dqg qdwlrqdo vrxufhv,

 Yduldeoh= jurvv ydoxh dgghg

 Wlph glphqvlrq= dqqxdo dyhudjhv/ 4<;304<<8

 Vhfwruv uhwdlqhg= ruhv dqg phwdov> qrq0phwdoolf plqhudov> fkhplfdov> phwdo jrrgv/ pdfklqhu| dqg hohfwulfdo jrrgv> wudqvsruw htxlsphqw> irrg surgxfwv> wh{wlohv/ forwklqj dqg irrwzhdu> sdshu dqg sulqwlqj surgxfwv> plvf1 pdqxidf0 wxuhg jrrgv +

 Uhjlrqdo euhdngrzq= 449 uhjlrqv/ vhh Wdeoh D4 +Iuhqfk Gìsduwhphqwv g*rxwuh0 phu dv zhoo dv Pdghlud dqg Dêruhv zhuh gursshg iurp Kdoohw*v ruljlqdo gdwd vhw/ lq rughu wr hqkdqfh frpsdudelolw| zlwk gdwd vhw 4,1

 Qxpehu ri revhuydwlrqv lq ixoo gdwd vhw= 65/69;

68 Data set 1 Data set 2

Country Number of Administrative Classification Observations Country Number of Administrative Classification Observations regions for which units level2 regions for which units level2 data are available1 data are available1

Belgium 10 Provinces NUTS 2 Vlaams Brabant 11 Provinces NUTS 2 and Brabant Wallon clustered as one region 3 Regions TL 2 Denmark 1 Germany 31 Regierungsbezirke NUTS 2 Neue Länder Germany 10 Länder NUTS 1 Berlin and neue excluded Länder excluded 13 Development regions NUTS 2 Greece 1 18 Comunidades NUTS 2 Spain 18 Comunidades NUTS 2 autónomas + y autónomas + Ceuta y Melilla 22 Régions NUTS 2 DOMs excluded France 22 Régions NUTS 2 DOMs excluded 2 Regions NUTS 2 Ireland 1 20 Regioni NUTS 2 Italy 20 Regioni NUTS 2 1 Luxembourg 1 12 Provincies NUTS 2 Netherlands 12 Provincies NUTS 2 9 Bundesländer NUTS 2 Austria 1 5 Comissões de NUTS 2 Regiões Portugal 5 Comissões de NUTS 2 Regiões coordenação regional autónomas coordenação regional autónomas excluded excluded 6 Suuralueet NUTS 2 Finland 1 21 Län NUTS 3 Sweden 1 37 Counties or groups of NUTS 2 United Kingdom 11 Government office NUTS 1 According to unitary authorities regions NUTS 95 classification 19 Fylker TL 3 Norway Switzerland 7 Grandes régions TL 2 Switzerland

TOTAL EU15 210 TOTAL EU15 116 TOTAL WE17 236

Wdeoh D4= Uhjlrqdo euhdngrzq ri gdwd vhwv 4 dqg 5

69 E Dsshqgl{ 5= Vfdwwhu sorwv ri vhfwrudo Edodvvd lqglfhv djdlqvw shulskhudolw| lqgh{ +|hdu 5333,

6: 6; F Dsshqgl{ 6= Hvwlpdwhg lqwud0frxqwu| fruh0shulskhu| judglhqwv +4<:805333,

6<