The overall scientific objective of this project was to identify and explain in a crosscountry
analysis the impact of deepening and widening of economic integration on
regional structural change and cohesion in current European Union (EU) member states
and accession countries. A summary of our main research results is given below. These
findings provide a basis for the evaluation of the likely overall allocation and
distributional implications of deepening and widening of the EU and of policy at
European, national and local levels.
In the EU-15 member states regional structural change has taken place at a slow speed.
Regional production structures are converging to the EU-15 average level, so that more
specialised regions are becoming more diverse and less specialised regions are becoming
more specialised. In terms of the regional performance, those regions that are highly
specialised in resource dependent industries such as iron and steel industries, and
agriculture, are not performing well, and one might consider these regions as losers from
the integration process. On the other hand, central regions tend to perform above average,
while remote regions appear to be catching-up. Semi-central and semi-remote regions
show a very mixed picture.
An initial high specialisation at the regional level had a negative impact on employment
growth. This negative relation can be observed, in particular, in regions specialized in
resource dependent and industries with increasing returns to scale. The significantly
negative industry-specific specialization-growth nexus did, however, generally not
translate into a negative aggregate specialization-growth nexus.
The analysis for the EU new member states (NMS) and Romania and Bulgaria shows
that those regions that have a high proportion of employment in the secondary and
tertiary sectors, and that are less specialised tend to have the highest per capita GDP
levels. These regions tend to be internal regions, capital city regions or regions with a
direct border to the EU-15, suggesting that agglomeration and location are important
determinants for the performance of the regions of the NMS. This suggests a taxonomy
of winning and loosing regions since the converse is true for the other regions.
There has also been a distinct divergence among NMS regions. This finding is not
dependent on the spatial scale of the countries. Again, this suggests that the integration
process has not benefited all regions equally, and that there are loosing regions.
An important part of our research was to investigate the spatial distribution of foreign
direct investment (FDI) and the impact of this distribution on economic activity in the
NMS. FDI is spread widely in geographical terms but some concentrations emerge at the
country and region level. From a sectoral perspective, it is noticeable that high-tech
foreign firms are less numerous than low tech ones, representing no more than 30% of the
whole sample. The economic factors that are important in attracting FDI are good
macro-economic fundamentals, good infrastructures, skilled labour force, large domestic
markets and a sound legal system. National boundaries do not play a significant role on
FDI location patterns. From a policy perspective this result is extremely important since it
indicates that competition for attracting FDI occurs among regions rather than countries.