Working Paper: CEPR ID: DP2618
Authors: Karen Helene Midelfart-Knarvik; Henry G. Overman; Anthony J. Venables
Abstract: We develop and econometrically estimate a model of the location of industries across countries. The model combines factor endowments and geographical considerations, and shows how industry and country characteristics interact to determine the location of production. We estimate the model on sectoral data for EU countries over the period 1980-97, and find that endowments of skilled and scientific labour are important determinants of industrial structure, as also are forward and backward linkages to industry.
Keywords: comparative advantage; economic geography; specialization
JEL Codes: F10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Comparative advantage and geographical factors (F11) | Industrial location (L69) |
| Abundant factor supplies and good market access (Q13) | Attract industries (R38) |
| Skilled labour endowments (J24) | Attract high-skill industries (R38) |
| Geography (R12) | Industrial location (L69) |
| Cost factors and geographical demand distribution (R22) | Equilibrium pattern of industrial location (R32) |
| Backward linkage effect weakens (F69) | Industrial location dynamics (R32) |
| Forward linkage effect strengthens (F69) | Industrial location dynamics (R32) |
| Industry characteristics and country characteristics (O57) | Industrial location patterns (R32) |