Introduction

Studies on the location of industrial activity within the European Union usually point to an undeniable tendency toward industrial specialisation, but also to a more doubtful trend toward greater geographical concentration of activity, both measured at a national level. The rise in importance of intrasector trade, increasing returns to scale and commercial or technological externalities are all viewed as favourable factors conducive to increased revenue owing to a combination of comparative advantages and strong industrial links.

As this chapter will argue, this is a rather hasty conclusion. Such studies fail to look, first, at a regional interpretation of industrial specialisation or, secondly, at the consequences of the observed geographical heterogeneity on revenue disparities within Europe. The interdependence of economic agents in Europe, the customer/supplier links between companies, as defined by the theoreticians of the new economical geography point, for example, to a regional, rather than purely national, specialisation in activities. This means that geographical heterogeneity in Europe needs to be interpreted from the local and transnational points of view.

In addition, the lesser concentration of activities in Europe compared with the USA is accompanied by greater inequality of regional development, as assessed by the yardstick of per capita income (Puga 1999). However, these two characteristics of European economic geography cannot be accounted for in terms of comparative advantage using traditional theories of trade.