Specialization and Agglomeration Patterns in Eastern Europe

Abstract

The paper investigates specialization and agglomeration trends in EU-27 NUTS2 regions over 1991-2011 by means of two versions of the relative Theil indicator that use employment data. The paper’s main focus is on Central and Eastern European Countries (CEECs) regions. As a legacy of central planning, in the early ‘Nineties these regions presented significantly above-average specialization and agglomeration. The paper shows that over 1991-2011 these features change very little; moreover, while disproportions fall in the other EU members, they rise in CEECs, implying growing divergence among the two groups in real terms, notwithstanding EU emphasis on real convergence. Indicators disaggregated by sectors show that for CEECs specialization/agglomeration change most in agriculture, market services and manufacturing. The paper focuses on the last two sectors. It argues that performance in the service sector is largely due to capital regions catching up on previous underdevelopment in the sector, therefore getting closer to Western regions. Non-capital regions instead lag behind, moving away from the EU sectoral average. As far as manufacturing is concerned, CEECs regions continue to specialize in the more traditional lines of production, for which also agglomeration remains extremely high. Consideration of the changes over time gives a partially different picture and shows that the higher specialization in overall manufacturing results from the development of a small but dynamic medium-high technology sub-sector that is significantly disseminated across regions, thus appearing to result from successful industrial restructuring and reconversion.

Keywords

• Regions
• European Union
• Theil indicator
• specialization
• agglomeration