Regional integration and specialization patterns in Spain

The aim of this paper is to analyse how economic integration in Europe has affected industrial geographical concentration in Spain and to explain the driving forces behind industry location. First, we construct regional specialization and geographical concentration indices for 50 Spanish provinces (NUTS III) and 30 industrial sectors in 1979, 1986 and 1992. Second, we carry out an econometric analysis of the determinants of the geographical concentration of industries. Our main conclusion is that there is no evidence of increasing specialization in Spain between 1979 and 1992, and that the most important determinant of Spain's economic geography is scale economies. Furthermore, traditional trade theory does not play a role in explaining the pattern of industrial concentration. Finally, inter-industry linkages have a negative effect on concentration, indicating that the opening up of the Spanish economy may have lessened the importance of being close to suppliers.