Agglomeration of European industries

This chapter analyses the agglomeration of industrial activity across European regions over the past two decades. This period was characterized by the development of potent cross-border regional production networks in manufacturing in Central Europe that include both the more advanced regions of Germany, Austria, Switzerland, Northern Italy, Sweden, and those of the new EU member states of Central and Eastern Europe. These developments were accompanied by serious deindustrialization processes in other parts of Europe which in turn had important macroeconomic implications in the form of sustained external imbalances. The chapter explores the geographic agglomeration of industrial activity in Europe, but also that of ‘advanced tradable services’ in which the more advanced regions of Europe can counter balance the loss of manufacturing. It also gives evidence of cross-border (vertical and functional) specialization patterns that characterize regional production networks.