ABSTRACT
The chapter analyses the changes in industrial location that have occurred in Europe in some decades and aims to develop an understanding of the underlying forces that influence these changes. It presents the theoretical framework for investigating the effects of European integration and ecommerce on the location of industry. The chapter looks at the issue of location from an economic policy perspective. It also presents empirical evidence on trends in industrial specialization and geographic concentration in Europe. The chapter highlights some of the major industry and country characteristics driving the location patterns across the European Union. Traditionally, economic geography models have focused on the forces of agglomeration and dispersion which influence the concentration of economic activities. The interplay between the existence of economies of scale and a reduction of transport costs associated with market integration leads to the prediction that industries with increasing returns should limit the number of their production sites.
