ABSTRACT
The objective of this list is to suggest certain research topics in the area of spatial economics and economic integration.
A lesson for the EU is that the Single Market Programme (integration deepening) provided some opportunities for concentration of production in select hotspots, as well as for rationalisation of business operations. Amiti (1998; 1999) found some evidence that this took place in some manufacturing industries, including industrial chemicals, petroleum, textiles, plastics, iron and steel, machinery and transport equipment. These are all industries that are subject to economies of scale and which have a high proportion of intermediate inputs in final production. Hence, this provides some support for the arguments of the new theory of spatial economics. In the period 1976– 89 geographical concentration increased in thirty out of sixty-five recorded industries, concentration fell in twelve industries (the biggest fall was in the manufacturing of concrete for construction), while there was no significant change in geographical concentration in other industries (Amiti, 1999: 580). On the other hand, a study by the European Commission observed that an ‘examination of data offers mixed evidence for the contention that the single market is leading to a geographical concentration’ (European Commission, 1998: 67) and that there is ‘little evidence of concentration occurring in the EC’ (European Commission, 1998: 69). Hence, this topic demands further research.
There was (and perhaps still is) confusion about whether external trade policy including integration affects the aggregate level of employment. Trade only increases competition, improves allocation of resources and dwindles the clout of several privileged, monopolistic and entrenched interests. Therefore, trade widens opportunities for the vast majority of players and can assist them to join the group of prosperous countries. It alters the geography of production and the structure of employment within different economic sectors. Trade influences the overall standard of living and the kind of jobs available, rather than making them available.
The future of the inflow of foreign labour in the EU is highly uncertain. On the one hand, an ageing population in the EU will demand extra expenditure by the state. On the other hand, an inflow of foreign labour to rectify demographic trends in the EU may ease the pressure from labour shortages in the EU. But an inflow from where? – an ‘orderly’ inflow from the countries in transition or a ‘disorderly’ inflow from the Islamic and unstable countries which are undergoing a demographic ‘explosion’, such as the south Mediterranean countries? Background research on how to cope with such developments is lacking.
The social issue of an ageing population and its needs as well as the trend for retired people to move to southern EU countries has an impact on the geography of production of services in the EU. Another issue that needs more research is the effect of the entry of women in the specific part-time labour market.
Innovation is one of the major dimensions of competition. Creation of knowledge and technology and their spread and extension (upgrading technological capabilities) gain in importance. Should research capabilities and finance be clustered in an integrated area, reducing risk and benefiting from economies of scale? Alternatively, should one decentralise these efforts to introduce competition, to avoid routine and to benefit from multiplicity of ideas? Should one be active and subsidise training and innovation or be passive and let market forces do the upgrading of production potential and capabilities? What is the impact of national research institutes? Should they be centralised at the EU level? What are the instruments and incentives to create and sustain a permanent ‘learning culture’ and inspire human capital accumulation?
Whereas economic integration from the 1940s made the US geography of industrial production more similar (less specialised), integration in the EU has had as its consequence growing disparity (increasing specialisation) in manufacturing production. This slow process shows no signs of abating in either region. The forces driving this process are still not known.
What is the impact of deurbanisation on the geography of production? Migration out of metropolitan areas such as Rome has been shown to have an impact on urban development and employment.
North–south and east–west integration change the geography of production. A possible research issue is the theoretical consideration of economic integration between countries with different levels of development, e.g. integration between the EU and the transition economies. What are the chances of integration between the EU and Mediterranean countries? Is integration, such as a free trade area, between the US, Canada and Mexico without special treatment for the weaker country a good thing?
Will there be a greater spread (deconcentration) of EU industry towards the ‘periphery’ and Central and East European countries as a consequence of integration?
One of the most difficult obstacles facing the Central and East European countries before they can join the EU is the environmental dimension of the acquis communautaire. How do EU and other international quality and environmental standards affect the geography of production?
What is the effect of slower growth on the ‘spread’ effects that benefit peripheral regions?
Relations between regionalism and multilateral solutions to the trade and investment problems offer another challenging research topic. Is there any way to prevent the creation and evolution of regional blocs that inhibit global liberalisation? What is the consequence of each policy choice on the geography of production? This is particularly important in agriculture and services.
The relation between economic integration and NTBs has received relatively little research attention so far.
Another global item for research is the impact of integration on various industries. Integration has had the strongest impact on the higher value-added industries that produce tradable goods with significant economies of scale. This, however, has to be studied in greater detail, in particular its relevance for developing countries.
One should not forget the development of the theory of public choice. What do the voters want regarding economic integration and what are they ready, able and willing to pay in terms of taxes, prices and security of employment? Does that public choice change over time? How can integration arrangements be adjusted to accommodate these changes? Do governments care more about re-election than about the long-term future of their country?
There are also unresolved issues regarding fiscal federalism in integration groups with members at different level of development. How will the EMU operate without the ability to temporarily run up large budget deficit and without (semi)automatic federal transfers to disadvantaged regions or countries when hit by asymmetrical shocks?
There is a large shady area in our knowledge regarding the need for an industrial and technology policy (intervention) for an increase in competitiveness of an integrated group. Is simple economic integration and liberalisation in an enlarged market sufficient for an increase in competitiveness? What are the corporate strategies regarding economic integration? How will they change over time? Is business consolidation (mergers and acquisitions) a necessary consequence of an enlarging and integrating market? Is it going to be reversed in the future? What is the impact of integration on concentration ratios?
What is the relation between international economic integration and SMEs?
What is the effect of economic integration and trade liberalisation on the existing clusters of industries? Does integration stimulate the creation and expansion of new clusters? Do TNCs provoke clustering?
Is there a need for the harmonisation of regulation in an integrating group of countries, or can/should one leave competition within national regulations about, for example, labour or environment issues?
As regional policies had very limited results in the past, one wonders whether it is necessary to have such a policy at the level of an integration scheme. If not, how can EMU take place among countries that are at different levels of economic development? Can one leave the solution of the ‘regional problem’ exclusively to market forces? How will this cope with the regional problem of the EU once the transition countries start entering the EU?
As for the services sector, the question is whether a liberal regulatory framework within a group of countries is sufficient to bring about the integration of and competition in this sector? If not, what else is necessary? Why?
High and ever-increasing environmental standards will continue to introduce NTBs to trade. What is the best way to cope with this problem – through mutual recognition of national standards in the EU or should the highest standards be imposed throughout the group? If the highest standards are to be imposed in the EU, then some countries may face financial difficulties in implementing them. Who should pay for this: national taxpayers, the taxpayers of the standard-imposing country and/or the EU?
Last, but not least, there is the question of regional integration and multilateral rules for trade and investment. Almost all countries in the world are and will be involved in some type of integration arrangement. International economic integration is here to stay. The issue is the strengthening of the complementarity between regional economic integration and the WTO, and preventing regional groups turning into blocs that inhibit global liberalisation. Researchers and practitioners will have to find the ways and means to make sure that integration and the multilateral process continue to reinforce each other in the decades to come.
