New Horizons in International Business series
Edited by Jean-Louis Mucchielli and Thierry Mayer
Chapter 1: Geographical concentration of production by leading firms in EU manufacturing
1. Geographical concentration of production by leading ﬁrms in EU manufacturing Leo Sleuwaegen and Reinhilde Veugelers INTRODUCTION 1.1 The process of market integration, triggered in the European Union (EU) by the Single Market Programme (SMP), systematically changes the nature of competition, and therefore the structure of ﬁrms and industries. There is a widespread recognition of the potential beneﬁts in terms of higher eﬃciency and increased competition. The ‘oﬃcial EU’ view, summarized in the Cecchini Report on the ‘Costs of non-Europe’, anticipated four main eﬀects, each having implications for the structure of industries and ﬁrms: ● ● ● ● direct cost savings due to the elimination of non-tariﬀ barriers, such as fewer customs delays and costs of multiple certiﬁcation; cost savings derived from increased volumes and more eﬃcient location of production (scale and learning economies and better exploitation of comparative advantage); tightening of competitive pressures, reduced prices and increased eﬃciency as more ﬁrms from diﬀerent Member States compete directly in the bigger marketplace; speedier innovation from increased competitive pressures. At the same time, policy-makers particularly in smaller regions worry about what the eﬀects of economic integration will be on the location of production activities. A common concern among politicians of peripheral regions in the EU is that economic integration will lead to a loss of industry production and jobs in their regions. These concerns are partly supported by recent theoretical work, which suggests that economic integration may indeed lead to increased concentration of production and larger...
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