International Handbook on the Economics of Integration, Volume II Competition, Spatial Location of Economic Activity and Financial Issues
Competition, Spatial Location of Economic Activity and Financial Issues
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Edited by Miroslav N. Jovanović
Chapter 7: Spatial Effects of Economic Integration: A Conceptualisation from Regional Growth and Location Theories
7 Spatial effects of economic integration: a conceptualisation from regional growth and location theories Roberto Camagni and Roberta Capello 1 ECONOMIC INTEGRATION PROCESSES AND SPATIAL EFFECTS European integration, intended as an economic, legal, political (and in some cases social and cultural) integration of European countries, is proceeding at a rapid pace. Since 1957, the number of European Union (EU) member states has increased to 27 in 2007, and currently accession negotiations are under way with several other states. Over the last 50 years there has been widespread discussion about the economic consequences of European integration, the main questions being whether economic integration is a growth-enhancing process and whether these gains are homogeneously distributed over space. The reasons for the wide interest in economic integration effects by regional economics mainly lie in the spatial effects that they generate. Generally speaking, economic integration acts on the costs associated with engaging in and coordinating activities across space, called ‘spatial transaction costs’ (McCann, 2008). Economic integration acts on transaction costs associated with moving goods, knowledge and information across national borders, decreasing tariffs, and shrinking physical and economic distance among actors. Moreover, through the pervasive diffusion of technological communication standards, the widespread development of transportation networks and agreements on facilitated transport and communication tariffs within the integrated area, transport and knowledge costs also fall, again reducing spatial transaction costs by limiting costs associated with moving goods, information and knowledge across space. These changes affect first the trade-off between transport costs and agglomeration economies on which...
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