International specialisation of manufacturing activity and economic integration within the European Economic Community

Abstract

The geography of international trade is of increasing importance in geographical research due to variables which have caused a restructuring of the global economy. Regional trading blocs are one of the most important variables creating change in the global spatial economy, for example the EEC. Customs union theory can be used as a framework that suggests three modes of analysis which are concerned with changes in the volume, nature, and pattern of trade. Most of the literature is concerned with the first of these, and has been focused on predicting changes in trade flows for the EEC as a whole, using a positivist methodology. The second and third modes of analysis, have to a large extent been neglected and form the central themes of this research. Empirical analysis of the changes in the nature and pattern of trade, for the period 1974 to 1985, is performed for total manufactured trade and manufactured articles at various levels of statistical disaggregation for each member country's trade within the EEC. A realist methodology is adopted to enable both a satisfactory explanation of the observed trends and as a more suitable basis for identifying policy implications. Since 1974, the nature of trade for total manufactured trade is shown to be increasingly characterised by intraindustry trade, that is trade in a closely differentiated product, rather than the theorised inter-industry specialisation. The pattern of trade, in terms of integration, for total manufactured trade is also shown to be increasing. This trend towards integration in manufactured products indicates that intra-industry specialisation in part may account for intra-industry trade. Confirmation of this trend is given following empirical analysis for selected industries (pulp and paper, iron and steel, textiles and base metals) at a disaggregate level of data. Theoretical and practical limitations arise in the presence of both intra-industry trade and intra-industry specialisation. No longer can the neoclassical factor proportion theory provide an adequate account of international trade or basis for policy formation. Industrial adjustment can not be interpreted simply as replacing declining sectors with new ones in which the country has a comparative advantage. In contrast, in the presence of intra-industry trade, policy making is far more complex as it must encourage the process of specialisation within traditional sectors