TRADING PLACES - INDUSTRIAL SPECIALIZATION IN THE EUROPEAN-UNION

This article examines the location of manufacturing industries in the European Union. It draws on intra-industry trade measures for 1961-90 and on sectoral employment data by countries and regions. The analysis of employment data suggests that EU industry has become increasingly localized in the 1980s. Increasing-returns industries are strongly con centrated at the economic core of the EU and display low levels of int ra-industry trade. High-tech industries are also strongly localized, b ut show no centre-periphery gradient and no specific pattern of intra- industry trade. The main potential for future specialization appears t o remain in sectors sensitive to labour costs, which are still relativ ely dispersed and have high levels of intra-industry trade. Employment in these industries is shifting towards the EU periphery. 'Neoclassic al' determinants of international specialization are thus likely to do minate the ongoing adjustment process in EU manufacturing.