Geographic Concentration in Portugal and Regional Specific Factors

TL;DR

This study analyzes regional manufacturing location factors in Portugal from 1980 to 1999, finding that natural advantages and local resources are primary, while spillovers and policies have limited influence.

Contribution

It estimates the Rybczynski equation across multiple periods, highlighting the evolving importance of regional factors in Portuguese manufacturing location decisions.

Findings

Natural advantages are primary in manufacturing location.

Spillovers and policies have limited impact.

Regional factors' explanatory power increased over time.

Abstract

This paper pretends to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1980 to 1999. Estimations are displayed with the model mentioned and for four different periods, namely 1980 to 1985, from 1986 to 1994, from 1980 to 1994 and from 1995 to 1999. The consideration of the various periods until 1994, aims to capture the effects of our entrance at the, in that time, EEC (European Economic Community) and the consideration of a period from 1995 is because the change in methodology for compiling statistical data taken from this time in Portugal. As a summary conclusion, noted that the location of manufacturing in Portugal is still mostly explained by specific factors, with a tendency to increase in some cases the explanation by these factors, having the effect "spillovers" and industrial policies little importance in this context.