A Regional Core, Adjacent, Periphery Model for National Economic Geography Analysis



34

Regional economic theory further assumes that per capita incomes are highest in the core regions and
decline progressively along the radius extending to the periphery (von Thünen, 1842). The decline in
income is the result of the transport intensity of manufactured products (Venables and Limao, 2002).
The higher the transport intensity of a product, the closer the location of its production will lie to the
regional core, and the less manufacturing production will occur in the periphery. With the removal of
trade barriers, some manufacturing will relocate from the periphery to the core resulting in increased
unemployment in the periphery regions. On the other hand, the relative wage differential between the
core and periphery regions will attract capital investment to the latter (Venables, 2000).

The previous section has illustrated the inverse relationship of population densities and
distance in the regional CAP model. Given this fact, it is reasonable to expect the existence of a
positive relationship between the levels of per capita income and a region’s CAP classification. This
section addresses two questions. First, is there a significant difference between the levels of per capita
income in the CAP regions, and has convergence or divergence of income levels occurred? Second,
how has the structure of employment in the CAP regions changed over time?

8.3.1 Income Differences in the CAP Regions

The average per capita incomes20 for the CAP regions are presented in Table 6. The EU 15
average per capita income value is the mean value of the annual index of regional per capita income.
The average level of per capita income for the entire EU geographic market increased by 3.0% from
92.3% in 1990 to 95.3% in 1997. The average levels of per capita income as reported for the
individual CAP regions reveal different levels for the CAP region types. The average level of per
capita income is highest in the core regions and lowest in the island periphery regions. These are
promising outcomes that support von Thünen’s concentric circle theory of a positive relationship
between regional population density and per capita income that underlies the CAP model.

20 Regional per capita income is an annual indexed variable used to rank and compare the per capita income development of
the regions
.



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