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

38

increases with distance from the core as von Thünen’s concentric circle theory predicts. The inverse
is true for industrial employment.

The policy effects of economic integration and the new regionalism are visible in the direction
of change in the employment structure. The parallel effect of these policies was to restructure regional
agricultural and industrial employment. Employment in agriculture declined in all CAP regions with
the smallest decline occurring in the core regions and the largest in the island periphery regions. The
elimination of barriers to trade resulted in a decline in industrial employment in all the EU CAP
regions. This decline in industrial employment, however, is smallest in the periphery regions.
Similarly, the increased employment in the service industry is highest in the periphery regions,
followed closely by the island periphery regions. These two developments support the observations
that out-migration from the periphery regions is being mitigated by new employment opportunities
primarily in the service industry.

The objective of this section was to examine whether developments in regional demographic
and economic data could be analysed within the framework of the CAP model at the EU regional
level. The stylised facts lend initial support to the forces of the new economic geography theory. The
CAP model provides preliminary evidence of the presence of agglomeration and dispersion forces at
the EU regional level. The home market effect is visible in population migration primarily to the EU
core regions, as theory predicts (Krugman, 1991b). The competition effect is evident in population
migration to the adjacent and periphery regions.

Furthermore, per capita income is highest in the core regions and declines sequentially in the
adjacent and the periphery regions. There is a significant difference in the average levels of per capita
income between the CAP region types, with some income convergence between the adjacent and
periphery regions attributable to the competition effect. The structure of regional employment is
changing with labour moving out of the agricultural and manufacturing sectors and into the service
sector.

Through the inclusion of the adjacent region, the CAP model shows that population density,
per capita income, and manufacturing employment decline gradually with distance from the core

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