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How and to what extent the new economic geography explains industry specialization patterns in Europe?

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  1. Introduction
  2. Economic Specialization
  3. Specialization Patterns in Europe
  4. Conclusion

The discipline of economic geography is concerned with the impact of the geophysical, social, and political environments on political activities (Hodder & Lee, 1974). It addresses the influence of location, distribution, and spatial organization of economic activities on productivity. According to Hodder and Lee (1974), economic geography follows two approaches, spatial and systematic approaches: the spatial approach espouses the view that political units, specifically nation states, have a major influence on economic activities and productivity. The systematic approach interrogates the ?influence of the natural environment upon the occupations, products, and lives of people in different parts of the world? (Hodder & Lee, 1974, 15). Anderson (2012) says that economic activities include human actions that are geared towards the following outcomes: 1. Production of goods and services, 2. Transfer of goods and services from one economic agent to another, 3. Transform goods and services into utility through acts of consumption. These activities are back grounded against certain political, social and geophysical environments that affect the effectiveness of the activities to result in desired outcomes.

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[...] Other forms of localization economies have a psychological and sociological basis, for instance in industries that are fraught with risk and where a form of fraternity provides a sense of security because they give new players who are making a major investment in an industry with an uncertain future a certain level of trust through the community. Such kinds of localization economies are inherent in London's IT industry where tech start-ups with little capital and financial guarantee develop innovations to attract venture capitalists. Besides sharing ideas and information, the start-ups provide a platform where newcomers can learn and grow in a community Bibliography: Anderson, W. P Economic geography. Oxon: Routledge. Carbaugh, R. J International economics (13th edition). Mason, MA: Cengage Learning. Hodder, B. [...]

[...] Economic geography. New York: Macmillan Co. Hodder, B. W., & Lee, R. (1974). Economic geography. London: Methuen. Hartshorn, Truman A., John W. Alexander, and John W. Alexander Economic geography. Englewood Cliffs, N.J.: Prentice Hall. [...]

[...] For example, the United States produces 40 autos and 40 bushels of wheat before specialization, but after full specialization is able to produce 140 autos but no wheat. On the other hand, a country like Canada can produce 40 autos and 80 bushels of wheat before specialization but after specialization increase its wheat production to 160 bushels of wheat and no autos. The two countries can then trade off their production gains to make up for what they do not produce locally. [...]

[...] The decisions made by each agent are in turn dependent upon the on the choices that have already been made, or are anticipated, by the other agents (Anderson 2012) This paper aims to find out the dynamics of economic specialization in Europe and to what extent the new economic geography perspective goes to explain this specialization. Economic Specialization: Economic specialization is derived from the need to achieve comparative advantage. According to Carbaugh (2010), the law of comparative advantage says that the contemporary dynamics of international trade requires that each country will find it productive to specialize in the ?production of the good of its comparative advantage and will trade this for the good of its comparative advantage? (Carbaugh 39). Countries that embrace specialization achieve production gains. [...]