Peripherality and Integration: Industrial Growth and Decline in the Greek Regions

Abstract

Peripheral European economies are often characterized by unfavorable structural regularities and geographical coordinates, making the process of economic integration an experience possibly associated with welfare losses at the regional level. Such types of arguments are at variance with the neoclassical understanding of the operation of the spatial economy, making the study of a weak industrial base in the EU periphery an interesting assignment with implications for theory and policy. We develop an empirical model accounting for industrial (manufacturing) growth and decline in the Greek regions in the period following EU membership (1981–2005). Given that Greek regions are characterized as lagging behind and structurally weak for the entire period under consideration, understanding the factors behind their industrial experience may have a value added for many regions with similar characteristics, especially in the new and potential EU member states.