ECONOMIC CONCENTRATION AND REGIONAL SPECIALIZATION IN THE EUROPEAN UNION

Empirical investigation about industrial location and its changes take two different but connected approaches. First refers to the question whether regions are becoming more specialized and the second approach examines the question whether industries (or economic activities) are becoming more concentrated. Aim of this paper is to examine the processes of economic concentration and regional specialization and to compare them on the example of NUTS2 regions of the EU. Specialization and concentration have long been treated as very close phenomena, if not identical. They usually move in the same way over time but they can also take opposite directions. The favourable situation is when regional specialization is increasing and the concentration of economic activity is decreasing. This generally means that regions become more specialized in the production of some product or service which can boost their economy and enhance their competitiveness. On the other hand, lesser concentration means that economic activity is evenly distributed in space which can have positive benefits on local economy. In order to examine the movement of regional specialisation and economic concentration on the example of 237 NUTS 2 regions of the European union, Herfindahl-Hirschmann index was calculated as an absolute measurement of these two phenomena from 2005 to 2017. The results of the analysis show that specialisation and concentration both increased in the observed time period but their movement was not synchronised, especially in the eve of the financial crisis in 2008 when the specialisation decreased and the concentration increased.