Regional manufacturing in the Czech Republic

Abstract

The New Economic Geography (NEG)’s agglomerative forces strongly determined the location of firms, in spite of policy intervention blatantly activist intended to reverberate the geography of production (during the communist regime). Recent models of geography and trade recognize a bijective interaction between NEG forces and comparative advantages, they fully explain productive specialization. Our interpretation of the Czech manufacturing is in accordance with the NEG and its recent integration with the comparative advantages stream. In the panel data float up some invariant characteristics enhancing the attractiveness of traditional industrialized territories. The estimates embody the population density and gravitational and agglomeration forces. The time-invariant characteristics are present in the most industrial regions, influencing the localization of manufacturing activity in these spots. In spite of the forceful influence of path dependence, the very manufacturing cores underwent a process of restructuration, adapting the old-fashioned specialization pattern toward a more coherent production tailored to local assets, endowments and technologies.