Market access and the other determinants of North-South manufacturing location choice: An application to the Euro-Mediterranean area

This paper examines the impact of market and supply accessibility on the geographic distribution of manufacturing sectors in the Euro-Mediterranean area. The evolution of market and supplier access in the area is first investigated. Then, market and supplier access, production cost and regional integration are focused on as the main determinants of industrial location. A deeper regional integration agreements can act as an important dispersion force, driving the location of manufacturing in new member states and Mediterranean countries.

► The paper underlines the significant market segmentation in the Euro-Mediterranean area over the period 1994-2003. ► Market accessibility is the main determinant of firms' location choices even if differences in production costs should not be ignored. ► A greater “South/South” integration is key for promoting the location of firms in new member states and Mediterranean countries.