Market potential and welfare: evidence from the Iberian Peninsula

We present a methodology to quantify market potential in the context of an economic geography model. The model is then applied to the NUTS 2 regions of Portugal and Spain. Some results can be pointed out. First, the Iberian Peninsula presents a clear centre-periphery pattern. The market potential pi...

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Bibliographic Details
Published in:Portuguese economic journal 2005-08, Vol.4 (2), p.107-127
Main Author: Pires, Armando José Garcia
Format: Article
Language:English
Subjects:
Economic analysis
Economic conditions
Economic geography
Economics
Empirical research
Geography
Iberian peninsula
Location of industry
Market potential
Market structure
Model testing
Portugal
Regional economics
Regions
Spain
Studies
Welfare
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Summary:We present a methodology to quantify market potential in the context of an economic geography model. The model is then applied to the NUTS 2 regions of Portugal and Spain. Some results can be pointed out. First, the Iberian Peninsula presents a clear centre-periphery pattern. The market potential pike is situated in the region of Madrid, followed very closely by Cataluna and Pais Vasco. Also all Portuguese regions are at the bottom of the market potential rank, i.e.: Portugal is at the periphery of Spain. Second, the regional welfare index confirms market potential results. There is therefore a direct correlation between market potential and regional welfare. Third, a scenario of complete integration between the Portuguese and the Spanish economy is favourable to the most laggard regions. On the contrary, the most advanced regions of each country loose a little. However, "lock-in" effects allow the most central regions to continue in the forefront of development and welfare. [PUBLICATION ABSTRACT]
ISSN:1617-982X
1617-9838
DOI:10.1007/s10258-005-0044-4