Does a Wait and See Approach to European Integration Shelter the Industrial Base of Small Countries?

This paper compares the effect of economic integration on industry location for a small country that goes ahead with an integration process, such as the European, and a country adopting a wait and see strategy. Theoretical results, derived from a three-region new economic geography model, are compared to stylised facts on European manufacturing production. The result is that further integration could strengthen the industrial base of small countries that go ahead with integration.