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Enlargement and the European Geography of the Information Technology Sector
Author(s) -
Barry Frank,
Curran Declan
Publication year - 2004
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2004.00634.x
Subject(s) - resizing , software , distribution (mathematics) , western europe , european union , economy , information technology , international trade , business , economic geography , geography , commerce , economics , political science , computer science , mathematical analysis , mathematics , programming language , law
The information technology sector in Europe, comprising the production of computer hardware and software, is disproportionately located on the continent's western periphery. The vast bulk of computers sold in Europe in the 1990s were assembled either in Ireland or Scotland, while Ireland also accounted for over 40 per cent of all packaged software and 60 per cent of all business software sold in Europe. As the sector in both these locations is largely foreign owned, the question arises as to whether EU enlargement might impact on the geography of the sector by diverting information technology FDI from the western to the new eastern periphery. This issue is explored in the present paper by analysis of five individual sub‐segments: computer assembly and electronic components, R&D, mass‐market packaged software and the remainder of the software sector. The paper deems it likely that computer assembly operations will continue the shift seen in recent years from Ireland and Scotland to Central and Eastern Europe. The production of electronic components such as microchips represents a growing share of activity in most EU locations as well as in the CEE countries. Analysis suggests that this pattern of geographically‐dispersed growth will resume once the consequences of the collapse of the high‐tech bubble are played out. The distribution of R&D activity across Europe and globally is also considered unlikely to be much affected by enlargement. As for software, as long as localisation activities remain important, Ireland – the EU location in which most of this activity is carried out – seems set to be able to compete strongly, given the attractiveness of its English‐language environment and other attributes to the young continental Europeans upon which this activity relies. Most software services remain largely non‐tradable however. This sector will grow in the accession states as computer penetration rates converge on the EU average, but without displacing activity from the incumbent EU member states. For firms already competing in the tradable niche software segment, on the other hand, enlargement cannot but be beneficial because of its impact on the size of the market into which they sell.