Typology of the geography of trade, 2010


Observations for policy

European regions have different trade orientations due to historic legacy, the presence of major hubs and geographic positions. While the economic and financial crisis led to an overall reduction in the trade in goods, geographic patterns of economic interaction remained largely unchanged. All European regions have other European regions as their first trade partners.

The geographic orientation in the trade of goods shows clear East-West characteristics. However, all European regions tend to trade most within their own neighbourhood, with some regions which have a more global orientation, due to history, proximity or the global division of labour.

Regions in the UK, Switzerland and Mediterranean have the most global orientation of their trade in goods as well as major European metropolitan areas such as London, Paris, Madrid and Berlin, except Brussels. These cities and regions constitute major gateways to the rest of the world.

Policy context

Cohesion Policy was initially established to facilitate the creation of the Single Market and to limit its possible negative impacts in less developed regions. The integration of Central and Eastern European countries has generated a strong growth of trade with the EU-15 as well as between themselves, as highlighted in the sixth Cohesion Report. These new patterns of exchange have created a series of opportunities and challenges. Cohesion policy has for example addressed them by seeking to improve the business environment in lagging regions, thereby increasing the likelihood that they would benefit from trade integration. Equally, Cohesion Policy supports improvements in transport and digital connections enabling economies of scale to be achieved through increased trade.

The Territorial Agenda goes more in depth on this topic linking the global competitiveness to strong local economies. For example social capital and territorial assets should be used in a place-based approach and play a key role regarding the trade interactions and orientation of regions. Furthermore, the Territorial Agenda highlights the importance of improving the connectivity for individuals, communities and firms. Reinforcing the trans-European network, linking European economic centres of production and markets and improving linkages between primary and secondary transport systems could further develop regional trade.

Map interpretation

The diversity of orientation of trade is related to a number of decisive factors such as historical relations, largely dependent on the presence of major hubs, notably ports and most of all the nature/specialisation of the regional trade. Three main categories and six typologies are defined to describe the orientation of European region regarding trade of goods.

Regions with a strong European orientation are shown in red and blue. Regions in blue have a rather Western European orientation. Regions in red have a rather Eastern European orientation, including countries from the former USSR. The map illustrates that most countries trade in their own neighbourhood.

Countries with a stronger global orientation are illustrated in pink and orange. More globally oriented regions can be found in the UK, Switzerland and the Mediterranean. Regions in the UK and Switzerland are more oriented to Eastern Asia, but mainly to Northern America (12.4% while the average is 6.6%). Regions in the Mediterranean are more oriented to regions in the Southern and Southeastern neighbourhood and the Middle East.

Finally regions with an average profile are defined and shown in green.

Even though a global orientation or specialisation in products with a higher technological content is often related to better regional performance, no evidence has been found for this. The orientation illustrated in the map focuses on goods. Only when integrating different approaches at regional and city level, further evidence of the relationship between forms of regional participation to the global economy and cities/regional economic performances might be given.

Concepts and methods

Regions are grouped according to their orientation of trade using principal component analysis, making it possible to identify the most significant combinations of external trade relations in European region. This analysis resulted in three types (European, “non-European” and “average”) and six sub-types.