Trends and determinants of the geographic dispersion of Irish manufacturing activity, 1926-1996

This paper documents the trends in localization of the Irish manufacturing sector since the 1920s and investigates which of three prominent models is most consistent with the data. We find that aggregate manufacturing activity experienced an inverted u-shaped pattern of localization and is now more dispersed than it was in the 1920s. Our analysis of individual sub-sectors shows that, while this long-term trend holds for many of these, there is a considerable amount of heterogeneity in the extent and the evolution of their geographic dispersion. An econometric analysis of a panel of sub-sectors reveals that there is support for old and new trade theories, as well as economic geography models, in explaining location of the more modern manufacturing industries over the long run. For the more recent period since 1972 we find evidence consistent with new economic geography models for all manufacturing industries, while external economies arising from spillovers through foreign direct investment have acted to disperse modern manufacturing activities