Geographical and economic patterns

A fairly abundant literature exists on the agglomeration and concentration of industries and on the specialisation of countries and regions especially after the New Economic Geography (NEG) came into fashion. Most of this recent literature focuses on the manufacturing sector of the economy rather than the agricultural sector, as well as on the core rather than the periphery in core-periphery models. Thus, the agricultural sector received comparatively little at-tention regarding its impact on agglomeration, and/or how such processes af-fect it. This seems not to be necessarily justifiable at a European level, where a substantial amount of funding goes into agriculture. The recent EU-enlargement somehow enforced the role and the problems of agriculture since before joining the EU about 25% of the accession countries' labour force was employed in the primary sector, whilst only generating about 8% of GDP. An analogous story can be told regarding peripheral regions. The EU makes a lot of financial and political effort in order to improve the economic situation in pe-ripheral regions (36.4% of the total 2005 budget). Every member state is trying to support its remote regions to catch up economically either jointly with or separately from EU-efforts, for instance by subsidising firms relocating into those peripheral regions or by implementing some national support programs. Very frequently, a peripheral region is also a rural region, i.e. having a greater-than-average share of the agricultural employment, and a lower-than-average contribution to GDP. One obtains a very similar picture at a world-wide level from the WTO trade liberalisation negotiations from the Uruguay- to the Doha-Round, where it is frequently the agricultural sector that causes impediments to the agreements. In fact, liberalising trade and market access for manufacturing rarely poses comparatively great problems for the countries. One reason for this difference is the immobility of large parts of, and the low substitutability between the produc-tion factors employed in agriculture. Land is obviously immobile and hardly sub-stitutable in the production of agricultural goods. The workers employed in agri-culture are frequently rather low skilled, and interregionally immobile. Notwithstanding that, the NEG literature can shed some light on how to help agriculture to modernizing itself, and remote areas to become less margin-alized. In fact, the clustering of firms is reputed to have strong links with growth, which is one of the main concerns about peripheral regions. Moreover, commut-ing, intelligent agriculture" - i.e., combining the production factors "land" and "skilled labour" – and public infrastructure investment are important issues for developing the periphery. Thus, in considering which features of the NEG litera-ture are important to foster the development of agricultural and rural areas, we will review the influence of territory on the development of enterprises, including efforts to explain the spatial distribution of economic activity and the interactions between urban centres and rural areas.