Spatial patterns of production linkages in the context of Europe's small towns: how are rural firms linked to the local economy?

Abstract

This paper examines the spatial economic behaviour of firms located in and around thirty towns across five European countries. It tests a number of hypotheses regarding the influence of various characteristics on the strength of local economic integration. Findings reveal that the more 'traditional' and less productive rural firms exhibit stronger ties to their locality and the size of the local intermediate goods market influences the extent to which firms source locally. Differences in terms of country, area and town size highlight the importance of local contexts in explaining patterns of spatial economic behaviour.