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GLOBAL-LOCAL INTERPLAY IN THE BALTIC SEA REGION Pärnu, Estonia, October 1-4, 1998  Börje Johansson
in central and peripehral munciplaities Abstract The paper analyses the development of population, jobs and economic
activities in three categories of municipalities, which are
classified with respect to the type of functional region each
municipality belongs to. The functional regions are organised in (i)
metropolitan regions, (ii) medium-sized regions, and (iii) small and
peripheral regions. These three types of regions differ in
particular as regards the market potential for different types of
products. The concepts market potential and scale economies are
combined in a model (of home market advantages) which can explain why
the change processes differe in such distinct ways between the three
categories of municipalities.
The paper ends in a discussion of how the theory of comparative
advantages and the theory of home market advantages into a theory of
economic milieu. It is also suggested how medium-size and small
regions can overcome the relatively small local market by slecting
products which are (i) not distance-sensitive, and (ii) are
charactersied by external economies of scale. This leads in the
direction of a model of regional clusters and market potential.
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