With the launching of the European Monetary Union came fears of increased specialization, and potential industry-specific shocks that would endanger the stability within the common currency area. We investigate the impact of the introduction of the euro on the spatial distribution (specialization) of economic activities in four euro zone countries: France, Ireland, Portugal, and Finland. Evidence of a statistical significant increase in specialization is found after the introduction of the euro, in several manufacturing industries, with services playing a downward pressure on countries' specialization level. At the regional level there is evidence of an increase in similarity between regions and the countries they belong to, and the EU15.This paper, First Place Co-Winner of the Best Student Paper Award, was presented at the 18th International Conference of the International Trade and Finance Association, meeting at Universidade Nova de Lisboa, Lisbon, Portugal, on May 22, 2008.Key words: European Integration, Euro, Specialization, Regions.JEL Classification: F14, F15, R12, R15.
