This paper examines the relationship between regional integration and regional differences in production structures and income levels. It argues that for high trade costs, industries are spread across regions to meet final consumer demand. For intermediate trade costs, increasing returns interacting with migration and/or input-output linkages between firms create a propensity for the agglomeration of industries. When workers migrate towards locations with more firms and higher real wages, this intensifies agglomeration. Conversely, if workers do not move across regions, at low trade costs, firms become increasingly sensitive to cost differentials, leading to the spread of industries again. The paper uses a model to analyze the impact of interregional migration on economic agglomeration. It finds that if interregional migration remains minimal, the propensity for firms to agglomerate will be lower than in the US, where workers are more mobile. Additionally, the lack of migration can make the relationship between integration and agglomeration non-monotonic. Starting from high trade costs, reductions in trade costs initially encourage agglomeration, but if workers do not move, firms may spread out again at low trade costs. The paper also discusses the role of input-output linkages and intersectoral migration in understanding the determinants of economic agglomeration. It concludes that the relationship between regional integration and industrial location is influenced by the presence or absence of interregional labor mobility. When workers move, the symmetric equilibrium is stable, and agglomeration occurs. Without interregional migration, the symmetric equilibrium becomes unstable at a critical level of trade costs, leading to discontinuous or gradual changes in industrial location.This paper examines the relationship between regional integration and regional differences in production structures and income levels. It argues that for high trade costs, industries are spread across regions to meet final consumer demand. For intermediate trade costs, increasing returns interacting with migration and/or input-output linkages between firms create a propensity for the agglomeration of industries. When workers migrate towards locations with more firms and higher real wages, this intensifies agglomeration. Conversely, if workers do not move across regions, at low trade costs, firms become increasingly sensitive to cost differentials, leading to the spread of industries again. The paper uses a model to analyze the impact of interregional migration on economic agglomeration. It finds that if interregional migration remains minimal, the propensity for firms to agglomerate will be lower than in the US, where workers are more mobile. Additionally, the lack of migration can make the relationship between integration and agglomeration non-monotonic. Starting from high trade costs, reductions in trade costs initially encourage agglomeration, but if workers do not move, firms may spread out again at low trade costs. The paper also discusses the role of input-output linkages and intersectoral migration in understanding the determinants of economic agglomeration. It concludes that the relationship between regional integration and industrial location is influenced by the presence or absence of interregional labor mobility. When workers move, the symmetric equilibrium is stable, and agglomeration occurs. Without interregional migration, the symmetric equilibrium becomes unstable at a critical level of trade costs, leading to discontinuous or gradual changes in industrial location.