# 19.01 Technological Diversification of U.S. Cities during the Great Historical Crises

Mathieu P.A. Steijn and Pierre-Alexandre Balland and Ron Boschma and David L. Rigby

 

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Abstract: Regional resilience is high on the scientific and policy agenda. An essential feature of resilience is diversifying into new activities. But, little is known about whether major economic crises accelerate or decelerate regional diversification, and whether the impact differs between specialised and diverse regions. This paper offers systematic evidence on the effects of three of the largest crises in U.S. history (the Long Depression 1873-1879, the Great Depression 1929-1934, and the Oil Crisis 1973-1975) on the development of new technological capabilities within U.S. metropolitan areas. We find that crises reduce the pace of diversification in cities and that they narrow the scope of diversification to more closely related activities. We also find that more diverse cities outperform more specialised cities in diversifying during times of crisis but more diverse cities do not have a stronger focus on less related diversification during these unsettled times.

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# 18.43 A network-based method to harmonize data classifications

Dario Diodato

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Abstract: A frequent problem in research is the harmonization of data to a common classification, whether that is in terms of – to name a few examples – industries, commodities, occupations, or geographical areas. Statistical offices often provide concordance tables, to match data through time or with different classifications, but these concordance tables alone are often not sufficient to define a clear methodology on how the matching should be performed. In fact, the concordance tables have, in numerous occasions, a many-to-many mapping of classifications. The issue is exacerbated when two or more concordance tables are concatenated. In this Jupyter notebook, I discuss a network- based abstraction of this problem and propose, as a general solution, a method that identifies the network components (or the network communities) to make data converge to a new classification. The method simplifies the issue and reduces greatly conversion errors.

# 18.42 Does inward FDI influence the quality of domestic institutions? A cross-country panel analysis

Roberto Antonietti & Jasmine Mondolo

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Abstract: Domestic institutions are recognized as important in attracting foreign direct investment (FDI) and spurring economic development in host countries, but FDI can also affect and shape domestic institutions. In this paper we use extensive data on the quality of institutions and on inward FDI in 127 countries over a period of 22 years to see whether attracting FDI improves the quality of institutions in the host economies. We distinguish between different types of institution, FDI and country, and we estimate a series of pooled ordinary least squares, fixed effects, and dynamic panel data models to address endogeneity. Our findings suggest that higher amounts of inward FDI improve the average quality of institutions in recipient countries. This holds particularly when the quality of institutions is measured in terms of political stability, regulatory quality and rule of law, and when host countries are developing or transition economies.

# 18.41 Scaling of Atypical Knowledge Combinations in American Metropolitan Areas from 1836 to 2010

Lars Mewes

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Abstract: Cities are epicenters for invention. Scaling analyses have verified the productivity of cities and demonstrate a super-linear relationship between cities’ population size and invention performance. However, little is known about what kinds of inventions correlate with city size. Is the productivity of cities only limited to invention quantity? We shift the focus on the quality of idea creation by investigating how cities influence the art of knowledge combination. Atypical combinations introduce novel and unexpected linkages between knowledge domains. They express creativity in inventions and are particularly important for technological breakthroughs. Our study of 174 years of invention history in metropolitan areas in the United States (US) reveals a super-linear scaling of atypical combination with population size. The observed scaling grows over time indicating a geographic shift towards cities since the early 20th century. The productivity of large cities is thus not only restricted to quantity, but also includes quality in invention processes.

# 18.40 Spinoffs, parents, and institutions: Evidence from the Italian motorcycle industry

Gianluca Capone and Andrea Morrison

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Abstract: In this paper we study the impact of spinoff generation events on the performance of parent organizations. Using data from the Italian motorcycle industry (1893-1993), we find that parents have higher survival chances after a spinoff generation event, confirming results from previous studies about other manufacturing industries. We also show that these enhanced survival patterns differ across time and space, and we link these effects to institutional differences: spinoff generation did not determine any survival advantage for parent firms in the Fascist era and in the Turin cluster, while it had an additional positive effect in the Motorvalley cluster. The paper contributes to the literature on spinoff generation and employee mobility and adds to the debate on the role of institutions in evolutionary economic geography, by showing the importance of contextual factors for the performance of parent firms.

# 18.39 The geographical dimension of structural change

Ron Boschma

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Abstract: This chapter explores patterns of structural change from a geographical perspective. It summarizes recent insights on the geography of structural change, and in particular on regional diversification. It shows how local capabilities and institutions impact on structural change, and why the capacity of regions to diversify differs substantially. This chapter describes how concepts like diversification and relatedness have been fruitfully combined in a rapidly expanding literature. Diversification refers to the emergence of new activities, an important feature of structural change. These new activities are often embedded in, or related to, existing activities at the national and regional scale, requiring similar capabilities. But new activities can also be unrelated to existing ones. For our understanding of structural change, the role of agency is considered crucial, as it shapes diversification at the regional level.

# 18.38 Specialization, diversification and environmental technology life-cycle

Nicoló Barbieri and François Perruchas and Davide Consoli

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Abstract: The paper analyses whether and to what extent regional related and unrelated variety matter for the development of green technology, and whether their influence differs over the technology life-cycle. Using patent and socio-economic data on a thirty- year (1980-2009) panel of US States, our study finds that unrelated variety is a positive predictor of green innovative activities. When unpacked over the life cycle, we find that unrelated variety is the main driver of green technology development in early stages while related variety becomes more prominent as the technology enters into maturity.

# 18.37 Disentangling link formation and dissolution in spatial networks: An application of a two-mode STERGM to a project-based R&D network in the German Biotechnology industry

Tom Broekel & Marcel Bednarz

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Abstract: The analysis of spatial networks’ evolution has predominantly concentrated on the formation process of links. However, the evolution of networks is similarly shaped by the dissolution of links, which has thus far received considerably less attention. The paper presents separable temporal exponential random graph models (STERGMs) as a promising method in this context, which allows for the disentangling of both processes. Moreover, the applicability of the method to two-mode network data is demonstrated. We illustrate the use of these models for the R&D collaboration network of the German biotechnology industry as well as for testing for the relevance of different forms of proximities for its evolution. The results reveal proximities varying in their relative importance for link formation and link dissolution.

# 18.36 Related variety, unrelated variety and the novelty content of firm innovation in urban and non-urban locations

Marte C.W. Solheim and Ron Boschma and Sverre Herstad

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Abstract: In this paper, we investigate whether the composition of experience-based knowledge accumulated by firms in urban and rural locations is reflected in the novelty content of their innovations. Looking at the manufacturing industry, and using Norwegian Linked Employer- Employee register data (LEED) merged with Community Innovation Survey (CIS) data, we find that unrelated experience variety within firms increases the probability of radical innovation, independently of firms’ location, whereas related variety increases the probability of incremental innovation in large-city regions. These results demonstrate that innovation capacity cannot be understood from the single perspective of R&D efforts and strategy as it also depends on experiences accumulated in ‘entire organizations’ and the locations in which accumulation occurs. Moreover, they suggest that for manufacturing firms, urban locations are not hot spot for radical change. Instead, they support incremental innovative activities by facilitating effective sharing of knowledge between related sectors.

# 18.35 Migration and invention in the age of mass migration

Andrea Morrison and Sergio Petralia and Dario Diodato

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Abstract: More than 30 million people migrated to the US between the 1850s and 1920s. In the order of thousands became inventors and patentees. Drawing on an original dataset of immigrant inventors to the US, we assess the city-level impact of immigrants patenting and their potential crowding out effects on US native inventors. Our study contributes to the different strands of literature in economics, innovation studies and economic geography on the role of immigrants as carriers of knowledge. Our results show that immigrants’ patenting is positively associated with total patenting. We find also that immigrant inventors crowd-in US inventors. The growth in US inventors’ productivity can be explained also in terms of knowledge spill-overs generate by immigrants. Our findings are robust to several checks and to the implementation of an instrumental variable strategy.