Papers in Evolutionary Economic Geography

May 31, 2018

# 18.21 The high importance of de-industrialization and job polarization for regional diversification

Filed under: 2018 — Tags: , , — T.Broekel @ 3:08 pm

Jacob Rubæk Holm & Christian Richter Østergaard


Abstract: The process of regional diversification has received a growing interest in recent years with a focus on the role of relatedness between economic activities. The main argument is that regions diversify into economic activities closely related to their current activities. However, there are also processes working against this rather path dependent process, such as de-industrialization, job polarization, skill-biased technological change, and urbanization. The purpose of this paper is to analyse the importance of relatedness and these major processes in regional diversification with specific emphasis on the role of job polarization and de-industrialisation. The paper draws on linked employer-employee census data from Denmark 2008-2013. Results show that, while relatedness does matter for regional diversification, job polarization and deindustrialisation entail that the most related industries tend to contract. Hence, the results show that regional diversification is affected by relatedness, but its effect is overshadowed by job polarisation and de-industrialization. This effect is consistent across regions. The results show a role for policy and entrepreneurship in introducing unrelated diversification.



November 22, 2017

# 17.28 Local and Non-Local Knowledge Typologies: Technological Complexity in the Irish Knowledge Space

Adam Whittle


It is now commonplace to assume that the production of economically valuable knowledge is central to modern theories of growth and regional development. At the same time, it is also well known that not all knowledge is equal, and that the spatial and temporal distribution of knowledge is highly uneven. Combing insights from Evolutionary Economic Geography (EEG) and Economic Complexity (EC) the primary aim of this paper is to investigate whether more complex knowledge is generated by local of non-local (foreign) firms. From this perspective, a series of recent contributions have highlighted the role of foreign firms in enacting structural transformation, but such an investigation has yet to account for the complexity of the knowledge produced. Exploiting information contained within a recently developed Irish patent database our measure of complexity uses a modified bipartite network to link the technologies produced within regions, to their country of origin i.e. local or non-local. Results indicate that the most complex technologies tend to be produced in a few diverse regions. For Ireland, our results indicate that the most complex technologies tend to be produced in a few diverse regions. In addition, we find that the majority of this complex knowledge is generated in technology classes where the share of foreign activity is greater than local firms. Lastly, we generate an entry model to compute the process of complex regional diversification. Here the focus is on how regions develop a comparative advantage in a technological domains more complex than those already present in that region. As such, we focus our attention only on those technologies with the highest complexity values, as these technologies are said to underpin the European Union’s Smart Specialisation thesis.

October 23, 2017

# 17.27 Regional diversification and green employment in US Metropolitan Areas

Filed under: 2017 — Tags: , , — mattehartog @ 6:08 pm

Nicolò Barbieri, Davide Consoli


This paper analyses whether and to what extent regional diversification enables or thwarts green employment in US Metropolitan Areas (MAs) between 2006 and 2014. The recent debate on related and unrelated variety provides the conceptual frame for our study. The main findings are two. First, unrelated diversification is a positive and significant predictor of green employment growth. Second, this effect differs across occupational categories: while unrelated variety at industry level favours the growth of mid- to low-skill green jobs, unrelated variety at occupational level favours high- to mid-skill green jobs. Overall, local related diversification has very little impact.

August 3, 2016

# 16.23 Place, platform, and knowledge co-production dynamics: Evidence from makers and FabLab

Filed under: 2016 — Tags: , , , , , — mattehartog @ 4:40 pm

Raphaël Suire


FabLabs (fabrication laboratories) have become popular but the academic literature on this entrepreneurial phenomenon is scant. This paper provides some insight into the sources of Fablab performance based on original data on the characteristics and interactions between (n = 48) FabLabs and their ecosystem. A FabLab is a geographically located, intermediary platform which reduces the matching and searching costs to stakeholders involved in an entrepreneurial endeavor. We find that a FabLab is less productive if disconnected from its ecosystem. Innovation production is highest when the FabLab acts as a platform allowing interactions between small explorative firms, and large exploitative firms. Its innovation remains explorative if the interaction involves only small explorative firms. Our study has some implications for the management of FabLabs and their ambiguous impact on the overall innovation ecosystem in relation to resilience, smart specialization and diversification.

February 3, 2016

# 16.03 The workforce of pioneer plants

Ricardo Hausmann, Frank Neffke


Is labor mobility important in technological diffusion? We address this question by asking how plants assemble their workforce if they are industry pioneers in a location. By definition, these plants cannot hire local workers with industry experience. Using German social-security data, we find that such plants recruit workers from related industries from more distant regions and local workers from less-related industries. We also show that pioneers leverage a low-cost advantage in unskilled labor to compete with plants that are located in areas where the industry is more prevalent. Finally, whereas research on German reunication has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversication of eastern Germany by giving access to experienced workers from western Germany.

June 9, 2015

# 15.19 Cross-specialization: A New Perspective on Industry Policy

Filed under: 2015 — Tags: , , , , — mattehartog @ 9:56 am

Matthijs J. Janssen


In this paper we discuss how an economies’ established stronghold industries can form a basis for sustaining competiveness. As changing market circumstances demand strongholds to stay adaptive, their knowledge bases need to be enriched with knowledge that is uncommon to the industry itself. Inspired by insights from evolutionary economic geography, we argue why rather than (only) supporting related variety, policy makers should ‘cross-specialize’ by creating linkages between strong but unrelated industries. Experimentation based on bridging rich knowledge bases provides important opportunities for breakthrough innovation and, ultimately, economic diversification. Policy makers can facilitate uncommon interactions by creating various kinds of platform-like interfaces. One way to determine what technologies and themes are suitable in this regard is by taking a close look at cross-over industries. As these cross-over industries consist of parties able to communicate with both of the unrelated strongholds, they are highly relevant for policy interventions aimed at closing structural holes in the industry space. Looking at the case of the Dutch Topsectors, we describe how cross-over industries can be identified. We use skill-relatedness and employment data to construct the Dutch industry space, and apply network analytics for calculating cross-over centrality measures. We conclude by discussing research and policy implications.

March 28, 2015

# 15.08 Neighbor regions as the source of new industries

Filed under: 2015 — Tags: , , , , , , — mattehartog @ 1:41 am

Ron Boschma, Víctor Martín and Asier Minondo


The development of new industries demands access to local capabilities. Little attention has yet been paid to the role of spillovers from neighbor regions for industrial diversification, nor has the role of network linkages between neighbor regions been investigated. As the spread of capabilities has a strong geographical bias, we expect regions to develop new industries in which their neighbor regions are specialized. To test this hypothesis, we analyze the development of new industries in US states during the period 2000-2012. We show that an US state has a higher probability of developing a comparative advantage in a new industry if a neighbor state is specialized in that industry. We also show that neighbor US states have more similar export structures. This export similarity seems to be explained by higher social connectivity between neighbor states, as embodied in their bilateral migration patterns.

October 27, 2014

# 14.21 Institutions and Diversification: Related versus Unrelated Diversification in a Varieties of Capitalism framework

Ron Boschma and Gianluca Capone


The Varieties of Capitalism literature has drawn little attention to industrial renewal and diversification, while the related diversification literature has neglected the institutional dimension of industrial change. Bringing together both literatures, the paper proposes that institutions have an impact on the direction of the diversification process, in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure. We investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995-2010. Our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies, while liberal market economies show a higher probability to move in more unrelated industries: their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution. In particular, we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on ‘non-market’ coordination in the domains of labor relations, corporate governance relations, product market relations, and inter-firm relations.

April 9, 2014

# 14.10 Agents of structural change. The role of firms and entrepreneurs in regional diversification

Filed under: 2014 — Tags: , , , , , — mattehartog @ 3:58 pm

Frank Neffke, Matté Hartog, Ron Boschma, Martin Henning


Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or non-local firms and entrepreneurs create most novelty in a region? Using matched employer-employee data for the whole Swedish workforce, we determine how unrelated and therefore how novel the activities of different establishments are to a region’s industry mix. Up- and downsizing establishments cause large shifts in the local industry structure, but these shifts only occasionally require an expansion of local capabilities because the new activities are often related to existing local activities. Indeed, these incumbents tend to align their production with the local economy, deepening the region’s specialization. In contrast, structural change mostly originates via new establishments, especially those with non-local roots. Moreover, although entrepreneurs start businesses more often in activities unrelated to the existing regional economy, new establishments founded by existing firms survive in such activities more often, inducing longer-lasting changes in the region.

February 5, 2014

# 14.07 Relatedness and Diversification in the EU-27 and ENP countries

Filed under: 2014 — Tags: , , , — mattehartog @ 10:44 am

Ron Boschma and Gianluca Capone


This paper analyzes the process of industrial diversification in the EU-27 and ENP countries in the period 1995-2010 by means of world trade data derived from the BACI database (elaborated UN Comtrade data). Our results show that in both the EU-27 and the ENP countries, the evolution of the export mix is strongly path-dependent: countries tend to keep a comparative advantage in products that are strongly related to their current productive structure, and they also diversify in nearby products. However, this effect is much stronger for ENP countries, signalling their lower capabilities to diversify in products that are not very near to their productive structure. We also show that the future export structures of countries are affected by their imports: both the EU-27 and ENP countries keep a comparative advantage in products that are strongly related to their imports, but only EU countries show a strong capability to diversify in new products from related import sectors. Our results also hold when controlling  for geographical and institutional proximity.

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