Title: Evolutionary economic geography and growth: technological relatedness and regional branching
1Evolutionary economic geography and
growthtechnological relatedness and regional
branching
- Ron Boschma
- Utrecht University
- http// econ.geo.uu.nl/boschma/boschma.html
- DIMETIC course
- Pecs
- July 5, 2010
2structure of lecture
- technological relatedness and related variety
- 4 empirical applications in evolutionary economic
geography - spatial externalities related variety
- labour mobility inflow of related labour
- entrepreneurship experienced entrepreneurs
- regional diversification entry and exit of
industries - literature
- Frenken et al. (2007)
- Boschma, Eriksson and Lindgren (2009)
- Boschma and Wenting (2007)
- Neffke, Henning and Boschma (2009)
3 1. technological relatedness and related variety
- firms differ firm-specific competences
- variety as key driver of regional growth the
more, the better - knowledge will spill over to other firms now and
then, and geographical proximity is an enabling
factor (Jane Jacobs) - effective learning requires cognitive proximity
between firms - but too much cognitive proximity may be harmful
(lock-in) - need for technological relatedness and related
variety to enable knowledge spillovers - regional level might be crucial knowledge
spillovers are often geographically bounded
42. spatial externalities related variety
- Jacobs externalities and regional growth?
- what matter for regional growth sectors that are
technologically related in a region - the higher related variety in a region, the
higher regional growth effective knowledge
transfer requires some but not too much cognitive
proximity between sectors in a region - Frenken et al. (2007) for the Netherlands,
confirmed by studies in other countries (e.g.
Italy, Great Britain, Finland)
52. spatial externalities related variety
- regional growth may also depend on
extra-regional knowledge flows non-local
linkages bring new variety into the region - Boschma and Iammarino 2009, Economic Geography 85
(3), 289-311 study on related variety, trade
linkages and regional growth in Italy - it is not inflows of extra-regional knowledge per
se that matters for regional growth - inflows of extra-regional knowledge related (but
not identical) to the knowledge base in a region
that do matter for regional growth - this concerns new knowledge that can be
understood and exploited by related sectors in
the region and, thus, be transformed into
regional growth
63. labour mobility inflow of related labour
- labour mobility key mechanism through which
knowledge diffuses however, no attention paid to
relatedness - Boschma, Eriksson and Lindgren (Journal of
Economic Geography, vol. 9 (2), 2009) effect of
labour mobility on plant performance through
relatedness - (1) at the plant level the more related the
skill portfolio of a plant is, the higher plant
productivity growth - (2) through labour mobility inflow of new skills
that are related to the knowledge base of the
plant had a positive effect on plant performance
(in contrast to inflows of identical skills) - (3) extra-regional linkages labour mobility
across regions has only a positive effect on
plant performance when this concerns new
employees with skills that are related (but not
similar) to the existing set of skills at the
plant level
7relatedness at the plant level
- human capital may matter, but . does a
particular portfolio of skills enhance intra-firm
learning and performance of firms? - need to distinguish between similar, related and
unrelated set of skills at firm level - related set of skills (as opposed to similar and
unrelated skill portfolios) beneficial for firm
performance not too much cognitive proximity,
and not too little cognitive proximity
8relatedness and labour mobility
- labour mobility may matter, but . does the
inflow of particular types of skills enhance
intra-firm learning and performance of plants? - too much reliance on intra-firm skills may be
harmful, especially when this concerns a
portfolio of similar skills (as opposed to a
related set of skills at the firm level) need
for inflow of new skills to avoid lock-in - however, absorptive capacity is required to
understand and implement new skills at the level
of the firm - therefore, effect of labour mobility depends on
the types of skills that are brought into the
firm by new employees, and the extent to which
these newly recruited skills add to the existing
set of skills at the firm level - hypothesis inflow of new skills related (but not
similar or unrelated) to the skill base of plant
enhances intra-firm learning and firm performance
9intra- versus inter-regional labour mobility
- labour mobility may matter, but . does the
inflow of skills from the same region enhance
intra-firm learning and performance of firms? - too much reliance on intra-regional labour
inflows may also be harmful need for
inter-regional labour inflows to avoid lock-in - however, this effect depends on inflows of types
of skills - intra-regional flows when these concern
employees with similar skills, the problem of
cognitive lock-in may worsen - the more unrelated the inflow of new skills, the
more need for intra-regional mobility, in order
to solve problems of communication - inter-regional labour mobility will enhance firm
performance when these concern inflows of related
skills
10empirical study of Sweden data
- data source micro database ASTRID that connects
individuals (e.g. education, skills) to
workplaces (e.g. sector, location, employees,
value added) for the whole Swedish economy - excluding young workers (lt25 years), part-timers
(lt half time) and low-skilled job movers total
of 101,093 job moves in 2001 - only workplaces that registered inflows of
skilled employees in 2001 total of 17,098
workplaces - intra- versus inter-regional mobility 108 labour
markets areas
11empirical study of Sweden variables (1)
- dependent variable labour productivity growth
(growth value added per employee) at the plant
level 2001-2003 - control variables plant size, urban size,
industries and RD - intra-plant data educational background of
employees at 3 digit level (95 categories) as a
proxy for skill portfolio - inhouse similarity inverted entropy at 3 digit
level - inhouse related variety weighted sum of entropy
at 3 digit level within each 2 digit class in
2001 - inhouse unrelated variety entropy at 1 digit
level
12empirical study of Sweden variables (2)
- inflows of skills at plant level sector-specific
work experience of employees at 5 digit level
(753 industries) - inflow similar skills number of new employees
with background in the same 5-digit sector as the
plant - inflow related skills number of new employees
with background in all 5-digit sectors that share
the same 3-digit sector as the plant, excluding
those with a background in the same 5-digit
sector as the plant - inflow unrelated skills number of new employees
with background in all other 5-digit sectors - inflow intra-regional versus inter-regional (108
labour market areas)
13Inflow related skillsplant inflow labour
311
311
3111
3111
31112
31113
31111
31111
31112
31113
3 digit 4 digit 5 digit
14empirical study of Sweden main results (1)
- control variables strongest effect of plant size
(negative) - skill portfolio plant
- educational level per se positive effect, but
- inhouse similarity not significant
- inhouse related variety strong positive effect
- inhouse unrelated variety not significant
- inflow types of skills
- labour mobility of skilled people per se
negative effect, but . - inflow of similar skills negative effect
- inflow of related skills strong positive effect
- inflow of unrelated skills not significant
15empirical study of Sweden main results (2)
- intra- versus inter-regional flows of types of
skills - intra-regional labour mobility not significant
- inter-regional labour mobility a negative effect
- (1) inflow of similar skills negative effect, no
matter whether it concerns intra-regional or
inter-regional labour mobility - (2) inflow of related skills positive effect, no
matter whether it concerns intra-regional or
inter-regional labour mobility - thus, inter-regional labour mobility turns from a
negative into a positive effect when it concerns
inflows of related skills. Inter-regional labour
mobility has only a positive effect on
productivity growth when it concerns new skills
that are complementary to the plant - (3) inflow of unrelated skills the effect of
inflows of unrelated skills turns into a positive
effect when it concerns intra-regional mobility,
while inter-regional flows of unrelated skills
have a negative impact on productivity growth
16relatedness and labour mobility research agenda
- need for dynamic analysis skill portfolio of
plants - to get more sophisticated measures of relatedness
- to link this study to topic of regional
branching what kinds of labour mobility are
required to diversify regions - related labour
- places with related industries
- mostly local labour
- need for certain types of labour may differ
between different stages of industry/cluster
formation e.g. how to avoid lock-in?
174. entrepreneurship experienced entrepreneurs
- through entrepreneurship, new industries emerge,
but these do not start from scratch relatedness
is again crucial - empirical study on the spatial evolution of
British automobile sector 1895-1968 (Boschma and
Wenting, Industrial and Corporate Change, 2007,
16 (2) 213-238) - experienced entrepreneurs (with relevant
knowledge from related industries) are crucial
for first stage of the industry lifecycle - related knowledge and skills are transferred from
old sectors (engineering, cycle making, coach
making) to the new (automobile) sector this
increased their survival rate, in comparison to
other types of entrepreneurs - British regions endowed with these related
industries also had a higher probability to
develop the new automobile industry effective
knowledge transfer from the old to the new
requires relatedness regional diversification or
branching
185. regional diversification entry and exit of
industries
- many case studies on regional diversification or
branching, but no systematic study - creative destruction (Schumpeter) rise and fall
of industries in regions - depending on the degree of technological
relatedness with existing industries in a region? - two research questions
- rise of new industries do industries have a
higher probability to enter a region when these
are technologically related to pre-existing
industries in a region? - fall of existing industries do industries have a
lower probability to exit a region when these are
technologically related to pre-existing
industries in a region?
19regional diversification
- long-term analysis of 70 Swedish regions
1969-2002 (Neffke, Henning and Boschma, 2009) - first, we needed an indicator to measure the
degree of technological relatedness between
industries - co-occurrence analysis to assess inter-industry
relatedness - co-occurrence of products that belong to
different industries in the portfolios of
manufacturing plants economies of scope - control for profitability and size of industries
- Sweden data on manufacturing plants concerning
the products produced 1969-2002 product data
assigned to standard industry codes (a total of
174 6-digit industries) - we calculated the average degree of technological
relatedness between each pair of industries in
the period 1969-2002
20regional diversification
21regional diversification
- in order to determine whether entries and exits
of industries in a region are affected by the
degree of technological relatedness with other
industries in the region, we aggregated our data
to 70 Swedish regions - then, we developed an indicator to determine how
close an industry is to all other industries in a
region technological closeness - defined as the number of industries in a region
that an industry is technologically related to
above a certain threshold
22illustration of closeness indicator
23regional diversification
- we estimated the entry probability of an industry
in a region, and how that is affected by the
closeness of the new industry to a regions
portfolio - as expected, industries that are technologically
related to pre-existing sectors in a region have
a higher probability to enter the region - we also estimated the exit probability of an
industry in a region, and how that is affected by
its closeness to the regions portfolio - as expected, unrelated sectors have a higher
probability to exit the region
24entry and exit probabilities
25average industry space in Sweden 1969-2002, with
the evolution of the production structure of
Linkoping
26regional diversification
- thus, systematic evidence regions tend to
diversify by branching into new industries that
are related to their current industries path
dependent process - the same applies to the destruction process
existing industries tend to disappear from
regions when these are not embedded in current
industries - many open questions e.g. through which
mechanisms (entrepreneurship, labour mobility,
pipelines, etc.) do new industries connect to
existing industries? - what are the effects of the entry of new
industries that bridge two technology clusters in
a region? - what are the regional implications of changes in
industry space? - does industry space differ from country to
country?
27regional diversification
Evolution of Swedish regional production
structures with closeness measure (the number of
related industries with a RR over 0.25)