Is Specialization Good for Regional Economic Development?

Abstract

Kemeny T. and Storper M. Is specialization good for regional economic development?, Regional Studies. Debates about urban growth and change often centre on specialization. However, arguments linking specialization to metropolitan economic development contain diverse, and sometimes conflicting, claims. Is it better to be highly specialized or diversified? Does specialization refer to the absolute or relative scale of an activity in a region? Does specialization have static or evolutionary effects? This paper investigates these questions in theoretical and empirical terms. By analysing local agglomerations over time, it is found that growing absolute specialization is positively linked to wages, while changes in relative concentration are not significantly associated with wage dynamics.

Kemeny T. and Storper M. 专殊化是否有利于区域经济发展，区域研究。有关城市成长与变迁的辩论，经常聚焦于专殊化。但将专殊化连结至大都会经济发展的主张，则具有纷杂且有时是相互矛盾的宣称。高度专殊化或多样化，何者较佳？专殊化指涉的是一个区域中活动的绝对或相对尺度呢？专殊化具有静态还是演进的影响呢？本文就理论与经验来探讨这些问题。本文透过分析随着时间推移的在地群聚，发现成长中的绝对专殊化，与工资有正向的关联，而相对集中化的改变，则与工资动态的关係不显着。

Kemeny T. et Storper M. La spécialisation, est-elle bonne pour le développement économique régional?, Regional Studies. Les débats à propos de la croissance et du développement urbains portent souvent sur la spécialisation. Toujours est-il que les arguments qui relient la spécialisation au développement économique métropolitain embrassent diverses revendications souvent contradictoires. Est-ce qu'il vaut mieux être hautement spécialisé ou diversifié? La spécialisation, fait-elle allusion à l’étendue absolue ou relative d'une activité dans la région? La spécialisation, a-t-elle des impacts statiques ou évolutifs? Ce présent article examine ces questions des points de vue théorique et empirique. En analysant les agglomérations locales dans le temps, il s'avère que la spécialisation absolue croissante est liée positivement aux salaires, tandis que les changements de la concentration relative ne sont pas associés de façon significative à la dynamique des salaires.

Kemeny T. und Storper M. Ist Spezialisierung gut für die regionale Wirtschaftsentwicklung?, Regional Studies. Im Mittelpunkt der Debatten über das Wachstum und die Veränderung von Städten steht oft die Spezialisierung. Allerdings enthalten die Argumente, die eine Spezialisierung mit der metropolitanen Wirtschaftentwicklung verbinden, unterschiedliche und zuweilen widersprüchliche Behauptungen. Ist es besser, hoch spezialisiert oder diversifiziert zu sein? Bezieht sich die Spezialisierung auf den absoluten oder den relativen Umfang einer Aktivität in einer Region? Hat eine Spezialisierung statische oder evolutionäre Effekte? In diesem Beitrag werden diese Fragen in theoretischer und empirischer Hinsicht untersucht. Anhand einer Analyse der lokalen Agglomerationen im Laufe der Zeit stellen wir fest, dass eine zunehmende absolute Spezialisierung in einem positiven Zusammenhang mit den Löhnen steht, während Veränderungen bei der relativen Konzentration in keinem signifikanten Zusammenhang mit der Lohndynamik stehen.

Kemeny T. y Storper M. ¿Es buena la especialización para el desarrollo económico regional?, Regional Studies. Los debates sobre el crecimiento y el cambio de las ciudades muchas veces se centran en la especialización. Sin embargo, los argumentos para relacionar la especialización con el desarrollo económico metropolitano contienen afirmaciones diversas y a veces conflictivas. ¿Es mejor estar altamente especializado o diversificado? ¿Se refiere la especialización a la escala absoluta o relativa de una actividad en una región? ¿Tiene la especialización efectos estáticos o evolutivos? En este artículo investigamos estas cuestiones en términos teóricos y empíricos. Al analizar las aglomeraciones locales con el paso del tiempo, observamos que la creciente especialización absoluta está positivamente vinculada a los salarios, mientras que los cambios en la concentración relativa no tienen un vínculo significativo con las dinámicas de salarios.

• Regional economic development
• Specialization
• Agglomeration

• 区域经济发展
• 专殊化
• 群聚

• Développement économique régional
• Spécialisation
• Agglomération

• Regionale Wirtschaftsentwicklung
• Spezialisierung
• Agglomeration

• Desarrollo económico regional
• Especialización
• Aglomeración

JEL classifications:

• O18
• O21
• R11
• R12

Acknowledgements

The authors would like to thank the participants of the Evolutionary Economic Geography sessions at the 2012 Association of American Geographers, as well as two anonymous reviewers for helpful suggestions.

Notes

1. For present purposes, ‘terms of trade’ refers to the relative prices of the region's output compared with the prices of the goods and services it imports. If the region's output enjoys increasing ratios of its unit prices relative to what it imports, then its terms of trade are said to be improving.

2. Acknowledging all the limitations of the industrial data that are discussed in more detail below.

3. To minimize the importance of smaller metropolitan areas, results are presented only for metropolitan and combined statistical areas with a total employment base over 500 000.

4. Relative rankings correspond to those that would be produced using location quotients.

5. Wage data, as compared with output data from the Census of Manufactures, are also less likely to introduce bias due to mis-measurement (Ciccone and Hall, 1996).

6. Though contrasting evidence exists (for instance, De la Roca and Puga, 2013).

7. The Census Bureau's Longitudinal Employer–Household Dynamics (LEHD) are the closest data of this kind for the United States, though they offer very scant establishment information. Access to such data is also somewhat out of reach: it is restricted to approved researchers, with approval often taking very lengthy periods.

8. Including lagged dependent variables as predictors can be a tricky procedure, with the possibility that such variables will (incorrectly) swamp the effects of other predictors of interest. This and methods of correcting for such problems are discussed further in the results section, but this problem does not afflict the results of this empirical enquiry.

9. There are also some issues with employment data that are suppressed due to reasons of confidentiality (Isserman and Westervelt, 2006), though this may not be true in more recent samples.

10. Though Jensen and Kletzer use locational Gini coefficients, the use of the Herfindahl index made more sense because it is explicitly about concentration – another way to say specialization. See Wolfson (1997) for a comparison of the two measures. The sensitivity of results was explored in relation to the choice of alternate years, including 2000 and 2005. Results did not materially vary.

11. In initial exploration, city and industry dummy variables were also included. These would account for the effect of any stationary city- or industry-wide shocks. Since these did not materially change the results for the variables of interest, these are not reported here. These dummies also became unwieldy in the more complex approaches that follow. While it is common for researchers to log-transform some variables, especially wages, we opted against this approach, choosing to leave variables in their natural scale. It was done so mainly because of the size of the dataset. While non-normality of predictors can indicate potential problems of non-normality of the residuals, this issue is not likely to bias estimates produced using a dataset with so many observations. In most cases, logging did not materially affect the results.

12. Wooldridge's test was conducted using the Stata command ‘xtserial’.

13. This is also true for estimates produced using system-GMM, which is ideal for short panels with lagged outcome variables included as predictors. What distinguishes the results presented from those produced with system-GMM is that the latter produced a very large number of instruments (by definition, all lags of all instruments), which can cause efficiency problems in panels deeper than eight. In this case, either the instrument matrix did not satisfy diagnostics or, when limiting lags, AR(2) behaviour was significant. Given that results for coefficients were consistent, results were presented from the two-step GMM-FE procedure.

14. Results are not particularly sensitive to moderate changes in these thresholds.

15. Using GMM, consistent results were additionally found when the relationship for the mix of metropolitan and, where available, consolidated statistical areas was estimated, though questions remained about instrument validity here.

16. Hidalgo et al. (2007) and Neffke et al. (2011) are notable exceptions.