Which region to choose for an industrial policy? A research path to highlight restructuring opportunities

ABSTRACT

Our study explores research avenues that can help policymakers to assess regional capabilities for ‘green’ economic restructuring. After reviewing the relevant literature, and envisioning research paths which consider both market transactions and externalities, we propose possible ways to translate past research findings into novel statistical tools. Our point of departure is the ‘skill relatedness’ among economic sectors in Norway, as inferred from intersectoral labour flows (years 2008–2014). Then, on the basis of the industrial composition in each of the 161 Norwegian labour market areas, candidate regions that could benefit the most from a ‘green’ restructuring policy, aimed at photovoltaics in our empirical example, are brought forward.

KEYWORDS:

• Regional branching
• smart specialization
• related diversification
• knowledge flows
• evolutionary economics

JEL CLASSIFICATIONS:

• D85
• O18
• R11
• R15

Acknowledgement

We thank Pierre-Alexandre Balland, Christian Binz, Filippo Bontadini, Tom Brökel, Rikard Eriksson, Pasquale Marcello Falcone, Jens Grøgaard, Jutta Günther, Sverre Herstad, Muhamed Kudic, Sergi Lozano, Trond Løyning, Jannika Mattes, Piergiuseppe Morone, Svein Olav Nås, Angelo Secchi, Bram Timmermans, Frank van der Wouden and all the participants to the NIFU workshop on Industrial Dynamics (NIFU, Norway, September 2017), to the FORINNPOL Reference Group meeting (Research Council of Norway, Norway, November 2017), to the 3rd EAEPE Research Area [X] ‘Networks’ workshop (University of Bremen, Germany, November 2017), to the Bioeconomy in Transition seminar (Unitelma Sapienza University of Rome, Italy, December 2017) and to the Economic Geography research seminar (Utrecht University, the Netherlands, March 2018), for useful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Marco Capasso http://orcid.org/0000-0003-2057-299X

Eric James Iversen http://orcid.org/0000-0001-8143-5118

Antje Klitkou http://orcid.org/0000-0002-3593-8272

Notes

1 Similar approaches have been used in the literature on ‘economic base analysis’ (see, e.g. Haig, 1927; Hoyt, 1961) and ‘revealed comparative advantage’ (Balassa, 1965).

2 There is some degree of arbitrariness in the thresholds considered in this subsection. To help the reader getting an operational idea of the method, we mention here the same thresholds that we will use for our empirical example. Different thresholds can be adopted in different contexts; more in general, human supervision is supposed to support the whole procedure, and we do not envision a fully automatized procedure.

3 This system is hierarchical: the 4-digit categories are sub categories of the 3-digit categories, which in turn are sub categories of the 2-digit categories.

Additional information

Funding

This work was funded by the FORINNPOL initiative (project no. 271925/O50) and the BIONÆR initiative (project no. 244249) of the Research Council of Norway.