Technology, Talent, Diversity and the Wealth of European Regions

Abstract

In this article, we test the creativity and diversity hypothesis of Richard Florida for European regions. Florida argues that the level of regional economic development depends on the levels of technology, talent, and tolerance that regions harbour. Tolerance, in this case, is a measure for diversity of lifestyles, the creativity that results from it and population's openness towards non-traditional lifestyles. Using data for 94 European regions we investigate whether differences in creativity and diversity are a good predictor of differences in regional wealth in additive and multiplicative regression models. The results indicate that regional differences in diversity are directly related to differences in regional wealth. Moreover, we find that the synergetic effect of technology and talent on the level of regional wealth depends on the degree of diversity that resides within regions. Our findings support the idea that creativity and diversity deserve a more prominent place in economic geography.

Notes

NUTS: Nomenclature of territorial units for statistics.

Excluding the French Overseas Territories and the Spanish enclaves in North Africa.

We also considered using robust regression analysis in combination with a bootstrapping procedure, as recommended by Dietz et al. (1987). However, Freedman (1981) and Bickel and Freedman (1983) note that bootstrapping only seems to perform well when applied to single-equation regression models which are estimated on samples that are substantially larger than the square of the number of parameters. Given the design of our study, we therefore opted for the jackknife.

The following regions had pseudo values greater than two times the standard deviation of the overall pseudo value per independent variable: Technology—Sterea Ellada, Hessen, Flevoland; Talent—Region de Murcia, Lisboa/Vale de Tejo, Utrecht, Limburg (NL); Tolerance—Sterea Ellada, Hamburg; Melting Pot—Hamburg, Bremen, Berlin, Illes Baleares; Bohemianism—Hamburg, Berlin.

Additional models (not reported here) show that the Melting Pot index is indeed significantly directly related to Technology (p < 0.05), and that both Melting Pot and Bohemianism are directly related to Talent (p < 0.05 and p < 0.01).

To construct these plots, we used an Excel-macro provided by Jeremy Dawson, available at: http://www.jeremydawson.co.uk/slopes.htm. The plots are based on the jackknifed estimates of Model 5.