Related Variety and Regional Economic Growth in a Cross-Section of European Urban Regions

Abstract

This paper introduces indicators of regional related variety and unrelated variety to conceptually overcome the current impasse in the specialization-diversity debate in agglomeration economics. Although various country-level studies have been published on this conceptualization in recent years, a pan-European test has been missing from the literature until now. A pan-European test is more interesting than country-level tests, as newly defined cohesion policies, smart-specialization policies, place-based development strategies and competitiveness policies may be especially served by related variety and unrelated variety conceptualizations. We test empirically for the significance of variables based on these concepts, using a cross-sectional data set for 205 European regions during the period 2000–2010. The results confirming our hypotheses are that related variety is significantly related to employment growth, especially in small and medium-sized city-regions, and that specialization is significantly related to productivity growth. We do not find robust relationships that are hypothesized between unrelated variety and unemployment growth.

Funding

Research time of Frank van Oort is financed by the Smart Specialization for Innovative Regions (SmartSpec) FP7-project of the European Union (2013).

Notes

1 Studies using the same methodology report similar results in Great Britain (Bishop & Gripaios, 2010; Essletzbichler, 2013), Italy (Antonietti & Cainelli, 2011; Boschma & Iammarino, 2009; Cainelli & Iacobucci, 2012; Mameli et al., 2012; Quatraro, 2010), Germany (Brachert et al., 2011), Finland (Hartog et al., 2012), Spain (Boschma et al., 2012, 2013) and the US (Castaldi et al., 2013).

2 Belgium, Denmark, Finland, France, Ireland, Italy, Portugal, The Netherlands, Spain, Sweden, the UK, Czech Republic, Hungary, Poland, and Slovakia. For other countries data in AMADEUS were found unreliable.