Geography Reference
In-Depth Information
that a region benei ts especially from extra-regional knowledge when it originates from
sectors that are related or close to, but not quite the same as the sectors present in the
region. This type of analysis goes beyond the regional level, and sheds more light on the
importance of inl ows of extra-regional knowledge (is it just a matter of being globally
connected, or is there more to say?). However, more rei nement is needed to assess more
systematically its importance for urban and regional growth.
This also concerns how to measure related variety. Recently, scholars have come up
with more sophisticated indicators of relatedness on the basis of combinations of human
skills or products that occur frequently in plants or i rms (Breschi et al., 2003; Hausmann
and Klinger, 2007; Nef ke and Svensson Henning, 2009; see for a discussion Nef ke,
2009). Such studies provide a picture of which industries are related to one another, in
order to capture better the knowledge spillover ef ects of related variety. Another advan-
tage of these new indicators of relatedness is that they do not rely on predei ned and static
SIC codes. Since relatedness between industries may change in the long run because of
technological developments, there is a need for a l exible indicator that accounts for
shifts in technological relatedness and related variety over time.
The agglomeration economies literature (Henderson et al., 1995) has claimed that new
(high-tech) industries need Jacobs-type externalities (and thus inter-industry knowledge
spillovers) to develop, while more mature industries benei t more from MAR-type exter-
nalities (i.e. intra-industry spillovers) in more specialized cities. From an evolutionary
point of view, it is more interesting to investigate whether new industries need the local
presence of related industries. Following the idea behind related variety, we would expect
that a local diversity of sectors per se is less likely to lead to successful new combinations,
because sectors will learn more from each other when they are technologically related. A
research question that follows from this is whether related variety itself can be explained
as an outcome of a historical process of regional development. As Boschma and Frenken
(2009b) have explained, dif erent time scales are involved. In the short run, related variety
is a very stable property as the sectoral composition of a regional economy changes only
slowly over time. Yet, over longer time scales, related variety itself is subject to change
and becomes a dependent variable. One can ask the question of to what extent the tech-
nological relatedness between sectors in a regional economy as a whole can help us to
understand the opportunities of each region to diversify into new and related industries.
To the extent that new industries emerge from existing and related industries, the sectoral
composition of a regional economy at one moment in time provides but also constrains
diversii cation opportunities of regions in the near future.
Thus, from an evolutionary economic geography perspective, one would expect that
a set of related industries in a region is rather persistent over time because regions are
more likely to expand and diversify into sectors that are closely related to their existing
activities (Hidalgo et al., 2007; Nef ke and Svensson Henning, 2009). This means that
when i rms diversify (but not many do so because of the risks involved), they will show a
higher propensity to diversify into technologically related instead of unrelated industries.
Recent studies have indeed coni rmed that regional branching occurs through related
industries. Hausmann and Klinger (2007) found empirical evidence that there is a strong
tendency of the export mix of countries to move from current products towards related
products, rather than goods that are less related. In other words, a country's current
position in the product space determines its opportunities for future diversii cation.
