Related Variety, Unrelated Variety and Regional Functions: Identifying Sources of Regional Employment Growth in Germany from 2003 to 2008

This article analyses how regional employment growth in Germany is affected by related variety, unrelated variety and the functions a region performs in the production process. Following the related variety literature, we argue that regions benefit from the existence of related activities that facilitate economic development. However, we argue that the sole reliance of related variety on standard industrial classifications remains debatable. Hence, we offer estimations for establishing that conceptual progress can indeed be made when a focus for analysis goes beyond solely considering industries. We develop an industry-function based approach of related and unrelated variety. Our findings suggest that related variety only in combination with a high functional specialization of the region facilitates regional growth in Germany. Additionally, also unrelated variety per se fails to wield influences affecting development of regions. It is rather unrelated, but functionally proximate variety in the groups 'White Collar' and 'Blue Collar Workers' positively affects regional employment growth.

[1]  Frédéric Robert-Nicoud.  Offshoring of routine tasks and (de)industrialisation: Threat or opportunity—And for whom? , 2008 .

[2]  A. Markusen,et al.  The Distinctive City: Divergent Patterns in Growth, Hierarchy and Specialisation , 2006 .

[3]  César A. Hidalgo,et al.  The Product Space Conditions the Development of Nations , 2007, Science.

[4]  Paul Bishop,et al.  Spatial Externalities, Relatedness and Sector Employment Growth in Great Britain , 2010 .

[5]  R. Boschma,et al.  Related variety and regional growth in Spain , 2011 .

[6]  Pierre-Philippe Combes,et al.  Economic Structure and Local Growth: France, 1984-1993 , 2000 .

[7]  Jacques-François Thisse,et al.  Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses? , 2003 .

[8]  Frank Neffke,et al.  Skill-relatedness and firm diversification , 2013 .

[9]  Eckhardt Bode,et al.  Lokale Wissensdiffusion und regionale Divergenz in Deutschland , 1998 .

[10]  Michael Porter,et al.  The Economic Performance of Regions , 2003 .

[11]  Sukkoo Kim.  The Rise of Multiunit Firms in U.S. Manufacturing , 1998 .

[12]  Masahisa Fujita,et al.  On the evolution of the spatial economy with multi-unit · multi-plant firms: the impact of IT development , 2005 .

[13]  James C. Davis,et al.  The agglomeration of headquarters , 2008 .

[14]  P. R. Thompson,et al.  National Industries and Local Occupational Strengths: The Cross-Hairs of Targeting , 1987 .

[15]  E. Glaeser,et al.  Growth in Cities , 1991, Journal of Political Economy.

[16]  Vesa Harmaakorpi,et al.  Collective Creativity and Brokerage Functions in Heavily Cross-Disciplined Innovation Processes , 2010 .

[17]  Ron Boschma,et al.  How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions , 2011 .

[18]  Pierre Desrochers,et al.  Opening up the ‘Jacobs Spillovers’ black box: local diversity, creativity and the processes underlying new combinations , 2011 .

[19]  Michaela Trippl.  Developing Cross‐Border Regional Innovation Systems: Key Factors And Challenges , 2010 .

[20]  R. Boschma,et al.  A theoretical framework for evolutionary economic geography: industrial dynamics and urban growth as a branching process , 2007 .

[21]  J. LeSage.  Spatial Econometrics , 1998 .

[22]  Elisa Barbour,et al.  Regional Occupational and Industrial Structure: Does One Imply the Other? , 2007 .

[23]  Mario A. Maggioni,et al.  Inter-regional Knowledge Flows in Europe: An Econometric Analysis , 2007 .

[24]  K. Frenken,et al.  Related Variety, Unrelated Variety and Regional Economic Growth , 2007 .

[25]  Fabrice Defever,et al.  Functional fragmentation and the location of multinational firms in the enlarged Europe , 2006 .

[26]  F. Bade,et al.  Urban specialization in the internet age: Empirical findings for Germany , 2004 .

[27]  E. Glaeser,et al.  The Rise of the Skilled City , 2003 .

[28]  R. Kosfeld,et al.  Regional productivity and income convergence in the unified Germany, 1992–2000 , 2006 .

[29]  Edward Feser,et al.  What Regions Do Rather than Make: A Proposed Set of Knowledge-based Occupation Clusters , 2003 .

[30]  Uwe Blien,et al.  Local Economic Structure and Industry Development in Germany, 1993-2001 , 2004 .

[31]  G. Duranton,et al.  From Sectoral to Functional Urban Specialisation , 2001 .

[32]  Ron Boschma,et al.  Related Variety, Trade Linkages, and Regional Growth in Italy , 2009 .

[33]  J. Essletzbichler.  Diversity, stability and regional growth in the U.S. (1975-2002) , 2005 .

[34]  Catherine Beaudry,et al.  Who's right, Marshall or Jacobs? The localization versus urbanization debate , 2009 .

[35]  Daniel J. Graham,et al.  A meta-analysis of estimates of urban agglomeration economies , 2009 .

[36]  Rikard Eriksson,et al.  Papers in Evolutionary Economic Geography # 10 . 04 Localized Spillovers and Knowledge Flows : How Does Proximity Influence the Performance of Plants ? , 2010 .

[37]  J. Christensen.  Proximity and Innovation: A Critical Assessment , 2008 .

[38]  Bart Nooteboom,et al.  Optimal Cognitive Distance and Absorptive Capacity , 2005 .

[39]  J. Koo,et al.  How to Analyze the Regional Economy With Occupation Data , 2005 .

[40]  Jean-Marc Robin,et al.  The Dynamics of Local Employment in France , 2003, SSRN Electronic Journal.

[41]  Mark A. Satterthwaite,et al.  Sectoral growth patterns at the metropolitan level: An evaluation of economic development incentives , 1992 .

[42]  Jacques Poot,et al.  Agglomeration Externalities, Innovation and Regional Growth: Theoretical Perspectives and Meta-Analysis , 2008 .

[43]  Bruce A. Seaman,et al.  Targeting Occupations in Regional and Community Economic Development , 2003 .

[44]  S. Rosenthal,et al.  Evidence on the nature and sources of agglomeration economies , 2004 .

[45]  K. Arrow.  The Economic Implications of Learning by Doing , 1962 .

[46]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[47]  Ari Kuncoro,et al.  Industrial Development in Cities , 1992, Journal of Political Economy.