Edited by Aura Reggiani and Peter Nijkamp
Chapter 9: Variety and Regional Growth: Theory, Measurement and Outcomes
Koen Frenken, Frank G. van Oort and Thijs Verburg 9.1 INTRODUCTION The relationship between variety1 and economic development has been a neglected research area in economics. For a long time, economic theory has been focused on explaining economic growth by a combination of growth in inputs and efficiency improvements. The underlying qualitative nature of economic development, for example, in terms of the variety of sectors or the variety of technologies, has been addressed only rarely. One can distinguish three types of relationships between variety and economic development. The first approach centres on variety, spillovers and growth, which has become a central theme in what is called new growth theory. It has been argued that apart from spillovers occurring between firms within a sector, spillovers also occur between sectors. Following this argument, the present variety in an economy can be an additional source of economic growth (Jacobs 1961; van Oort 2004). This means that it is not only the stock of inputs that affects growth, but also the precise composition in a qualitative sense as well. Only some technologies are in sectors which are complementary, in that their joint presence within an economy causes additional growth. And, since spillovers are geographically bounded, differences in regional growth should be related to qualitative differences in an economy’s composition at the regional level. A region specializing in a particular composition of complementary sectors will experience higher growth rates than a region specializing in sectors that do not complement each other. A second way to...
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