INDUSTRIAL STRUCTURE AND A TRADEOFF BETWEEN PRODUCTIVITY AND ECONOMIC RESILIENCE

SHUTTERS Shade T and Keith Waters
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SHUTTERS Shade T: School of Complex Adaptive Systems, Arizona State University, USA and Global Climate Forum, Berlin, Germany
Keith Waters: Schar School of Policy and Government, George Mason University, USA

Studies in Business and Economics, 2022, vol. 17, issue 3, 224-240

Abstract: The structures of regional economies play a critical role in determining both a region’s productivity and its resilience to shocks. We extend previous work on the regional occupation and skills structure by analyzing the effect of a region’s industry structure. We operationalize the concept of economic structure by constructing a network of interdependent economic components, employing ecological techniques of co-occurrence analysis to infer interactions between industries. For each U.S. metropolitan statistical area, we create an aggregate measure of economic tightness that captures the degree of interconnectedness among a region’s industries. We find that industry tightness, which we find is partly driven by rare industry pairs, is positively correlated with a region’s economic productivity, negatively correlated with a region’s change in productivity following the Great Recession. This study contributes to an understanding of the tradeoff between productivity and resilience, which is intended to help policy makers that face similar real-world tradeoffs.

Keywords: economic structure; regional science; resilience; co-occurrence; Panarchy (search for similar items in EconPapers)
Date: 2022
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