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Specialization and Regional Economic Development

Tom Kemeny and Michael Storper

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: Debates about urban growth and change often center on specialization.However, arguments linking specialization to metropolitan economic development contain diverse, and sometimes conflicting, claims. Is it better to be highly specialized or diversified? Does specialization refer to the absolute scale of an activity in a region, its share within the regional economy, or its share in the nation's economy? Does specialization have static effects, or is its impact chiefly evolutionary? This paper starts by investigating these different theoretical claims. We then turn to an empirical inquiry into the roles of relative and absolute specialization. By analyzing local agglomerations over time, we find that growing absolute specialization is positively linked to wages, while changes in relative concentration are not significantly associated with wage dynamics. This supports notions of specialization based on the absolute size of an agglomeration, and casts doubt on notions of specialization based on shares of an activity in the regional economy.

Keywords: Specialization; diversification; agglomeration economies; urban wages (search for similar items in EconPapers)
JEL-codes: O21 R11 R12 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-geo and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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