Variety and regional economic growth in the Netherlands

Koen Frenken, Frank Oort, Thijs Verburg and Ron Boschma ()

No 502, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: In economic theory, one can distinguish between variety as a source of regional knowledge spillovers, called Jacobs externalities, and variety as a portfolio protecting a region from external shocks. We argue that Jacobs externalities are best measured by related variety (within sectors), while the portfolio argument is better captured by unrelated variety (between sectors). We introduce a methodology based on entropy measures to compute related variety and unrelated variety. Using data at the COROP level for the period 1996-2002, we find that Jacobs externalities enhance employment growth, while unrelated variety dampens unemployment growth. Productivity growth, by contrast, can be explained by traditional determinants including investments and R&D expenditures. Implications for regional policy in The Netherlands follow.

Keywords: evolutionary economic geography; new economic geography; economic variety (search for similar items in EconPapers)
Pages: 59 pages
Date: 2004-12, Revised 2004-12
New Economics Papers: this item is included in nep-geo, nep-ino and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:egu:wpaper:0502

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