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Relatedness and the Resource Curse - Is there a liability of relatedness?

Rune Fitjar () and Bram Timmermans

No 1906, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: The literature on relatedness emphasizes the benefits of co-location with related industries, as knowledge spillovers promote innovation and regional branching. However, resource competition between industries which rely on related capabilities has not largely been considered. The resource curse literature argues that resource competition produces adverse effects for other industries when extractive industries expand. However, this literature has not considered whether this depends on the relatedness between the resource industry and these other industries. This paper brings together these two strands of literature. We examine the relationship between the oil and gas industry in Norway and its related industries during a period of rising oil prices and an expansion of the oil and gas industries. We conduct the analysis at the national scale, as well as in the most oil-specialised region of Stavanger, in order to examine how these dynamics play out at a regional, as well as national level. An analysis of the labor flow between the petroleum and related industries using a Norwegian linked employer-employee database reveals that higher wages increase the likelihood of moving from related industries into petroleum, but reduce the likelihood of moving in the opposite direction. The petroleum industry recruits the most productive workers from related industries and returns its least productive workers. Consequently, we argue that relatedness is not an even playing field: There may be losers, as well as winners, from relatedness.

Keywords: Relatedness; resource curse; petroleum; labour mobility; Norway (search for similar items in EconPapers)
JEL-codes: R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-geo and nep-tid
Date: 2019-01, Revised 2019-01
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