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Industry interconnectedness and regional economic growth in Germany

Shade T. Shutters, Holger Seibert (), Bastian Alm and Keith Waters
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Holger Seibert: Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

No 202107, IAB Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "Urban systems, and regions more generally, are the epicenters of many of today's social issues. Yet they are also the global drivers of technological innovation and thus it is critical that we understand their vulnerabilities and what makes them resilient to different types of shocks. We take regions to be systems composed of internal networks of interdependent components. As the connectedness of those networks increases, it allows information and resources to move more rapidly within a region. Yet, it also increases the speed and efficiency at which the effects of shocks cascade through the system. Here we analyze regional networks of interdependent industries and how their structures relate to a region's vulnerability to shocks. Methodologically, we utilize a metric of economic connectedness, known as tightness, which attempts to quantify the ambiguous notion of a region's internal connectedness relative to other regions. Using industry employment, we calculate the economic tightness of German regions during the Great Recession, comparing it to each region's economic performance during the shock (2007-2009) and during recovery (2009-2011). We find that tightness is negatively correlated with changes in economic performance during the shock but positively correlated with performance during recovery. This suggests that regional economic planners face a tradeoff between being more productive or being more vulnerable to the next economic shock. Finally, we speculate on how these findings from the Great Recession may highlight potential implications of the ongoing COVID-19 pandemic and suggest future research that would compare outcomes of these two global shocks." (Author's abstract, IAB-Doku) ((en))

Keywords: Wirtschaftswachstum; Regionalverflechtung; Regionalentwicklung; Innovation; Informationsfluss; Wissenstransfer; regionales Netzwerk; Wirtschaftszweige; Resilienz; Wirtschaftskrise; Finanzkrise; Konjunkturaufschwung; Arbeitsmarktregion; Industrie; sektorale Verteilung; Wirtschaftsstruktur; Pandemie; Auswirkungen (search for similar items in EconPapers)
JEL-codes: J40 R00 R11 R12 R58 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2021-04-28
New Economics Papers: this item is included in nep-geo, nep-net and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:202107

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