Martin Henning

How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions

Abstract The question of how new regional growth paths emerge has been raised by many leading economic geographers. From an evolutionary perspective, there are strong reasons to believe that regions are most likely to branch into industries that are technologically related to the preexisting industries in the regions. Using a new indicator of technological relatedness between manufacturing industries, we analyzed the economic evolution of 70 Swedish regions from 1969 to 2002 with detailed plant-level data. Our analyses show that the long-term evolution of the economic landscape in Sweden is subject to strong path dependencies. Industries that were technologically related to the preexisting industries in a region had a higher probability of entering that region than did industries that were technologically unrelated to the region’s preexisting industries. These industries had a higher probability of exiting that region. Moreover, the industrial profiles of Swedish regions showed a high degree of technological cohesion. Despite substantial structural change, this cohesion was persistent over time. Our methodology also proved useful when we focused on the economic evolution of one particular region. Our analysis indicates that the Linköping region increased its industrial cohesion over 30 years because of the entry of industries that were closely related to its regional portfolio and the exit of industries that were technologically peripheral. In summary, we found systematic evidence that the rise and fall of industries is strongly conditioned by industrial relatedness at the regional level.

Producer services: growth and roles in long-term economic development

This paper deals with the varying roles of producer services in economic transformation during the last 30 years in Sweden, and analyses unique longitudinal data on eight service sectors. The theoretical background for the analysis is inspired by the technology shift thesis of economic historians, and we show that the renewal and transformation of producer services has taken place later than for the manufacturing sector. The importance of producer services in national growth increased enormously towards the end of the period, but we also note that this growth has been accompanied by a divergence in growth between service sectors.

Agents of Structural Change : The Role of Firms and Entrepreneurs in Regional Diversification

abstract Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or nonlocal establishment founders create most novelty in a region? We develop a theoretical framework that focuses on the roles different agents play in regional transformation. We then apply this framework, using Swedish matched employer–employee data, to determine how novel the activities of new establishments are to a region. Incumbents mainly reinforce a region’s current specialization: incumbent’s growth, decline, and industry switching further align them with the rest of the local economy. The unrelated diversification required for structural change mostly originates via new establishments, especially via those with nonlocal roots. Interestingly, although entrepreneurs often introduce novel activities to a local economy, when they do so, their ventures have higher failure rates compared to new subsidiaries of existing firms. Consequently, new subsidiaries manage to create longer-lasting change in regions.

Swedish regional GDP 1855–2000: Estimations and general trends in the Swedish regional system

This paper uses a method devised by Geary and Stark to estimate regional GDPs for 24 Swedish provinces 1855-2007. In empirical tests, we find that the Swedish estimations yield results of good precision, comparable to those reported in the international literature. From the literature, we generate six expectations concerning the development of regional GDPs in Sweden. Using the GDP estimations, we test these expectations empirically. We find that the historical regional GDPs show a high correlation over time, but that the early industrialization process co-evolved with a dramatic redistribution of productive capacity. We show that the regional inequalities in GDP per capita were at their lowest point in modern history in the early 1980s. However, while efficiency in the regional system has never been as equal, absolute regional differences in scale of production has increased dramatically over our investigated period. This process has especially benefited the metropolitan provinces. We also sketch a research agenda from our results.

Geographical Location and Urbanization of the Swedish Manufacturing Industry, 1900-1960: Evidence from a New Database

Abstract This article introduces a new database, based on official statistics, of regional manufacturing industries in Sweden. We employ this database to examine the distribution of manufacturing activity across Swedish regions and cities, 1900–1960. Over this period we observe an increasing concentration of manufacturing activities, reaching a peak around 1940, across the northern, southern and western parts (NUTS-I areas) of Sweden. Over the same period, the North-South divide in terms of manufacturing employment grew larger. Across counties (NUTS-III) and cities we, however, observe two shorter periods of convergence of manufacturing activities, in the early twentieth century and in the post-war period, whereas the inter-war period was characterised by divergence. These developments occurred to the backdrop of the urbanisation of industry in Sweden, as the rural share of manufacturing employment declined from roughly 60 to 25% between 1900 and 1960. We also find that the regional patterns of individual industries over time followed different trajectories, suggesting that that the determinants of industry location differed significantly across industries.

Returning to work: regional determinants of re-employment after major redundancies

ABSTRACT Using matched employer–employee data on roughly 429,000 workers made redundant from large plant closures or major downsizing in Sweden between 1990 and 2005, this paper analyses the role of the regional industry mix (specialization, related and unrelated variety) in the likelihood of returning to work. The results show that a high presence of same or related industries speeds up the re-employment process, while high concentrations of unrelated activities do not. The role of related activities is particularly evident in the short run and in regions with high unemployment. Consequently, the prospect of successful diversification is enhanced in regions with related industries.

LABOUR FORCE BUILDING IN A RAPIDLY EXPANDING SECTOR

Abstract Between 1991 and 2010, jobs in the knowledge-intensive IT services sector in Sweden increased from 30,000 to 104,000. Departing from recent theoretical insights suggesting that the skill composition of worker inflows is an indicator of knowledge relevant to employers, we investigate labour inflows into the sector. Who were the people getting jobs in this expanding sector? And, how were their skills valued by employers as the sector evolved? Our findings suggest that sectoral evolution was not reflected in how the skills of incoming workers were valued, but rather in who was hired into the sector. The paper suggests that the analysis of worker inflows is a tool for investigating the evolution of both sectors and their knowledge bases. It provides some lessons for industrial and educational policies regarding technologically turbulent industries, and takes the first step towards developing an approach that integrates industry dynamics with labour force sourcing and evolution.

Time should tell (more): evolutionary economic geography and the challenge of history

ABSTRACT Evolutionary economic geography theory stresses the importance of time and history to explain the evolution of regional economies. Yet, consistent empirical treatment of longitudinal patterns of regional evolution has largely escaped the focus of this new approach. There is much work in progress, which suggests that a deepening of the historical perspective is the next natural step in a further development of evolutionary economic geography. However, there are also theoretical, empirical and methodological challenges to ‘taking evolutionary economic geography historical’. In this endeavour, much could be gained from insights from time–geography, economic history and the literature on longitudinal methodologies.

Review of M Dunford & L Greco: “After the Three Italies. Wealth, Inequality and Industrial Change”.

Book reviewed in this articles. Understanding the Cultural Landscape. Wallach, Bret. City of Flows. Modernity, Nature and the City. Kaika, Maria. Talking About Sydney: Population, Community, and Culture in Contemporary Sydney. Freestone, Robert; Randolph, Bill; Butler‐Bowden, Caroline and Randolph, W. (eds). Territory. A Short Introduction. Delaney, David. Worlds of Food: Place, Power and Provenance in the Food Chain. Morgan, Kevin; Marsden, Terry and Murdoch, Jonathan. Urban Geography: A Global Perspective. Pacione, Michael. For Space. Massey, Doreen. Highland Sanctuary: Environmental History in Tanzanias Usambara Mountains. Conte, Christopher A. After the Three Italies. Wealth, Inequality and Industrial Change. Dunford, Michael and Greco, Approaches to Human Geography. Aitken, Stuart and Valentine, Gill (eds). Space Odysseys: Spatiality and Social Relations in the 21st Century. Bcerenholdt, Jörgen Ole and Simonsen, Kirsten (eds).