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Persistence and Change of Regional Industrial Activities – The Impact of Diversification in the German Machine Tool Industry

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  • Dirk Fornahl
  • Christina Guenther

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Abstract

The paper Investigates stability and change of regional economic activities in the long-run. As the unit of analysis we selected the machine tool industry in West Germany for the years 1953 to 2002. We spot a strong variance in the activities between the different regions. These differences are relatively stable over time and the regional activities are rather path-dependent. Nevertheless, the paper also identifies changes in the level of activities. As the main driving factors for these changes we examine the effect of regional diversification strategies. We find that those regions pursuing a general diversification strategy have a higher likelihood to grow than regions which are specialising. Furthermore, diversification into totally new technological and product fields is only beneficial under specific circumstances based on technological and market developments. Hence, in most cases a broad diversification is superior to one focusing on new state-of-the-art technological fields.

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Bibliographic Info

Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2008-16.

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Date of creation: Jan 2009
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Handle: RePEc:esi:evopap:2008-16

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Related research

Keywords: Geographic concentration; specialisation indices; machine tool industry; path-dependencies; agglomeration economies Length 29 pages;

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Cited by:
  1. Christina Guenther, 2009. "Pioneer burnout: Radical product innovation and firm capabilities," Papers on Economics and Evolution, Philipps University Marburg, Department of Geography 2009-22, Philipps University Marburg, Department of Geography.

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