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Regional Economic Diversity: Action, Concept, or State of Confusion

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  • Wagner, John E.

Abstract

Economic diversity has been promoted as a means to achieve the goals of stability and growth. However, the link between diversity, diversification and economic performance depends on the differences, both conceptually and empirically, between diversity and diversification. Unfortunately, the literature contains varying definitions of diversity and diversification. I propose two key points in defining diversity. First, it is a static concept. Second, it examines the size, the presence of multiple specializations, and the linkages present among industries within a region’s economy. A brief review of diversity measures is used to discuss measuring diversity relative to some standard, as an explanatory variable in examining growth and stability, and other issues. No one diversity measure is critique free; care should be taken when using a diversity measure as the only factor in a policy designed to change the structure of a region’s economy, given the goals of growth and stability.

Suggested Citation

  • Wagner, John E., 2000. "Regional Economic Diversity: Action, Concept, or State of Confusion," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 30(2).
  • Handle: RePEc:ags:jrapmc:132170
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    References listed on IDEAS

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    1. David L. Barkley & Mark S. Henry & Shuming Bao, 1996. "Identifying "Spread" versus "Backwash" Effects in Regional Economic Areas: A Density Functions Approach," Land Economics, University of Wisconsin Press, vol. 72(3), pages 336-357.
    2. John R. Kort, 1981. "Regional Economic Instability and Industrial Diversification in the U.S," Land Economics, University of Wisconsin Press, vol. 57(4), pages 596-608.
    3. John E. Wagner & Steven C. Deller, 1998. "Measuring the Effects of Economic Diversity on Growth and Stability," Land Economics, University of Wisconsin Press, vol. 74(4), pages 541-556.
    4. Michael J. Wasylenko & Rodney A. Erickson, 1978. ""On Measuring Economic Diversification": Comment," Land Economics, University of Wisconsin Press, vol. 54(1), pages 106-109.
    5. David W. Hughes & David W. Holland, 1994. "Core-Periphery Economic Linkage: A Measure of Spread and Possible Backwash Effects for the Washington Economy," Land Economics, University of Wisconsin Press, vol. 70(3), pages 364-377.
    6. Peter Nijkamp & Jacques Poot, 1998. "original: Spatial perspectives on new theories of economic growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 32(1), pages 7-37.
    7. Deller, Steven C. & Chicoine, David L., 1989. "Economic Diversification and the Rural Economy: Evidence from Consumer Behavior," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 19(2).
    8. Waters, Edward C. & Holland, David W. & Weber, Bruce A., 1994. "Interregional Effects Of Reduced Timber Harvests: The Impact Of The Northern Spotted Owl Listing In Rural And Urban Oregon," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(01), July.
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    Cited by:

    1. Nissan, Edward & Carter, George, 2010. "States' Nonagricultural Employment at the 3-Digit North American Industry Classification System (NAICS) Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1).
    2. Pierre Desrochers & Samuli Leppälä, 2011. "Creative Environments: The Case for Local Economic Diversity," Chapters,in: Handbook of Creative Cities, chapter 21 Edward Elgar Publishing.
    3. Roberto Ezcurra, 2011. "Unemployment Volatility and Regional Specialization in the European Union," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1121-1137.
    4. Steven Deller & Philip Watson, 2016. "Did Regional Economic Diversity Influence The Effects Of The Great Recession?," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1824-1838, October.
    5. Jing Chen, 2018. "Economic Diversity and Regional Economic Performance: A Methodological Concern from Model Uncertainty," Working Papers Working Paper 2018-05, Regional Research Institute, West Virginia University.
    6. Bowe, Scott A. & Marcouiller, David W., 2007. "Alternative tourism-timber dependencies and the development of forested rural regions," Forest Policy and Economics, Elsevier, vol. 9(6), pages 653-670, February.
    7. Valerien O. Pede, 2013. "Diversity And Regional Economic Growth: Evidence From Us Counties," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 111-127, September.
    8. Andrey A. GNIDCHENKO, 2011. "Defragmentation Of Economic Growth With A Focus On Diversification: Evidence From Russian Economy," Theoretical and Practical Research in Economic Fields, ASERS Publishing, vol. 0(1), pages 45-85, June.
    9. Elizabeth Mack & Yifan Zhang & Sergio Rey & Ross Maciejewski, 2014. "Spatio-temporal analysis of industrial composition with IVIID: an interactive visual analytics interface for industrial diversity," Journal of Geographical Systems, Springer, vol. 16(2), pages 183-209, April.
    10. Jing Chen, 2018. "Interpreting Economic Diversity as the Presence of Multiple Specializations," Working Papers Working Paper 2018-02, Regional Research Institute, West Virginia University.
    11. Richard Stedman & Mike Patriquin & John Parkins, 2012. "Dependence, diversity, and the well-being of rural community: building on the Freudenburg legacy," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 2(1), pages 28-38, March.
    12. repec:eee:quaeco:v:64:y:2017:i:c:p:1-11 is not listed on IDEAS
    13. Gnidchenko, A., 2014. "Decomposing Export Growth into Extensive and Intensive Margins with the Emphasis on Comparative Advantages," Journal of the New Economic Association, New Economic Association, vol. 24(4), pages 38-64.
    14. Jing Chen, 2017. "Geographical Scale, Industrial Diversity and Regional Economic Stability," Working Papers Working Paper 2017-03, Regional Research Institute, West Virginia University.
    15. Gnidchenko, Andrey, 2011. "Моделирование Технологических И Институциональных Эффектов В Макроэкономическом Прогнозировании
      [Technological and Institutional Effects Modeling in Macroeconomic Forecasting]
      ," MPRA Paper 35484, University Library of Munich, Germany, revised May 2011.
    16. Dobis, Elizabeth A. & Delgado, Michael S. & Florax, Raymond J.G.M & Mulder, Peter, 2015. "The Significance of Urban Hierarchy in Explaining Population Dynamics in the United States," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205869, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    17. Xiaobing Shuai, 2013. "Will specialization continue forever? A case study of interactions between industry specialization and diversity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 1-24, February.
    18. Inha Oh & Yeongjun Yeo & Jeong-Dong Lee, 2015. "Efficiency versus Equality: Comparing Design Options for Indirect Emissions Accounting in the Korean Emissions Trading Scheme," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-21, November.
    19. repec:bla:presci:v:96:y:2017:i:3:p:451-476 is not listed on IDEAS

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