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Can foundational economy save regions in crisis?

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  • Mikhail Martynovich
  • Teis Hansen
  • Karl-Johan Lundquist

Abstract

We perform, to our best knowledge, the first systematic mapping of the foundational economy (FE) at the sub-national level by looking at the FE employment in Swedish regions between 2007 and 2016. We show that the FE itself not only suffered less than traded activities from employment decline during the Great Recession of 2007–2009 but was also a domain of substantial job creation in the post-crisis recovery. At the same time, regions with higher dependence on foundational employment were hit harder during the crisis in terms of overall labour market performance. We demonstrate that it is specific compositions of foundational and traded activities in the regional employment mix that relate differently to regional employment growth in times of crisis and recovery. Jointly, these findings allow us to contribute to the literatures on the FE and regional resilience.

Suggested Citation

  • Mikhail Martynovich & Teis Hansen & Karl-Johan Lundquist, 2023. "Can foundational economy save regions in crisis?," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 577-599.
    • Handle: RePEc:oup:jecgeo:v:23:y:2023:i:3:p:577-599.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbac027
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    Cited by:

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    More about this item

    Keywords

    Foundational economy; employment; crisis; recovery; resilience;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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