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Relatedness and the Resource Curse: Is There a Liability of Relatedness?

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  • Rune Dahl Fitjar
  • Bram Timmermans

Abstract

Literature in evolutionary economic geography has emphasized knowledge spillover benefits of co-location with related industries. We draw on resource curse literature to demonstrate that relatedness also comes with costs in the form of labor market competition. Using a case study of a growth period in the Norwegian petroleum industry, we show that this had positive as well as negative implications for related industries. Industries related to petroleum grew faster than unrelated industries over the period. However, they also suffered from high labor costs and loss of human capital. Related industries had to pay higher wages than unrelated industries, even after controlling for worker characteristics. Furthermore, several of their employees, in particular the most productive ones, left for the petroleum industry. The relationship between petroleum and related industries is asymmetric insofar as workers tend to leave related industries for petroleum at higher rates than vice versa. Furthermore, the petroleum industry recruits the most productive workers from related industries and returns its least productive workers. Overall, this could potentially lead to de-skilling in related industries, which could more than outweigh any potential knowledge spillover benefits from their relatedness to the petroleum industry. Consequently, we argue that relatedness is not an even playing field: there may be losers, as well as winners, from relatedness.

Suggested Citation

  • Rune Dahl Fitjar & Bram Timmermans, 2019. "Relatedness and the Resource Curse: Is There a Liability of Relatedness?," Economic Geography, Taylor & Francis Journals, vol. 95(3), pages 231-255, May.
    • Handle: RePEc:taf:recgxx:v:95:y:2019:i:3:p:231-255
    DOI: 10.1080/00130095.2018.1544460
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    Cited by:

    1. Marco Capasso & Michael Spjelkavik Mark, 2021. "The Evolving Economic Employment of ICT Education: The Case of Norway," Sustainability, MDPI, vol. 13(15), pages 1-18, July.
    2. Wang, Yue & Zhang, Zhenke & Xu, Minghui, 2023. "Evolution pattern of African countries' oil trade under the changing in the global oil market," Energy, Elsevier, vol. 284(C).
    3. Wang, Shuhong & Tian, Wenqian & Lu, Binbin, 2023. "Impact of capital investment and industrial structure optimization from the perspective of "resource curse": Evidence from developing countries," Resources Policy, Elsevier, vol. 80(C).
    4. Marco Capasso & Michael Spjelkavik Mark, 2019. "Visualizing the Evolving Fit of Education and Economy: The Case of ICT Education in Norway," LEM Papers Series 2019/40, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Tom Broekel & Rune Dahl Fitjar & Silje Haus-Reve, 2021. "The roles of diversity, complexity, and relatedness in regional development – What does the occupational perspective add?," Papers in Evolutionary Economic Geography (PEEG) 2135, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2021.
    6. Moritz Breul & Miguel Atienza, 2022. "Extractive Industries and Regional Diversification: A Multidimensional Framework for Diversification in Mining Regions," Papers in Evolutionary Economic Geography (PEEG) 2213, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2022.
    7. John-Erik Rørheim & Ron Boschma, 2022. "Skill-relatedness and employment growth of firms in times of prosperity and crisis in an oil-dependent region," Environment and Planning A, , vol. 54(4), pages 676-692, June.
    8. Jason Deegan & Tom Broekel & Silje Haus-Reve & Rune Dahl Fitjar, 2024. "How regions diversify into new jobs: from related industries or related occupations?," Regional Studies, Taylor & Francis Journals, vol. 58(11), pages 1965-1980, November.
    9. Balza, Lenin H. & De Los Rios, Camilo & Guerra, Alfredo & Herrera-Prada, Luis Omar & Manzano, Osmel, 2023. "Unraveling the network of extractive industries," Resources Policy, Elsevier, vol. 85(PB).
    10. Dandan Dai & Yijia Chen, 2022. "The geography of the fintech industry in China: An analysis of China’s city‐level patenting," Growth and Change, Wiley Blackwell, vol. 53(4), pages 1907-1932, December.
    11. Michaela Trippl & Sebastian Fastenrath & Arne Isaksen, 2022. "Rethinking regional economic resilience: Preconditions and processes shaping transformative resilience," GEIST - Geography of Innovation and Sustainability Transitions 2022(02), GEIST Working Paper Series.
    12. N. Cortinovis & D. Zhang & R. Boschma, 2024. "Regional diversification and intra-regional wage inequality in the Netherlands," Regional Studies, Taylor & Francis Journals, vol. 58(12), pages 2292-2306, December.
    13. Moritz Breul & Thi Xuan Thu Nguyen, 2021. "The Impact of Extractive Industries on Regional Diversification: Evidence from Vietnam," Papers in Evolutionary Economic Geography (PEEG) 2129, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2021.
    14. Fan, Xiaojia & Wu, Sanmang & Lei, Yalin & Li, Shantong & Li, Li, 2020. "Have China's resource-based regions improved in the division of GVCs? — Taking Shanxi Province as an example," Resources Policy, Elsevier, vol. 68(C).
    15. Wouter G. Bam & Karolien Bruyne & Mare Laing, 2021. "The IO–PS in the context of GVC-related policymaking: The case of the South African automotive industry," Journal of International Business Policy, Palgrave Macmillan, vol. 4(3), pages 410-432, September.

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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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