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Variety and regional economic growth in the Netherlands

  • Koen Frenken

    ()

  • Frank G. van Oort

    ()

  • Thijs Verburg
  • Ron A. Boschma

    ()

In economic theory, one can distinguish between variety as a source of regional knowledge spillovers, called Jacobs externalities, and variety as a portfolio protecting a region from external shocks. We argue that Jacobs externalities are best measured by related variety (within sectors), while the portfolio argument is better captured by unrelated variety (between sectors). We introduce a methodology based on entropy measures to compute related variety and unrelated variety. Using data at the COROP level for the period 1996-2002, we find that Jacobs externalities enhance employment growth, while unrelated variety dampens unemployment growth. Productivity growth, by contrast, can be explained by traditional determinants including investments and R&D expenditures. Implications for regional policy in The Netherlands follow.

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File URL: http://econ.geo.uu.nl/peeg/peeg0502.pdf
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Paper provided by Utrecht University, Section of Economic Geography in its series Papers in Evolutionary Economic Geography (PEEG) with number 0502.

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Length: 59 pages
Date of creation: Dec 2004
Date of revision: Dec 2004
Handle: RePEc:egu:wpaper:0502
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