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Quality of government and social capital as drivers of regional diversification in Europe

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Listed:
  • Nicola Cortinovis
  • Jing Xiao
  • Ron Boschma
  • Frank van Oort

Abstract

Industrial diversification is considered crucial for economies to prosper. Recent studies have shown that regional economies tend to diversify into sectors that are related to those already present in the region. However, no study yet has investigated the impact of regional institutions. The objective of the paper is to bring together the literatures on related diversification and institutions by analyzing how formal and informal institutions influence regional diversification. Analyzing 118 European regions in the period 2004 and 2012, we find evidence that institutions matter for regions to diversify into new industries. Bridging social capital is a key driver of regional diversification, in addition to relatedness, in contrast to quality of government in regions. Bonding social capital has a negative impact in regions with a low quality of government. This suggests that regional institutions relevant for structural change in regions are predominantly informal in character rather than formal, and bridging rather than bonding.

Suggested Citation

  • Nicola Cortinovis & Jing Xiao & Ron Boschma & Frank van Oort, 2016. "Quality of government and social capital as drivers of regional diversification in Europe," Papers in Evolutionary Economic Geography (PEEG) 1610, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised May 2016.
  • Handle: RePEc:egu:wpaper:1610
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    Cited by:

    1. Quatraro, Francesco & Scandura, Alessandra, 2020. "Regional patterns of unrelated technological diversification: the role of academic inventors," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202010, University of Turin.
    2. Anna D’Ambrosio & Sandro Montresor & Mario Davide Parrilli & Francesco Quatraro, 2019. "Migration, communities on the move and international innovation networks: an empirical analysis of Spanish regions," Regional Studies, Taylor & Francis Journals, vol. 53(1), pages 6-16, January.
    3. Wolf-Hendrik Uhlbach & Pierre-Alexandre Balland & Thomas Scherngell, 2017. "R&D Policy and Technological Trajectories of Regions: Evidence from the EU Framework Programmes," Papers in Evolutionary Economic Geography (PEEG) 1722, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2017.
    4. Pierre-Alexandre Balland & Ron Boschma & Joan Crespo & David L. Rigby, 2017. "Smart Specialization policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification," Papers in Evolutionary Economic Geography (PEEG) 1717, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2017.
    5. Roberto Antonietti & Ron Boschma, 2018. "Social capital, resilience and regional diversification in Italy," Papers in Evolutionary Economic Geography (PEEG) 1804, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2018.
    6. Pierre-Alexandre Balland & Ron Boschma, 2019. "Mapping the potential of EU regions to contribute to Industry 4.0," Papers in Evolutionary Economic Geography (PEEG) 1925, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2019.
    7. Gianluca Capone & Franco Malerba & Richard R. Nelson & Luigi Orsenigo & Sidney G. Winter, 2019. "History friendly models: retrospective and future perspectives," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(1), pages 1-23, March.
    8. Jing Xiao & Ron Boschma & Martin Andersson, 2018. "Resilience in the European Union: the effect of the 2008 crisis on the ability of regions in Europe to develop new industrial specializations," Industrial and Corporate Change, Oxford University Press, vol. 27(1), pages 15-47.
    9. Fulvio Castellacci & Davide Consoli & Artur Santoalha, 2018. "Technological Diversification in European Regions: The Role of E-skills," Working Papers on Innovation Studies 20181009, Centre for Technology, Innovation and Culture, University of Oslo.
    10. Andrés Rodríguez‐Pose, 2020. "Institutions and the fortunes of territories," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(3), pages 371-386, June.
    11. Jing Xiao & Ron Boschma & Martin Andersson, 2018. "Industrial Diversification in Europe: The Differentiated Role of Relatedness," Economic Geography, Taylor & Francis Journals, vol. 94(5), pages 514-549, October.
    12. Pierre-Alexandre Balland & Ron Boschma, 2020. "Complementary Inter-Regional Linkages and Smart Specialization: an Empirical Study on European Regions," Papers in Evolutionary Economic Geography (PEEG) 2023, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2020.
    13. Mathieu Steijn & Pierre-Alexandre Balland & Ron Boschma & David Rigby, 2019. "Technological Diversification of U.S. Cities during the Great Historical Crises," Papers in Evolutionary Economic Geography (PEEG) 1901, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2019.
    14. Kasim Yusupov & Iuliia Toktamysheva & Asat Yangirov & Rustem Akhunov, 2019. "Economic Growth Strategy Based on the Dynamics of Gross Domestic Product," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 151-163.
    15. F.C. Stam, 2018. "Enabling Creative Destruction : An Entrepreneurial Ecosystem Approach to Industrial Policy," Working Papers 18-05, Utrecht School of Economics.
    16. Lars Mewes & Tom Broekel, 2020. "Subsidized to change? The impact of R&D policy on regional technological diversification," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(1), pages 221-252, August.
    17. Antonella Rita Ferrara & Rosanna Nisticò, 2019. "Does Institutional Quality Matter for Multidimensional Well-Being Inequalities? Insights from Italy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(3), pages 1063-1105, October.
    18. Erlström, Andreas & Grillitsch, Markus & Hall, Ola, 2020. "The Geography of Connectivity: Trails of Mobile Phone Data," Papers in Innovation Studies 2020/6, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    19. Daniel A. Brent & Katie Lorah, 2017. "The Geography of Civic Crowdfunding: Implications for Social Inequality and Donor-Project Dynamics," Departmental Working Papers 2017-09, Department of Economics, Louisiana State University.
    20. Artur Santoalha, 2019. "Technological Diversification and Smart Specialization: the role of cooperation," Working Papers on Innovation Studies 20190109, Centre for Technology, Innovation and Culture, University of Oslo.
    21. Ron Boschma, 2018. "The geographical dimension of structural change," Papers in Evolutionary Economic Geography (PEEG) 1839, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2018.
    22. Silje Haus-Reve & Abigail Cooke, 2019. "Do regional social capital and trust matter for immigrant diversity and wages?," Papers in Evolutionary Economic Geography (PEEG) 1932, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2019.
    23. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 2018. "Multinational enterprises, industrial relatedness and employment in European regions," Papers in Evolutionary Economic Geography (PEEG) 1802, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2018.
    24. Apa, Roberta & De Noni, Ivan & Orsi, Luigi & Sedita, Silvia Rita, 2018. "Knowledge space oddity: How to increase the intensity and relevance of the technological progress of European regions," Research Policy, Elsevier, vol. 47(9), pages 1700-1712.
    25. Luis Carvalho & Mario Vale, 2018. "Biotech by Bricolage? Agency, institutional relatedness and new path development in peripheral regions," Papers in Evolutionary Economic Geography (PEEG) 1801, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2018.

    More about this item

    Keywords

    regional diversification; social capital; quality of government; institutions;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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