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Persistence and Change of Regional Industrial Activities – The Impact of Diversification in the German Machine Tool Industry

Author

Listed:
  • Dirk Fornahl
  • Christina Guenther

Abstract

The paper Investigates stability and change of regional economic activities in the long-run. As the unit of analysis we selected the machine tool industry in West Germany for the years 1953 to 2002. We spot a strong variance in the activities between the different regions. These differences are relatively stable over time and the regional activities are rather path-dependent. Nevertheless, the paper also identifies changes in the level of activities. As the main driving factors for these changes we examine the effect of regional diversification strategies. We find that those regions pursuing a general diversification strategy have a higher likelihood to grow than regions which are specialising. Furthermore, diversification into totally new technological and product fields is only beneficial under specific circumstances based on technological and market developments. Hence, in most cases a broad diversification is superior to one focusing on new state-of-the-art technological fields.

Suggested Citation

  • Dirk Fornahl & Christina Guenther, 2009. "Persistence and Change of Regional Industrial Activities – The Impact of Diversification in the German Machine Tool Industry," Papers on Economics and Evolution 2008-16, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:esi:evopap:2008-16
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    Cited by:

    1. Christina Guenther, 2009. "Pioneer burnout: Radical product innovation and firm capabilities," Papers on Economics and Evolution 2009-22, Philipps University Marburg, Department of Geography.

    More about this item

    Keywords

    Geographic concentration; specialisation indices; machine tool industry; path-dependencies; agglomeration economies Length 29 pages;
    All these keywords.

    JEL classification:

    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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)

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