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Related Variety, Unrelated Variety, and Regional Growth: The Role of Absorptive Capacity and Entrepreneurship

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  • Michael Fritsch

    () (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Sandra Kublina

    () (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Abstract

This paper investigates the effect of related and unrelated variety on regional growth in West Germany. In particular, we analyze the role of regional absorptive capacity and new business formation for these effects. We find that West German regions benefit from both types of varieties. The positive effect of unrelated variety on growth is more pronounced in regions with higher levels of absorptive capacity in terms of R&D activities and with higher levels of new business formation. Such moderating effects cannot be found for related variety.

Suggested Citation

  • Michael Fritsch & Sandra Kublina, 2016. "Related Variety, Unrelated Variety, and Regional Growth: The Role of Absorptive Capacity and Entrepreneurship," Jena Economic Research Papers 2016-009, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2016-009
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    More about this item

    Keywords

    Related variety; unrelated variety; knowledge spillovers; regional absorptive capacity; entrepreneurship; regional growth;

    JEL classification:

    • 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)
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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