From Relatedness to Complexity in Regional Industrial Evolution
If division is the starting point to understand regional industrial structure, complexity may be a stage in its evolutionary trajectory. ‘Regional’ emphasises the geographical context for economic activities, while ‘industrial’ is defined as a meso level compared with a micro firm level or a macro aggregate level. ‘Complexity’ provides a quality measure of regional industrial structure, while ‘evolution’ stands for a dynamic dimension to view ups and downs. The goal is to understand the role of complexity in economic performance within an evolutionary framework. An underlying mechanism through which complexity matters is a path-dependent evolutionary trajectory underpinned by relatedness. The Chinese case is used for the empirical work. Three studies are intended to shed light on different aspects of this topic: (i) multiplicity of mechanisms for evolution, (ii) the role of complexity in times of crisis, and (iii) the role of relatedness in relation to local market conditions. The first study explores how productivity is associated with sources of regional industrial path development. A conceptual framework for the heterogeneity of path development in a qualitative sense is transformed to a quantitative one to empirically test the existence of sources of path development and their association with productivity. The second study turns its attention to the economic shock with an attempt to explore the patterns, mechanisms, and necessities of regional resilience through a ‘complexity’ lens. A difference-in-difference framework is adopted to examine how the global financial crisis influenced economic growth in Chinese cities differently depending on their complexity. The third study investigates the extent to which regional industrial relatedness accounts for spatial disparities in state-granted land prices in China and the relevance of local market-orientedness for the role of relatedness. A co-occurrence measure of relatedness is used, whereas local market-orientedness is captured as a city’s innovation and entrepreneurship.
Complexity, Evolutionary Economic Geography, Regional Industrial Path Development, Regional Market-orientedness, Regional Resilience, Relatedness
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