Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis 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.

We investigate persistence and change of the levels of regional new business formation in West Germany over a period of thirty years. Our indicator is the position of a region in the national ranking. As indicated by previous studies, we generally find a rather high level of persistence and confirm the role of several sources of this persistence, namely, persistence in regional determinants of new business formation, distinct regional cultures of entrepreneurship, and path dependence in new business formation activity. There are, however, also a number of regions that have moved up or down in the national ranking by a considerable number of positions. We find that main factors that are related to such rank changes are R&D activities, industry diversity, and regional wage levels.

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Germany is among the largest countries in the world in terms of total GDP, owing largely to rapid industrialization and expansion of economic activities into several sectors. This paper contributes to the literature on German economic development by investigating the evolution of industry diversification in Germany; particularly focusing on the recent concepts of related (RV) and unrelated variety (UV) in West German regions. It also identifies the statistical and economic determinants of variation in variety over time. Among several industry structure measures; RV is the only measure that reveals a pronounced increasing trend. Since RV is composed of two parts: 1) entropy at five-digit within a two-digit classification, and 2) shares of two-digit sectors in total output, we examined which of the two components dominate. Our findings suggest that the entropy component within two-digit sectoral shares of the RV index is more dominant than the two-digit sectoral shares themselves. We further examined entries and exits of the firms among regions with top and bottom rankings in RV. Findings suggest that both the top and bottom regions experienced an increase in the total number of industries, however, exits were much less pronounced in the bottom regions. It suggests that an increase in variety among top regions is the result of the creative destruction type effect where new industries force inefficient old industries to leave the region. Finally, analysis shows support for the inverse u-shaped relationship between development and diversification.

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