Regional Economic Diversity and Diversification

Abstract

Regional scientists have long attempted to develop meaningful definitions and measures of economic diversity and diversification, and to establish functional relationships between diversity, diversification. and economic performance. The multiplicity of definitions and measures explains, in part, the confusion about these relationships. A framework that sorts out the overlaps, contradictions, and gaps of the various definitions and measures IS needed. Such a framework would explicitly address the question, "What is the relationship between a region's changing economic structure and performance?" In this paper it is suggested that an inputoutput model that incorporates elements of portfolio theory be used as the integrating framework for analysis.

The effects of economic activities diversification on development: The perspective of Serbia

“…Brewery (1985) empirically proved that the portfolio variance measure, suggested by Conroy, has a great power to explain differences in economic instability across regions. The similar conclusion about the possibilities of models that incorporate elements of portfolio theory to express relationship between a region's changing economic structure and performances was given by Siegel et al (1995). A portfolio management framework, as a basis for developing regional economic strategies, was also given in (Lande, 1994).…”

The regional portfolio of disruptions, protection, and disasters

“…Several authors have advocated this approach for tackling regional economic vulnerability is through diversification of the economic base-by adding new products, technologies, or markets, or by rebalancing the existing mix of exports (see e.g. Barth et al 1973;Board and Sutcliffe 1991;Siegel et al 1995). The complementary strategy is to strengthen levels of engineered and other protection for vulnerable activities and critical upstream and downstream transactions according to the public costs and social benefits involved (e.g.…”

“…Siegel et al 1995). The underlying motive is that, since overall variance of a portfolio depends on the covariance between income sources, diversifying exports into uncorrelated markets reduces variability and increases expected earnings.…”

Picking a Winner? Evidence from the Non-Manufacturing High-Tech Industry in the Blacksburg MSA

“…1 Be it the core and periphery, the centre and the hinterland or leading and lagging regions, urban and regional planners apply a wide range of analytical concepts to distinguish between different shades of uneven development that describe the diverse realities of economic landscapes. The multiplicity and mutual overlaps of concepts and definitions 1 See Siegel et al (1995) for a comprehensive overview of the literature. might occasionally appear confusing, yet at the same time they serve as an important reminder that when analysing economic activity "one size does not fit all".…”