Regional Skill-relatedness and the survival and growth of plants in the Netherlands (2005-2015)

Authors: Frank Van Oort*, Utrecht University, Diede Teunissen, Erasmus University Roterdam, Anet Weterings, Netherlands Environmental Assessment Agency (PBL)
Topics: Economic Geography, Quantitative Methods, Regional Geography
Keywords: Economic Geography, Employment growth, Relatedness, Netherlands
Session Type: Paper
Day: 4/3/2019
Start / End Time: 4:30 PM / 6:10 PM
Room: Diplomat Room, Omni, West
Presentation File: No File Uploaded

In economic geography, development economics and management studies, cognitive relatedness (also labelled technological proximity, cognitive proximity, technological closeness or skill relatedness) of firms, industries and regions is increasingly suggested to be an important precondition for economic diversification, industry branching and economic development in countries, cities and regions. Although increasingly the impact of related environments on the firm or plant level is being researched by correlating firm level performance to mechanisms and outcomes of agglomerated interaction, this is still an underdeveloped and inconclusive aspect in the literature. Theory suggests that firm establishments in especially knowledge-intensive industries are more likely to absorb knowledge spillovers, and therefore benefit from an environment characterized by skill-related industries. The impact of a related environment on plant survival and growth is empirically analyzed in this paper, by looking at longitudinal employment data from individual plants / establishments in the Netherlands from 2005-2015. We provide answers to the questions to what extent regional relatedness determines conditional plant growth more than specialization and/or diversification per se, and how the relatedness-growth analysis is conditional to relative and absolute starting positions of regions in their industry-base. The results show that establishments active in high-tech and creative industries experience a larger positive impact of regional relatedness on survival and employment growth than plants in other industries or plants in unrelated environments. The measurement of relatedness – either in terms of industries or weighted by employment – matters for these outcomes.

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