To them that hath: economic complexity and local industrial strategy in the UK

Abstract

Divergent economic performance in many countries has led to renewed interest in place-based policies, such as the UK’s local industrial strategies at the level of Combined Authorities or Local Economic Partnerships. However, an analysis of employment data using methods from the economic complexity literature demonstrates great heterogeneity in industrial strengths and future growth opportunities within those jurisdictions, raising challenges in designing common policies suited to all sub-geographies. Moreover, the ‘related’ industries into which low-complexity, low-wage local authorities could potentially diversify are also low-wage. Incremental policies building on existing local capacities are therefore likely to amplify divergence between prospering and left-behind areas.

Effect of Economic Complexity on Services Export Diversification: Do Foreign Direct Investment Inflows Matter?

“…Enhancing economic complexity should be at the heart of policymakers' agenda, both at the national and international levels, given not only its strong positive effect on macroeconomic aggregates such as economic growth, income inequality, poverty…etc, but also on services export diversification, the latter being also an important engine for economic growth (e.g., Anand et al, 2012;Gnangnon, 2021a;Mishra et al, 2011;Stojkoski et al, 2016). Discussing policies that could be conducive to greater economic complexity is beyond the scope of the present article, as such policies are likely to be specific to each country's circumstances and characteristics (e.g., the works by Mealy andCoyle, 2021, Sørensen et al, 2020;Whitehead and Bhorat, 2021).…”

The Economic Complexity of US Metropolitan Areas

“…Implications for development policy have been that countries can most easily achieve growth by diversifying into closely related industries/products and that it is hard to expand directly into less similar industries/products (Hidalgo and Hausmann, 2009). The same has been observed for regions (Kogler et al, 2013;Neffke et al, 2011;Balland et al, 2018;Daboín et al, 2019;Cicerone et al, 2020;Mealy and Coyle, 2019). For an overview over the branching out literature see Hidalgo et al (2018).…”

“…Examples include studies of regional "economic bases" (Andrews, 1953;Heilburn, 1981), "growth poles" (Parr, 1973;Perroux, 1955), industry clusters (Porter, 1998), and industrial variety (Frenken et al, 2007). A growing literature, mostly within evolutionary economic geography, employs the capabilities approach at the regional scale (Kogler et al, 2013;Neffke et al, 2011;Daboín et al, 2019;Cicerone et al, 2020;Mealy and Coyle, 2019;Muneepeerakul et al, 2013;Farinha et al, 2019;Essletzbichler, 2015). Like work on the productive structures of nations, these studies seek to construct the "product space" within a given country, and identify paths that subnational regions can take to develop their economies by branching into industries that are related to the ones they already have.…”

Effect of economic complexity on services export diversification: do foreign direct investment inflows matter?

“…Enhancing economic complexity should be at the heart of policymakers' agenda, both at the national and international levels, given its strong positive effect on macroeconomic aggregates, including on services export diversification, the latter being also an important engine for economic growth (Anand et al , 2012; Gnangnon, 2021a; Mishra et al , 2011; Stojkoski et al , 2016). Discussing policies that could be conducive to greater economic complexity is beyond the scope of the present article, as such policies are likely to be specific to each country's circumstances and characteristics (Balland et al , 2022; Mealy and Coyle, 2021; Giri et al , 2018; Salinas, 2021; Sørensen et al , 2020; Whitehead and Bhorat, 2021). Additionally, these policies should go beyond diversifying export the product mix and involve a structural transformation of the production structure, including towards sophisticated goods that would be exported by few other countries (Atolia et al , 2021).…”