Working Paper Number 2018-02
Conventional wisdom indicates that economic specialization can promote economic growth, whereas economic stability is theoretically associated with diversiﬁed economies. This conﬂicting relationship between specialization and diversity has been questioned, as regional scientists have suggested that specialization and diversity can coexist in a regional economy and proposed the concept of diversiﬁed specializations. To test this proposition empirically, three Herﬁndahl Hirschman Indices measuring regional economic diversity were used to examine the relationship between economic structure and regional economic performance among 359 metropolitan statistical areas (MSA) in the contiguous U.S. The ﬁrst index measures economic diversity across 87 three-digit North American Industry Classiﬁcation Systems (NAICS) sectors for each MSA; the second index quantiﬁes economic diversity among 51 clusters identiﬁed by Delgado et al. in J. Econ. Geogr. 16(1), 1-38 (2016); and the third index considers the effects of both industry and cluster diversity. This analysis conﬁrms that industry diversity promotes economic stability and also demonstrates that cluster diversity contributes to both economic stability and growth. I thus conclude that regions can simultaneously pursue both high and stable economic growth.
Digital Commons Citation
Chen, Jing, "Interpreting Economic Diversity as the Presence of Multiple Specializations" (2018). Regional Research Institute Working Papers. 36.