Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2019/10: Why bother about region-specific growth patterns and how to identify them?

Markus Grillitsch (), Mikhail Martynovich (), Rune Dahl Fitjar () and Silje Haus-Reve ()
Additional contact information
Markus Grillitsch: Lund University, Postal: Sweden
Mikhail Martynovich: Lund University, Postal: Sweden
Rune Dahl Fitjar: University of Stavanger, Postal: Norway
Silje Haus-Reve: University of Stavanger, Postal: Norway

Abstract: Understanding the causes of regional growth has been of key concern for policy makers and scholars in economic geography and regional science. Regional growth models estimate the effect of various regional factors on the growth of an average region. However, these models leave a large share of regional growth unexplained. This is to be expected, as the embeddedness of regions at various spatial scales from the local to the global invariably leads to growth that is highly region-specific. However, existing quantitative approaches to regional growth are not able to cope with this, treating outliers in growth models as stochastic noise rather than as cases of empirical interest. The paper proposes a method to carve out the region-specific growth component in regional growth models and illustrates this empirically using data for Sweden from 1990-2016. We find robust patterns of periodic region-specific growth outweighing the effect of generic structural factors. This has important implications for how we should think about and empirically address regional growth.

Keywords: Regional growth; regional development; evolutionary economic geography; path-dependency; embeddedness; outliers

JEL-codes: O18; R10

40 pages, July 18, 2019

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