Global or Local Spatial Spillovers? Industrial Diversity and Economic Resilience in the Middle Reaches of the Yangtze River Urban Agglomeration, China

Abstract

A growing body of literature has studied the empirical relationship between industrial diversity and economic resilience since the 2008 Great Recession. However, many existing studies are based on a nonspatial perspective, and little is known about the local or global spatial spillover effect of industrial diversity on economic resilience. This paper employs Bayesian spatial econometric methods to investigate the roles of related variety and unrelated variety on economic resilience in the middle reaches of the Yangtze River urban agglomeration, China and explores the possible local or global spatial spillover effect in the diversity–resilience relationship. The empirical results from the spatial Durbin error model estimation show that: (1) regions with high levels of related variety are economically resilient to the external shock in the postcrisis era, whereas unrelated variety has no significant direct effect on recovery resilience; (2) both related and unrelated variety have local spatial spillovers with respect to the one-year resilience of 2008–2009, but these spillovers are negligible in longer study periods. These results confirm the role of industrial relatedness and immediate neighbors in promoting regions’ short-run capabilities of recovery from external economic shocks.