Regional Economic Diversity and Regional Economic Stability: Research Results and Agenda

Abstract

This article on regional economic diversity addresses several issues: (1) theoretical foundations for arguments forwarding increased economic diversity as a development goal, (2) common empirical measures of economic diversity, and (3) empirical literature on economic diversity and its effect on regional economic stability. This examination of the literature suggests four main directions in which future research on regional economic diversity could go. First, it is shown that research on the relationship between economic diversity and regional income distribution is scarce yet critical. Second, recent research suggests that applications of input-output analysis hold the potential for integrative research on issues related to economic diversity. Third, an examination of the local economic development literature indicates that regional scientists could use the concept of “diversified specializations” to classify economic regions and evaluate clusters. Fourth, the literature on ecological diversity suggests additional ways to look at the issue of economic diversity-stability.