A blog post on diversification of regions in times of crises has just been published by the London School of Economics (LSE United States Centre). It is based on the article “Technological Diversification of U.S. Cities during the Great Historical Crises” that Spatial Economics’ Mathieu Steijn wrote with Pierre-Alexandre Balland, Ron Boschma, and David Rigby and came out earlier in the Journal of Economic Geography. The blog is intended to communicate the key findings of this work to a more general audience, among which policy-makers.
Short summary
After recent economic downturns there has been a renewed interest in ways for regions to overcome crises. The authors evaluate the capabilities of regions to diversify into new activities during crises and how this may help to mitigate their impact. They find that crises tend to restrict the development of new activities, especially those that require capabilities that are not present yet in the region. They also find that diversifying into new activities that are outside a region’s “comfort zone” during crises is actually generally associated with more employment growth, and that regions with a more diverse range of activities are better able to develop new ones.