A comprehensive analysis of the societal impact of industrial diversity on sustainable economic development

Abstract

PurposeThis paper aims to explore the interplay between industrial diversity and sustainable economic development in US counties.Design/methodology/approachAmong other popularly used measures, this study uses an underused measure, Hachman index, to gauge the degree of industrial diversity in the models. To capture the impact of industrial diversity on the local community, this study estimates the relationship of two diversity measures to four traditional socioeconomic indicators: per capita personal income growth, gross domestic product per worker, income inequality ratio and poverty rate.FindingsStatistical results suggest that industrial diversity, which is measured by Hachman index, is significantly related to the four socio-economic indicators. Industrial diversity can positively contribute to regional per capita personal income growth and mitigate income inequality and poverty stress; however, it is negatively related to the gross domestic product (GDP) per worker, which means industrial specialization may contribute to GDP per worker growth.Originality/valueThe findings of this study show that there is a nonlinear relationship between industrial diversity and all socioeconomic indicators. Most of the control variables, human capital variables and business and industry profile variables also display significant and positive impacts on economic development.