Abstract
This study analyzes the productive structure of Portugal in the period 2013–2017, using indicators of localization and specialization applied to 308 Portuguese local authorities. From an empirical approach using a threshold model, the following indicators are used: (i) localization quotient; (ii) specialization coefficient; (iii) Theil entropy index; (iv) rate of industrialization; and (v) the density of establishments by business size. The selected period 2013–2017 is due to the available data concerning firms located per local authority, and the choice of threshold model is justified through the possibility of assessing the non-linear effects of specialization and diversification on productivity, considering, in simultaneous terms, different regimes per business size. Estimation of the threshold model identified a positive, statistically significant relation between industrialization and productivity. Similarly, the terms of interaction between exports and diversification, and between the former and higher education institutions, shows a catalyzing effect of productivity. In addition, the most specialized micro-firms affect productivity significantly and positively, while the least specialized have the opposite effect. Small, less specialized companies have a significant and negative effect on productivity, contrasting with less specialized, medium-sized companies, which affect productivity positively. For large firms, the impact on productivity is negative for both high and low levels of specialization, reinforcing the need to fill existing gaps in strategic diversification, as well as the vertical and horizontal integration of the activities of production chains with high value added.
Highlights
The relation between spatial concentration and sector specialization, which began to be studied in the field of regional science, in recent years has emerged in the field of entrepreneurship and innovation, with it being a well-established fact that business undertakings are susceptible to geographical concentration [1,2,3], together with clear evidence that entrepreneurial activity varies considerably between countries and regions [4,5] and this phenomenon is shown to be persistent over time [6,7]
Entropy 2020, 22, 1271 to which in one country a given industry or sector is concentrated in a limited number of regions; sector specialization is the extent to which a country concentrates its industrial activity in a limited number of sectors, so that a region has a profile of a highly specialized production structure when regional production is distributed mainly over a small number of sectors [9]
The results found by Batisse [100] when studying the relation between the local economic structure and the growth of Chinese provinces show that specialization has a strong negative impact on growth, whereas a more diversified industrial community has a positive impact
Summary
The relation between spatial concentration and sector specialization, which began to be studied in the field of regional science, in recent years has emerged in the field of entrepreneurship and innovation, with it being a well-established fact that business undertakings are susceptible to geographical concentration [1,2,3], together with clear evidence that entrepreneurial activity varies considerably between countries and regions [4,5] and this phenomenon is shown to be persistent over time [6,7].According to Aiginger and Rossi-Hansberg [8], spatial concentration and sector specialization have been studied as intrinsically related economic phenomena. Most empirical studies deal with both processes as parallels, meaning that concentration dynamics are accompanied by the same specialization dynamics This being so, it is necessary to present the difference between spatial concentration and sector specialization, since there are always ambiguities arising from the fact that concentration is sometimes presented as equivalent to specialization. Entropy 2020, 22, 1271 to which in one country a given industry or sector is concentrated in a limited number of regions; sector specialization is the extent to which a country concentrates its industrial activity in a limited number of sectors, so that a region has a profile of a highly specialized production structure when regional production is distributed mainly over a small number of sectors [9]. Unlike sector specialization, Chowdhury et al [10] refer to sector diversification as corresponding to a concentration of production activities not in a small number of sectors but in diverse sectors
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