Abstract
This paper examines the role of local industrial embeddedness on economic resilience in UK Nomenclature of Territorial Units for Statistics (NUTS2) regions. The 2008 financial crisis had a profound effect on the socioeconomic conditions of different places. UK regions had significantly divergent experiences based on their capacity to avoid or overcome the shock. Research has shed light on some potential drivers behind this differential resilience performance such as skills, but others, such as the degree of a production system’s local embeddedness, are largely underexplored. This paper aims at filling this gap. We hypothesise that the combination of positive external economies of complexity and negative lock-in effects lead to an inverted U-shaped relationship between embeddedness and resilience. We use a novel dataset and method for approximating embeddedness and fixed-effects panel regressions for the period 2000–2010 to control for regional heterogeneity. The results support our hypothesis and suggest that embeddedness has a positive effect on resilience up to a point, after which more embeddedness leads to negative resilience effects. The results call for greater attention on the relationships among local industries, particularly with regards to the recent development of local industrial strategies.
Highlights
The 2008 crisis and, in particular, its uneven impact at the subnational level, have brought economic resilience to the centre stage of regional economic research [1,2,3]
This paper aims to contribute to this discussion by considering the notion of the embeddedness of local industrial structures and its relationship to regional economic resilience
This paper examines the role of local economic embeddedness on regional resilience
Summary
The 2008 crisis and, in particular, its uneven impact at the subnational level, have brought economic resilience to the centre stage of regional economic research [1,2,3]. As we understand the notion, it originated in environmental and ecological studies with the writings of Holling [10] was used in hazard and disaster studies (see paper by Noy and Yonson [11] for a useful review) before finding its way into regional economics and economic geography [12,13,14]. In the latter fields, the notion moved along a spectrum of understandings, differentiated on the perspective of single vs multiple equilibria vs resilience as a dynamic approach of continuous adaptation (Table 1). The notion moved along a spectrum of understandings, differentiated on the perspective of single vs. multiple equilibria vs. resilience as a dynamic approach of continuous adaptation (Table 1).
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