Explaining Spatial Patterns of Industrial Diversity: An Analysis of Sub-regions in Great Britain

Abstract

This paper argues that effective local policy development requires a thorough understanding of patterns of spatial diversity involving the integration of theoretical work from geography, economics and management. An empirical analysis of diversity in Great Britain for the period 1995-2002 is presented utilising entropy measures of diversity. The results of empirical models of the determinants of diversity across sub-regions examine the significance of a number of explanatory factors including regional size, level of urbanisation, industry structure, market structure and key resources. Decomposing the model into related and unrelated diversity components reveals some important differences between the two types of diversity. The paper concludes that policies fostering long-term diversity are a crucial complement to policies focusing on key sectors.