1. Paweł Churski, Katarzyna Kopczewska, Artur Ochojski, Adam Polko
TOWARDS THE INTERPRETATION OF REGIONAL SPECIALISATION: ECONOMY AND POLICY PERSPECTIVES
Paweł Churski, Katarzyna Kopczewska, Artur Ochojski, Adam Polko
Scientific project financed by Polish National Center of Science ( titled “Statistical models in identification of regional specialization, including the component of spatial heterogeneity” (call OPUS 6, contract no UMO-2013/11/B/HS4/01098).

2. Variety of defining regional specialisation in theory and practice
Content
Variety of defining regional specialisation in theory and practice
Regional specialisation as a dynamic process
The mechanisms of regional specialisation
Descrpitive and normative apporach: Questions of economics and policy
Case study

3. Variety of defining regional specialisation in theory and practice #1
Sectoral concetration
sectoral distribution of employment in the region
Sectoral concentraion is measured using cluster based methods.
Geographical concentration
regional distribution of employment in the industry
Geographical concetrnaion is measured using distance based nethods.
Agglomeration
spatial density of location of firms inside the region
agglomeration is measured using distance based methods.
Specialisation
based on a degree comparison of dominance/clustering in an economic activity, in relation to the adopted standard reference,
Specialisation is measured using cluster based methods.

4. Variety of defining regional specialisation in theory and practice #2
Territory A
Territory B
Territory C
Territory D …
Total
Industry 1
emp(ij)
Ʃemp(indA)
Industry 2
Ʃemp(indB)
Industry 3
Ʃemp(indC)
Industry 4
Ʃemp(indD)
Ʃemp(terrA)
Ʃemp(terrB)
Ʃemp(terrC)
Ʃemp(terrD)
ƩƩemp
GEOGRAPHICAL CONCENTRATION
SECTORAL CONCENTRATION

5. Review of theories explaining specialisation at national and regional level
Models and Authors
Driven forces of specialisation
Outcomes
TRADITIONAL TRADE THEORY
Smith (1776)
absolute advantage
Inter-industry specialisation due to differences in production costs
Ricardo (1821)
comparative advantage
Inter-industry specialisation due to differences in the productivity of labour
Heckscher-Ohlin model
Inter-industry specialisation due to differences in factor endowments and relative abundance of factors of production
Technology-gap model (Posner 1961)
Intra-industry specialisation due to technology differences (technology-gap) between countries
Product cycle models (Vernon 1966, Hirsch 1967)
Intra-industry specialisation due to different stages in the product life cycle
NEW TRADE THEORY
Krugman (1978); Krugman (1980); Helpman & Krugman (1985)
increasing return to scale
(economies of scale)
Inter-industry specialisation with sectors clustering in locations which offer best access to product markets
Intra-industry specialisation across firms which produce a horizontally differentiated variety of the industry’s products
ECONOMIC GEOGRAPHY AND
NEW ECONOMIC GEOGRAPHY (NEG)
The core-periphery model (Krugman 1991)
agglomeration and dispersion
(agglomeration economies and agglomeration diseconomies)
increasing returns to scale (economies of scale)
Intra-industry specialisation due to differences in the size of the markets and concentration of demand
Self-sustaining concentration of production in space can occur if economies of scale are large, transportation costs low, and enough production is mobile
U-shape relationship between geographical concentration and transportation costs: agglomeration increases as trade cost decreases to an intermediate level and a second one in which diseconomies of agglomeration combined with ever lower transportation costs lead to dispersion.

6. Variety of defining regional specialisation in theory and practice #3
AGGLOMERATION
CONCENTRATION
GEOGRAPHICAL
SECTORAL
LOCATION (DISTANCE)
IMPACT (OVERLAP)

7. Definition of regional specialisation #1
Regional specialisation is defined as the uniqueness of the region, which is determined by specific benefits, arising from the spatial agglomeration of industry entities and their production concentration.
the importance of interaction between spatial and sectoral determinants, which we believe should be considered together, because of the complementary nature in shaping the uniqueness of the region related to its specialisation;
regional specialisation is not the levels of agglomeration and concentration, but the scale benefits obtained by the region, which are associated with these processes or the uniqueness of the business

8. Definition of regional specialisation #2
CONCENTRATION
AGGLOMERATION
REGIONAL SPECIALISATION S2 S1 S4 S3
S1 – both high levels of spatial agglomeration and sectoral concentration (Sillicon Valley, Keihin in Japan) S2 – high level of spatial agglomeration and sectoral diversification (large cities and metropolitan regions) S3 – low level of spatial agglomeration and sectoral concentraion (exploitation of raw materials) S4 - both low levels of spaital agglomeratation and sectoral concentration (individual institutions with uniqueness in the supra-regional, and often transnational)

9. Regional specialisation as a dynamic process
The nature of regional specialisation depends on the type of industry and its stage of development.
On the one hand, industries offering standardised products such as textiles, food processing or auto production tend to be found disproportionately in smaller specialised metro areas. On the other hand, industries offering unique and diversified products such as publishing, financial or R&D tend to be found disproportionately in larger metro areas (Henderson, 2003, p. 2).
Similar findings come from analysis of the product life cycle. In the early stages of product development firms locate in the diversified city, searching for its ideal process. This location is more expensive because of congestion and other disadvantages resulting from density of economic activities. Then firms relocate to a specialised city where all firms are using the same type of process and where the location economies are higher and the production costs are lower (Duranton & Puga, 2001, p. 1455).
The stage of the product life cycle decides on the type of agglomeration economies. Jacobs’ externalities help in new industries, while MAR externalities are important in mature industries (Henderson et al., 1995; Neffke et al., 2011).

10. Key drivers of business activities
Theories in economics and related concepts
Division of labour /factor endowments
Market size and factor endowments:
labour and capital
Knowledge base,
spatial proximity& relational proximity
Diverse sources of knowledge,
urban amenities,
spatial and relational proximity
Territoire, milieu
socio-cultural, relational, institutional and cognitive proximities
Classical theory
Comparative advantage based on labour specialisation
Neo-classical theory
Comparative advantage based on factor endowments
New Trade Theory
Aggregated economies of scale trade expansion mechanism based on professional distinctive competences, unique infrastructure, technologies and networks of suppliers
New Economic Geography
Cost reduction mechanism based on knowledge, and global-wide technology internationalisation
Marshall – Arrow – Romer;
Porter
Proximity to infrastructure and knowledge based driven clustering mechanism
Jacobs’s theory of urban growth
Business anchorage and productivity growth mechanism based on urban amenities and diversified activities
Knowledge-based economy
Knowledge acquisition and accumulation mechanism
Evolutionary Economic Geography
Trust-based risk reduction mechanism
The mechanism of agents’ interaction and adaptive process
Regional specialisation: competitive advantage and productivity
Regional specialisation:
territory, innovation and competitiveness
Regional specialisation:
competitiveness and innovation

11. Descrpitive and normative apporach: Questions of economics and policy
Target of analysis
Research approach
Firm and its location
Region as a set of inter-linked locations
Positive
(process; descriptive and explanatory)
Regional specialisation explains the benefits to the firm
Regional specialisation explains growth patterns in regions
Normative
(final)
Regional specialisation as the determinant for business strategic activities
Regional specialisation as a criterion/ result for allocation of public funds

12. Case study - SPAG values for technology industries #1
High-tech knowledge intensive services
High-tech industries
Medium-tech industries
Lubel-skie
Wielko-polskie
Śląskie
Coverage 1
Distance
0.65
0.48
0.61
0.5
0.6
0.75
0.73
0.67
Overlap
0.15
0.14
0.26
0.43
0.27
0.36
0.17
SPAG
0.10
0.07
0.09
0.13
0.11
No. of obs.
3336
10597
11025
231
629
928
973
3086
4531

13. Case study - SPAG values for technology industries #2

14. Case study - SPAG values for technology industries #3

15. Case study - SPAG values for technology industries #4

16. Conclusions
Regional specialisation should be defined and identified in terms of the integrated/complex approach, using both agglomeration and concentration of economic activity
Regional specialisation is not the levels of agglomeration and concentration, but the scale benefits obtained by the region, which are associated with these processes or the uniqueness of the business
Policies and strategies must be highly suited to the specific situation of the region (place-based solutions), but they also are required to bravely and smartly pave the visionary perspectives of their leaders who must be concerned with the regional economy as a whole rather than seek to develop sectoral specialisation.
The mechanisms of regional specialisation depend on the specific factors, which impact the benefits gained by firms from economies of agglomeration and scale actually supported by different types of proximity. Thus, it shows the need for joint interpretation of spatial agglomeration, and of sectoral and geographical concentration to better understand regional specialisation.