The role of embeddedness on regional economic resilience: Evidence from the UK

Anastasios Kitsos, André Carrascal-Incera, Raquel Ortega-Argilés

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Article number3800
Number of pages19
JournalSustainability (Switzerland)
Volume11
Issue number14
DOIs
Publication statusPublished - 11 Jul 2019

Keywords

  • Economic resilience
  • Embeddedness
  • Input-output

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