Spatial Externalities, Relatedness and Sector Employment Growth in Great Britain

BISHOP P. and GRIPAIOS P. Spatial externalities, relatedness and sector employment growth in Great Britain, Regional Studies. This paper examines the impact of externalities on employment growth in sub-regions of Great Britain by estimating ordinary least-squares (OLS) and maximum likelihood spatial models at the two-digit level for 23 sectors. Issues arising from relatedness, sector differences, competition, cross-boundary spillovers, and spatial autocorrelation are explicitly addressed. Results indicate that specialization has a generally negative impact on growth, whilst the impact of diversity is heterogeneous across sectors and strong local competition has a typically positive impact. The results question the merits of policies primarily aimed at promoting regional specialization and suggest that diversity, local competition, and sector heterogeneity are important policy issues.