Content №4 от 2016
The Diversification of Regional Economic Structure as a Growth Strategy: Pros and Cons
The article considers various aspects related to diversification of the regional economy. It provides results from the analysis of shifts in the industrial structures of employment, gross value added, and industrial production for 2000-2014. Here we have estimated diversification processes in regional economies and their influence on economic growth. The estimations show that industrial structures of employment and production remain stable over a rather long period of time; that structural shifts are essentially driven by the economies of scale; and that industrial structures are most changeable in regions with a low economic potential and most steady in large regions. Quantitative assessments of diversification in employment, gross value added, and industrial production testify that these processes are orientated differently. During the period of review, employment patterns have gained in diversity, diversification of gross value added and industrial production has decreased, and generally regional economies have become more specialized. Diversification processes in employment, gross value added, and industrial production vary in their impact on economic dynamics. We can see a negative correlation between diversification in employment and dynamics indicators for the growth rates of employment and industrial production. Growth rates of GRP, real household incomes, and labor productivity are positively correlated with employment diversification. There is a negative correlation between the level of diversification and growth rates for GVA and industrial production. We have confirmed a hypothesis that diversification can assure sustainable regional economic growth, but it does not provide high growth rates. Regions show breakthrough results by strengthening their specialization as is evident from dynamics in the regions that have reached the greatest growth rates.
