Economic Diversity and Employment Levels in Italian Provinces over the Period 1951-2001: Does a Recurrent Industrial Pattern Exist?

Economic diversity is crucial to explain how geographic areas grow and evolve: economic diversity facilitates the transmission of ideas (through knowledge spillovers) and the outsourcing of activities (city-nurseries). In this paper we focus on these theoretical perspectives and examine the industry structure and growth of Italian provinces. We use data on employment levels in 47 economic sectors in 103 provinces and measure their degree of diversity over the period 1951-2001. By taking into account both provincial size (i.e., employment levels) and temporal dimension we test whether economic initiatives benefit from being localised in areas that are highly diversified from an industrial point of view. After confirming the relevance of economic diversity we investigate the industry pattern that boosted growth in the largest (in terms of number of employees) provinces in our sample. Our results confirm the Jacobs’ intuitions about how cities evolve and contribute to debate by reducing the gap between some Jacobs’ hypotheses and major theses.