Industrial Structure and Economic Resilience of Non-Metropolitan Regions: An Empirical Base for the Smart Specialization Policies

Abstract

In this paper, we aim to describe and explain the regional disparities in economic resilience in Slovakia in the period 1997–2017. We focus on the effects of economic structure in combination with the vertical (potential accessibility) and horizontal geographical location. Since the early 1990s, Slovak (non-)metropolitan regions exhibited deep changes in the sectoral structure of the economy that were followed by sharp unemployment increases. Due to the FDI-fueled economic growth in the last two decades, however, considerable progress in regional economic growth and reduction in unemployment was recorded. Therefore, Slovak non-metropolitan regions provide valuable lessons for the analysis of regional economic resilience in a long-term period. We ask if, and to what extent were, the prospects of regional renewal after economic crises associated with the geographical location, economic diversity, firm size and sectoral structure of the economy. We employed spatial regression models to test the effects of the potential accessibility, horizontal geographical location and industrial diversity, and sectoral (agriculture, manufacturing) and firm size structure. The dependent variable, Economic Resilience, was measured by the Regional Development Index, combining the indicators of demographic ageing, net migration, income per capita and registered unemployment rate. Potential accessibility and horizontal geographical location were the key predictors of regional economic resilience. Districts with tertiarized and diversified industrial and firm size structures scored, on average, higher in RDI than specialized districts with large firms and/or a high share of agriculture/manufacturing in total employment.