Dynamic Nature of Relatedness, or What Kind of Related Variety for Long-Term Regional Growth

Abstract

We challenge the currently dominating static view of inter-industry relatedness by investigating the evolution of relatedness linkages between Swedish industries during five sub-periods between 1991 and 2010. Distinguishing between stable ties (present in all sub-periods) and non-stable ties (e.g. emerging, disappearing, etc.), we demonstrate that inter-industry relatedness linkages change considerably over time. Furthermore, we show that these changes matter for how the co-location of related industries (related variety) influences regional employment growth – to generate growth the type of local related ties should match with the regional setting. We suggest that, at least partly, the impact of emerging, stable and disappearing ties differs since complementarity potential between related industries becomes depleted over time. In other words, relatedness linkages have a ‘best before date’.