Principle of Relatedness
"What is sometimes counterintuitive, is that the principle of relatedness is not about over-specialization. It is about understanding the unique paths that lead to diversification."
Time: July 31, 2018
Place: Morning in Oakland
Pointer from: My pops via Twitter
Note type: Direct
The principle of relatedness: New synthesis is an empirical principle describing the probability that a region enters—or exits—an economic activity as a function of the number of related activities present in that location (entry and exit of products, industries, occupations, and technologies, at the national, regional, and metropolitan scales)
We say that two activities, such as products, industries, or research areas are related when they require similar knowledge or inputs
What is sometimes counterintuitive, is that the principle of relatedness is not about over-specialization. It is about understanding the unique paths that lead to diversification.
The principle also suggests that industrial policy should not be centered solely on identifying promising industries, but on identifying mechanisms that facilitate knowledge flows among industries and regions. The policies supported by the principle are those focused on attracting the knowledge that regions are missing by facilitating the flow of the people who carry that knowledge, and by creating social bridges to the places where that knowledge is present.
[ME]: reminds me of silk road networks
The principle of relatedness invites us to evaluate policies not based on short-term winners and losers, but on their ability to contribute to collective learning.
July 31st, 2018