Which Region to Choose for Implementing a Country’s Industrial Policy? An Empirical Research Path to Highlight Regional Restructuring OpportunitiesMay 29 2018
NIFU Report 2018:18. Addressing climate change is one of the grand societal challenges of our time. It requires a concerted effort of innovation, industrial and environmental policy. In order to achieve green restructuring at regional level, which constitutes an essential element of sustainability transitions, transformation processes must occur across the entire innovation chain, with policy setting the direction of the restructuring processes. Our study explores research avenues that can help policymakers to assess regional capabilities for “green” economic restructuring. It seeks to harmonize inputs from the innovation studies literature within the framework of the economic geography studies on regional boundaries. After exploring the relevant literature and suggesting new pathways for empirical research on regional policy, we provide empirical examples of possible translations of the considerations above into statistical devices. Our point of departure is the construction of a network of skill relatedness among economic sectors in Norway, based on intersectoral labour flows (years 2008-2014). The suitability of different sector-specific policies for regional development is then assessed on the basis of the industrial composition of each of the 161 Norwegian labour market areas. Particular attention is devoted to environmentally relevant sectors as po-tential targets for regional policy, to understand which regions can provide the right embedding environment for activities in “green” innovative sectors. In our final empirical example, we show the potential of international trade firm-level data for understanding input-output relations in a policy-relevant sector. The formation of local value chains could indeed result from industrial policies which, informed on the past international transactions of firms in an emerging sector, bring to the local level input-output connections that have previously been international.