Mapping Economic Diversity

For the past year, I’ve been involved with an Appalachian Regional Commission (ARC) project, headed by colleagues at the University of Illinois and CREC, examining the importance and influence of a community’s economic diversity.   Researchers have recently become very interested in concepts of economic resilience–due in part to the impacts of recent natural disasters like Hurricanes Katrina and Sandy.  (For an example, see the work of the excellent Building Resilient Regions project.)  A lot of this work has examined how communities respond to and recover from disasters, with a focus on infrastructure, advance planning and the like.  But recovery from disasters—natural or economic–also depends on a region’s underlying economic strengths.  And, it appears that regions with more economic diversity (i.e. they are home to large mix of industries and economic activities) may be more resilient and more competitive.

Our research project sought to examine this hypothesis in Appalachia.  The situation on the ground in Appalachian communities is very complex and differentiated, but the region is home to many communities, such as small coal towns, that suffer from a lack of economic diversity.   Finding ways to stabilize and grow these economies is an important mission for the ARC.

Our project includes several key tools and resources (all of the materials are compiled here):

1) A web tool that maps economic diversity across the region, examining diversity by industry, occupation, and broad employment functions,

2) Case studies of community economic diversification efforts, and

3 A Guide for Action that can be used by community leaders and economic development professionals.

This project includes some very useful resources and guides.  It’s hard to briefly sum up the whole package, but I would point to one important concluding thought:  Effective regional diversification strategies are not about simply supporting a generically diverse mix of local economic activity.  Instead, these strategies require a well-conceived approach that builds multiple competitive specializations that are effectively aligned with a region’s real economic assets and skill sets.   These multiple (and diverse) specializations will help ensure that your region survives and prospers in the event of future shocks, whether they be natural or economic disasters.

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