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Relatedness, Complexity and Local Growth: Executive Summary

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Relatedness captures the extent to which the jobs in a region depend on the presence of other local activities.

Complexity captures the extent to which workers benefit from the presence of other workers with complementary skills or to which businesses do better when related activities are present locally. In this paper, we examine the contribution of relatedness and complexity to urban employment growth, using 1981— 2013 New Zealand census data. This analysis helps us evaluate the intervention logic of ‘smart specialisation’ policies used in the European Union. Current regional development and innovation policy debates in New Zealand discuss the merits of expanding our primary sector relative to diversifying into more complex products and services. Our analysis informs these debates by evaluating whether historical employment dynamics in New Zealand provide evidence of relatedness-driven growth, thereby indicating the capacity for such growth in the future.

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