Diversity and employment growth in Canada, 1971– 2001: can diversification policies succeed?

In this paper, we explore the link between diversity in the local economy, the process of diversification and employment growth. To do so, we first examine diversification trends between 1971 and 2001 across 382 Canadian areas (urban and rural). We then examine whether or not the more diversified areas display faster employment growth. Over some periods and for some types of area they do, but over other periods they do not. Furthermore, there is no clear link between the process of diversification and growth. Also, proximity to a large diversified economic unit (metropolitan areas) tends to be associated with growth; thus, it is not only the local characteristics of regions that determine their growth levels. Our evidence suggests that economies associated with diversity can occur concurrently with economies associated with specialisation. In the light of these complex relationships, we conclude that diversification policies are difficult to justify on the grounds of employment growth and would in any case be difficult to implement successfully due to the overall inertia observed in diversity levels. [ABSTRACT FROM AUTHOR]