Davies, B. and Maré, D. C. (forthcoming). “Relatedness, Complexity and Local Growth.” Regional Studies.
We derive a measure of the relatedness between economic activities using weighted correlations of local employment shares. Our approach recognises variation in the extent of local specialisation and adjusts for differences in data quality between cities. We use our measure to estimate city and activity complexity, and we examine the contribution of relatedness and complexity to urban employment growth in New Zealand. Relatedness and complexity are complementary in promoting employment growth in New Zealand’s largest cities but do not contribute to employment growth in its smaller cities.