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Journal of Global Trade, Ethics and Law

Vol. 2 No. 2 (2024): Journal of Global Trade, Ethics and Law
Articles

The Role of Geographic and Sectoral Diversification, and the Herfindahl-Hirschman Index: Insights from Italian Provinces and Regions

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Luigi Capoani
University of Trieste
Martini Piergiorgio
European Youth Think Tank
JGTEL

Published 2024-12-31

Keywords

  • Regional Economies,
  • HHI index,
  • imports and exports,
  • Geographic diversification

Copyright (c) 2024 Journal of Global Trade, Ethics and Law

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This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

The Role of Geographic and Sectoral Diversification, and the Herfindahl-Hirschman Index: Insights from Italian Provinces and Regions. (2024). Journal of Global Trade, Ethics and Law, 2(2), 73-106. https://doi.org/10.70150/wq5d0b20

Abstract

This study examines the role of the Herfindahl-Hirschman Index (HHI) and a new diversification index that integrates geographical and sectoral factors to analyze economic activities in Italian provinces. The research highlights how local territorial heterogeneity influences urban and regional economics, emphasizing diversification as a strategy for growth. The findings underscore diversification’s importance in enhancing economic stability and resilience, while comparing it with specialization. Although it can boost competitive advantage through efficiency and innovation, specialization also increases vulnerability to sector-specific risks. The study calculates the HHI by using three categories: geographical diversification of export destinations, sectoral exports, and geographical import diversification. These insights provide a groundbreaking understanding of the economic dynamics within Italian provinces and regions, showcasing the advantages and trade-offs between diversification and specialization in regional economic development.

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