The MAUP and the effect of industrial diversity on Brazilian regional economic stability

Abstract

The correlation between industrial diversity and regional economic stability is theoretically expected to be positive, suggesting that a region with greater industrial diversification will be less affected by exogenous shocks, resulting in less economic instability. Historically, however, empirical studies have produced mixed results, often finding a lack of significance in the correlation. Among the possible reasons that can lead to such divergence, this study focuses on the Modifiable Areal Unit Problem (MAUP), highlighting the importance of changes in geographic scale on the results due to spatial interference of data. To conduct this study, spatial econometrics and data from the RAIS and Demographic Census are used to collect information from Brazilian municipalities, micro-regions, and meso-regions between 2010 and 2019. The results show spatial influence at all geographic levels, as well as variation in the magnitude, significance and direction of the correlation depending on the scale used, confirming the hypothesis of MAUP in the study. Furthermore, the municipal level was the only one that presented results more consistent with the theory in the Brazilian case.

Keywords

• industrial diversity
• economic stability
• MAUP
• geographic scales
• spatial econometrics