Analyzing the Relationship between Population Density and “Hi ...

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Abstract

Insufficient knowledge about the effects of population density on high-tech activities at the sectoral level may hinder the understanding of optimal places to establish high-tech start-ups or relocate high-tech firms, especially in economically less developed countries outside the high-tech cores of the economy. Previous studies have discovered that agglomeration economies positively affect high-tech activities. However, the question of whether the effects differ at the sectoral level still has not received sufficient attention. This article aims to determine the significance and peculiarities of the relationship between population density and high-tech specialization at the sectoral level. The article uses the example of economically less developed countries in the European Union during the period from 2005 to 2015. For the analysis, the article employs correlation and regression analysis for predicting changes in high-tech specialization as a result of changes of population density and tests the significance of population density for such changes. The results observed at the sectoral level provide additional knowledge. First, the relationship between population density and high-tech specialization varies at the sector level. Second, population density in economically less developed countries is a significant predictor of changes in high-tech specialization at the sectoral level. Third, a sector-level increase in population density does not univocally positively affect high-tech activities in the specified high-tech and knowledge-intensive sectors in both densely and sparsely populated places. Thus, from a sectoral perspective, population density is a significant factor for understanding a territory’s potential for high-tech specialization, and this potential differs across sectors. Taking these findings into consideration may lead to more sustainable choices when allocating high-tech activities.