The role of related and unrelated variety in regional economic resilience: insights from Turkish regions

Abstract This study investigates the impact of related and unrelated variety on regional economic resilience in Turkey at the NUTS-3 level, emphasizing the role of sectoral interconnectedness in shaping a region’s capacity to withstand and recover from economic shocks. Departing from conventional employment-based indicators, the analysis adopts a GDP-based framework to capture resilience along two key dimensions: resistance and recovery which the recent literature increasingly interprets as measurable outcomes. Using a pooled OLS approach, resilience indices are constructed for multiple periods, accounting for both financial and epidemic shocks. The findings offer partial and context-dependent evidence: Unrelated variety generally shows a negative association with GDP-based resilience, especially during resistance and early recovery phases, but this relationship is not robust across all model specifications or shock types. Related variety, meanwhile, demonstrates weaker and less consistent effects, with occasional positive contributions observed only in select epidemic recovery models. These results underscore the sensitivity of industrial variety’s role to both the nature of the shock and the chosen resilience metric. Importantly, informal employment consistently exhibits a positive and statistically significant relationship with resilience, suggesting that, in the short term, informality may enhance regional adaptability through labor market flexibility. Overall, the hypothesis that related variety weakens resilience receives limited support, while the stabilizing role of informality appears more robust. The results highlight the need for shock specific and regionally tailored policies. Strengthening the capacity of local institutions and incorporating flexible formal labor arrangements could support more responsive and resilient regional development in Turkey.