Fragmentation and complexity: Analyzing structural change in the Chicago regional economy

In this paper, two dimensions are differentiated within the fragmentation process: a spatial and a functional one. On the one hand, due to fragmentation and industrial relocation, regional and national economies might be losing some internal linkages. This spatial fragmentation determines a decrease in the complexity of the production systems. On the other hand, outsourcing, as a form of functional fragmentation, increases the density of transactions and linkages within an economy. The overall impact of fragmentation on the complexity of the regional and national economic systems depends on the net effect of these two fragmentation forces. In this paper, the effects of fragmentation on the complexity of the economy of the Chicago region are studied from a set of input-output tables estimated for the period 1978-2014 using Average Propagation Lengths (APLs).