The power of regional centrality: specialization, diversity, and their effects on regional economic growth

Abstract The transition to electric vehicles is reshaping industrial structures and regional economies, particularly in countries with strong automotive sectors. This study investigates how regional network centrality within the automotive industry affects regional economic growth, focusing on the moderating roles of industrial specialization and diversity. While regions with higher centrality are expected to benefit from denser supply-chain linkages and knowledge flows, the magnitude of this effect depends on the composition of their industrial base. Using inter-firm transaction data from 15 South Korean provinces between 2008 and 2021, regional centrality is derived from social network analysis using degree centrality. Industrial specialization and diversity are measured to reflect the structural composition of regional industries. Panel regressions are employed to assess both the direct and interactive effects of these variables on regional economies. The results show that regional centrality has a significant positive effect on economic growth, confirming that regions occupying central positions in industrial networks achieve stronger economic performance. However, specialization and diversity weaken this positive effect, whereas a balanced interaction among the three factors enhances economic outcomes. These findings highlight the importance of network structures and industrial composition in shaping regional development dynamics. The study provides empirical evidence and policy insights for governments seeking to strengthen regional competitiveness and foster sustainable industrial transformation during technological transitions.