Keystone sector methodology:network analysis comparative study

Keystone sector methodology applied to Portugal

This new method to identify the keystone sectors in small communities is
carefully documented in Kilkenny and Nalbart (2000) and the following explanations
are mostly based on their text.

The keystone sector is considered the one that plays a unique and fundamental
role within a community, which means that without it, the quality of economic life in
the community will be inferior. As the nodes we chose are institutions, the keystone
sector we look for will be the institution without which the social network will become
disconnected. The ‘keystone’ concept was early used by the ecologist Robert Paine in
the late 60’s when identifying the predator as the critical species in an ecosystem⁸.

This new method enables us to think about the importance of a large set of
entities besides firms, which are not usually identified as important within an economic
competitiveness context, such as churches, clubs, hospitals, social care institutions,
schools, and so forth. We find attractive the application of this ecological idea to the
social environment in a town, where a number of demographic changes in business
occur across the years without a reasonable understanding of the predator activities. We
found it appropriate since within a social capital framework it is probable that
institutions other than firms, can play important roles in the growth and development
processes, as above described, given that they provide important productive resources
non-captured in other interactions⁹. The keystone sector methodology is also
appropriate because our hypothesis is that regional disparities have been addressed in a
biased format. Socioeconomic indicators that have been considered as criteria to apply
for structural funds across countries disregard other important characteristics at the
intermediate level of political agency. Our empirical experiment can thus turn into an
important complementary approach (social) to existent economic analysis.

This methodological approach is also driven from the theoretical considerations
presented before. As a matter of fact, the analysis will focus on the ‘interaction’ rather
than in the competitive actor’s attributes and will look to the whole social structure as a
production factor used to provide new competitive opportunities. As small towns are
the main nodes located in the broad regional network, they are the appropriate scale to
look at.

⁸ “Key sector analysis is also familiar in economic structure studies as those whose backward and
forward linkages creates above-average impacts on the rest of the economy” (Sonis, M., Hewings, G. and
Guo, J. (2000).

⁹ Interaction in input-output analysis is also approached within a q-analysis framework in Sonis, M. and
Hewings, G. (2000)

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