We thank Ron Martin for his insightful review essay on our book (MARTIN, 2016). He has raised questions that are important to understanding the development pathways of regions and to structuring research to generate robust insights that could be useful in sustaining or creating prosperous, inclusive regions. It is therefore a pleasure to be able to engage with his discussion in a way that hopefully will help us all to move forward collectively.

First, we agree with Martin that research on regional development should be securely anchored in both theory and data and were surprised at his remark that our book is light on detailed data analysis. In the urban and regional economic development literature, we know of no equivalent integration of a wealth of original, deep and broad empirical evidence on two urban economies as that reported on in our book. More importantly, Martin raises the central issue of the role of specialization in economic development today. In the cases at hand, we show that specialization leads to high regional incomes, in the past and in the present. Martin seems to suggest that regional economic diversification might be a key to high income. The debate about specialization versus diversification suffers from conceptual confusion.