Indicators and Growth effects of Related Variety at the national and regional level in the EU

Following the study by Frenken et al. (2007) introducing the concept of related variety in regional economics, a number of studies have been undertaken to analyze the effect of related variety on economic development. The review of related variety research made clear that – although the evidence base is still rather small with about 15 studies – most studies find support for the initial hypothesis by Frenken et al. (2007) that related variety supports regional employment growth. We also reviewed the studies looking at branching, following the study by Hidalgo et al. (2007). That is, the process in which a region or countries develops comparative advantage in new industries. Also here it was found that if a region or countries already hosts industries that are related to a specific industry, it is much more likely to become specialized in that industry. We end with a number of further research questions regarding: i. methodology, ii. the role of unrelated variety in regional development, an iii. the need to analyze how related variety may spur innovation and entrepreneurship.