Abstract
This note studies the mechanisms through which regional economies diversify over time and formulates suggestions on how
policy can influence such process. In particular, two closely related concepts will be defined, that is, technological relatedness
and related variety.
Regional diversification is a crucial process in order to develop new growth paths. It is understood as an emerging process
through which new activities develop out of existing ones, but the scope and outcome of this process are fundamentally
affected by technological and cognitive constraints.
We discuss how technological relatedness may provide an input for effective policy making. In this respect, public policy should
avoid picking winners that do not fit into the regional actual and potential industrial space and should prevent supporting
declining industries that occupy a peripheral position in the industry space of a region. More in particular, we direct attention to
various mechanisms through which new industries may be stimulated to connect to technologically related industries at the
regional level.
We also introduce the process of entrepreneurial discovery, in which entrepreneurs generate the key information guiding the
selection of the domains of future regional specialization, and discuss its relationship with policy schemes based on related
diversification.
policy can influence such process. In particular, two closely related concepts will be defined, that is, technological relatedness
and related variety.
Regional diversification is a crucial process in order to develop new growth paths. It is understood as an emerging process
through which new activities develop out of existing ones, but the scope and outcome of this process are fundamentally
affected by technological and cognitive constraints.
We discuss how technological relatedness may provide an input for effective policy making. In this respect, public policy should
avoid picking winners that do not fit into the regional actual and potential industrial space and should prevent supporting
declining industries that occupy a peripheral position in the industry space of a region. More in particular, we direct attention to
various mechanisms through which new industries may be stimulated to connect to technologically related industries at the
regional level.
We also introduce the process of entrepreneurial discovery, in which entrepreneurs generate the key information guiding the
selection of the domains of future regional specialization, and discuss its relationship with policy schemes based on related
diversification.
| Original language | English |
|---|---|
| Place of Publication | Luxembourg |
| Publisher | Publications Office of the European Union |
| Number of pages | 25 |
| ISBN (Electronic) | 978-92-79-35503-5 |
| DOIs | |
| Publication status | Published - 2013 |
Publication series
| Name | JRC technical reports |
|---|---|
| Publisher | Joint Research Centre of the European Commission |
| ISSN (Electronic) | 1831-9424 |
| Name | S3 Policy Brief Series |
|---|---|
| Publisher | Joint Research Centre of the European Commission |
| No. | 06/2104 |
Keywords
- Regional Branching
- Technological Relatedness
- Related Variety
- Related Diversification
- Entrepreneurial Discovery Process