Green-tech transition beyond regional borders: the role of embodied green knowledge flows

This work investigates the role of external exchanges of green knowledge on the regional development of new green technological specializations. We extend the recombinant knowledge framework to commodity-embodied knowledge and posit that inter-industry inter-regional flows of commodities, in which new green knowledge gets incorporated, are a channel through which regions can increase their opportunities of specializing in new green technologies and diversify in a more exploratory manner. We further expect these dynamics to be stronger when foreign rather than domestic embodied flows are concerned. By combining the EUREGIO input-output database with patent data, we test our hypotheses on a sample of 237 EU (NUTS2) regions over the period 2000-2019. We measure the regions’ centrality in the network of inter-regional flows of embodied green knowledge (GreenFlowNet) and exploit regional network centrality in a model of related diversification for green technologies. Results show that the centrality of regions in the network is positively associated with green diversification, making this process more exploratory. We also find that the regional ability to acquire new green-techs is mainly associated with the centrality in outward flows of green knowledge towards other regions rather than inward ones. Lastly, we find that regions’ green-tech diversification seems to be enabled (at the extensive margin) primarily by their centrality in the foreign network and accelerated (at the intensive margin) by their centrality in the domestic one. Policy implications are drawn accordingly.