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Capabilities, diversification & economic dynamics in European Regions

Author

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  • Jan Fagerberg

    (TIK, University of Oslo)

  • Martin Srholec

    (CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences)

Abstract

What determines the differences in economic performance across European regions? In addressing this question, this paper takes inspiration from two different approaches. One approach highlights the role of capability-building, of a technological or social nature, while another perspective emphasizes the potential advantages of proximity and, hence, a relatively diversified economic structure, for regional economic performance. The paper argues that the impacts of capability-building and diversification on regional economic development need to be assessed jointly. Using information for 261 regions at NUTS2 level in 27 European countries in the 2000s, novel data sources are exploited to construct measures of technological and social capabilities, which are combined with indicators of related and unrelated variety in the analysis of regional economic dynamics. The results suggest that capability-building play a key role in regional economic development while the results for diversification are more mixed.

Suggested Citation

  • Jan Fagerberg & Martin Srholec, 2021. "Capabilities, diversification & economic dynamics in European Regions," Working Papers on Innovation Studies 20210615, Centre for Technology, Innovation and Culture, University of Oslo.
    • Handle: RePEc:tik:inowpp:20210615
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    References listed on IDEAS

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