Regional Branching and Smart Specialisation Policy

No JRC88242, JRC Research Reports from Joint Research Centre

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.

Keywords: European cohesion policy; Structural Funds; smart specialisation; related variety; regional branching; entrepreneurial discovery process (search for similar items in EconPapers)
Pages: 28 pages
Date: 2014-05
New Economics Papers: this item is included in nep-ent, nep-geo, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

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