The Dark Side of the Geography of Innovation. Relatedness, Complexity, and Regional Inequality in Europe

Flavio Pinheiro, Pierre-Alexandre Balland, Ron Boschma () and Dominik Hartmann

No 2202, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: As regions evolve, their economies become more complex, and they tend to diversify into related activities. Although there is a bright side to this diversification process in terms of economic development, there may also be a dark side to it, as it possibly contributes to regional inequalities. The paper uses data on industries and patents to analyze the diversification patterns of 283 regions in 32 European countries over the past 15 years. We find that only the most economically advanced regions have the opportunity to diversify into highly complex activities. These regions tend to focus on related high-complex activities, while lagging regions focus on related low-complex activities, creating a spatial inequality feedback loop. This pattern creates a wicked problem for innovation policy: the strategy needed to improve the innovativeness of the European knowledge system might disproportionately benefit regions that are already developed and foster disparities.

Keywords: dark side of innovation; geography of innovation; regional diversification; complexity; regional inequality; Smart Specialisation Policy (search for similar items in EconPapers)
JEL-codes: O25 O31 O33 R11 (search for similar items in EconPapers)
Date: 2022-01, Revised 2022-01
New Economics Papers: this item is included in nep-cse, nep-eur, nep-geo, nep-ino, nep-sbm, nep-tid and nep-ure
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Citations: View citations in EconPapers (20)

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