The effect of regional variety on complexity in Europe: Unraveling complexity

Abstract

As to this date, the influence of regional variety on regional complexity has not been investigated, whereas these concepts play a central role in the economic geography literature. This study proposes a new method that is based on the influence of the regional technological composition expressed in related, semi-related and unrelated variety on regional complexity. The results show that regions in general lose complexity. Mainly, high complex regions ‘lose’ technological specializations and face difficulties with maintaining the level of complexity. Furthermore, it is shown that geographical relatedness density and semi-related variety have a strong and positive effect on the level of regional complexity.