Green Growth in the Technology Space – Regional Diversification Pathways in Europe

Abstract

Green growth as a way to reconcile economic and environmental benefits, challenges economies to develop capabilities that allow for handling of complex situations. Although an empirical account of these capabilities and their dynamics over time is desirable, current approaches in Evolutionary Economic Geography fall short in systematically accounting for those, in particular at the regional level. The central issue is the need to explore differences and similarities in possible pathways towards green growth in different geographical context. In particular, catch-up regions, which have developed the required capabilities both faster and more successfully, can provide a promising blueprint. Thus, to examine and contextualize green growth at the regional level, two research questions are addressed: “Which European regions have successfully diversified into more complex green technological capabilities over time? What are the similarities and differences between catch-up regions with regards to their green growth diversification pathways in the technology space?” To answer this, a quantitative-exploratory research approach was followed. Using green patent data, as a first step, a green fitness ranking of regions was developed. From the ranking evolution, a diverse set of leading and catch-up regions were identified according to their general innovation capacity. As a second step, the green technological dynamics over time were mapped out for each catch-up region using the technological relatedness within the regional technology space and observing the patterns over time against the technological dimensions of complexity, relatedness, and technology life cycle. The analysis confirms general patterns of regional development and path-dependence also for green growth, while the most successful catch-up regions systematically deviate from this. Based on the exploratory mapping, similarities and differences were derived as propositions for green growth diversification pathways. As such, path upgrading and path diversification are the most feasible, while successful path development might potentially be enabled by a dense core or constrained by dense clusters. Mechanisms for pathways include leveraging on technologies at advanced life-cycle stages and thus profiting from extra-regional knowledge, as well as coupling more unrelated path diversification opportunities with more related ones in clusters. These mechanisms are particularly interesting for regions with lower innovation capacity. Contributing factors for more complex green capabilities are strategic technological exits, also as part of re-orientating the portfolio, as well as a stable set of low-complex technologies as anchor points. These insights can inform more effective policy design for green growth, in particular smart specialization strategies.