Technological complexity and economic growth of regions

Technological complexity in Europe

Do competences in complex technologies matter for regional growth? Yes – they do! In our new study, Lars Mewes and I show that the complexity of technological competences facilitates regional economic growth in Europe:

We use patent data and the measure of Structural Diversity to model the complexity of 159 regions in Europe. We match regions’ complexity with a wide set of additional characteristics including GDP growth from 2000 to 2014. Relying on dynamic panel regressions, we identify a robust effect of complexity on economic growth. The results indicate that a 1% percent increase in regional complexity is associated with a 0.045% increase in GDP per capita. Crucially, our study adds missing evidence to recent smart specialization policies advocating regions to diversify into complex activities. Our findings back this by showing that engaging in complex technologies is more rewarding than increasing general innovation activities. On a side note, this is also the paper with the greatest numbers of individual regression estimations in both our careers with >3,000 model calculations to confirm the findings’ robustness.