Employment imbalances in EU regions: technological dependence or high-tech trade centrality?

Abstract

ABSTRACT We analyse the role of technological dependence and interregional trade centrality in explaining a region’s employment performance. We first identify the core–periphery technological structure of European Union (EU) regions, clustering them based on their high-tech trade relations (trade blocks) and technological and economic indicators (place-based regional groups). We show that EU regions have a fractal structure: blocks at the core and periphery of the high-tech trade network are divided into core and peripheral subgroups, which differ significantly in terms of innovation and employment performance. Next, the econometric analysis shows that buyer centrality is the main component of employment growth (especially in services), but within trade blocks it has to be combined with low technological dependence on more innovative regions (especially in manufacturing). Cohesion policies should pay attention to the fractal structure of regional inequalities, and Smart Specialisation strategies should consider that unrelated diversification towards activities intensive in the use of high-tech inputs may be more conducive to employment growth.