Technological complexity and economic growth of regions

Abstract

One the one hand, complex technologies offer substantial economic benefits, and on the other, they are difficult to invent and to imitate, and they refuse a fast dissemination. This two-sidedness motivates the idea that regions’ competitive advantages and, in consequence, their economic growth, originate in their ability to produce and utilize complex technologies. However, the relationship between technological complexity and regional economic growth has rarely been empirically investigated. Here, we address this pressing research gap by assessing the complexity of technological activities in 159 European NUTS 2 regions and relating it to their economic growth from 2000 to 2014. Our empirical results suggest that technological complexity is an important predictor of regional economic growth. A 10% increase in complexity is associated with a 0.45% GDP per capita growth. By showing that technological complexity is important for regional economic growth, our results fuel current policy debates about optimal regional policies such as the Smart Specialization strategy.