New indicators of related diversification applied to smart specialization in European regions

This paper proposes two new indicators of related diversification applied to Smart Specialization. The indicators are useful monitoring tools to assess the initial conditions and evolution of the European regions (NUTS-2) regarding one of the orienting principles of Smart Specialization: relatedness. The first indicator ranks regions quantitatively in a given year concerning related variety of specializations; and the second indicator captures to what extent regions acquire, over time, new specializations in related areas. These indexes use the concept of technological relatedness, and are applied to the case of European regions using the Organisation for Economic Co-operation and Development's (OECD) REGPAT database. The results indicate that regions located at the core of the European continent, as well as Northern European regions, perform better, whereas Southern and Eastern Europe persistently exhibit lower scores.