Related Variety, Trade Linkages, and Regional Growth in Italy

Abstract This article presents estimates of the impact of regional variety and trade linkages on regional economic growth by means of export and import data by Italian province (NUTS 3) and sector (three‐digit) for the period 1995–2003. Our results show strong evidence that related variety contributes to regional economic growth. Thus, Italian regions that are well endowed with sectors that are complementary in terms of competences (i.e., that show related variety) perform better. The article also assesses the effects of the breadth and relatedness of international trade linkages on regional growth, since they may bring new and related variety to a region. Our analysis demonstrates that regional growth is not…