Related variety is a key concept in evolutionary economic geography that links knowledge spillovers to economic development, new growth paths and economic renewal. It refers to the variety of industries within a region that are cognitively related and maximise the potential for learning opportunities and growth of existing industries as well as the local sources of growth for new industries. Combined with other methodologies, related variety facilitates decision making through the selection of investment priorities for future specialisation
Related variety is estimated using an entropy measure comparing employment in 5-digit industries within each 2-digit classes (as an average) and unrelated variety using an entropy measure comparing employment across 2-digit classes. Industrial specialisation is estimated as the share of regional employment in a sector compared to national/European share. Technological and cognitive proximity can be estimated through the analysis of the industrial classification of patents.
The logical steps of the application, based on its methodological description are:
- Step 1. Visit the main page of the application and search for a country's region.
- Step 2. Display a network visualization of the regional employment statistics
- Step 3. Display a network visualization of the sector specialization in regional employment
- Step 4. Combine the regional employment specialization with the technological specialization, which has derived from a patent analysis process
- Step 5. Extract sectors with technological proximity and high correlation with the already present ones.