Since the 1980s, income differences between European Union (EU) states have declined at the same time as regional inequalities within countries have increased (Puga, 2002). Across many states of the EU regional development is increasingly polarized (Overman et al., 2002). Although regional...

This note studies the mechanisms through which regional economies diversify over time and formulates suggestions on how policy can influence such process. In particular, two closely related concepts will be defined, that is, technological relatedness and related variety. Regional diversification...