Digitalisation in European regions: unravelling the impact of relatedness and complexity on digital technology adoption and productivity growth

Abstract

Digital technologies are the cornerstone of platform, knowledge, and network economies, driving the interconnectedness, innovation, and efficiency that define these economic models. Consequently, digitalisation has recently become a key policy objective for regional economies. This paper provides empirical evidence on how the adoption of new digital web technologies is shaped by previous regional digital capabilities. The analysis is based upon an economic complexity and relatedness framework using novel data on digital web technologies’ adoption for 278 European NUTS-2 regions between the years 2000 and 2022. Results show that regions tend to adopt new digital web technologies when they already master related digital capabilities. This paper also shows how digital complexity is associated with labour productivity gains at the regional level. Conclusions shed light on how regions adopt digital web technologies and serve as a tool for policymakers.