Related variety and regional growth in Spain

This paper investigates whether related variety, among other types of spatial externalities, affected regional growth in Spain at the NUTS 3 level during the period 1995-2007. We found evidence that related variety matters for growth across regions, especially when measured with the assistance of the Porter's cluster classification and the proximity index proposed by Hidalgo et al.. That is, Spanish provinces with a range of industries that are technologically related tend to show higher economic growth rates, controlling for the usual suspects. We did not find, however, any evidence of regional growth effects that come from technologically related sectors imports.