Disentangling relatedness density: the complementary impact of non-specialised related technologies

We propose a fundamental modification of the relatedness density index which considers the region’s whole technological structure, including linkages between technologies in which the region is specialised and those in which it is not. When carefully disentangled, relatedness to technologies in which the region is not ostensibly specialised is shown to boost diversification into new technologies, over and above the positive role of relatedness to technologies where a local specialisation does exist. This phenomenon is more pronounced in high-income regions, and provides the crucial insight that these more varied and complex local linkages help high productivity regions be so productive.