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Regional capabilities are regarded a pillar of Smart Specialisation Strategy (S3). There is yet little focus in S3 policy on the role of interregional linkages. This study on 292 NUTS-2 regions in Europe finds that interregional linkages have a positive effect on the probability of regions to diversify, especially in peripheral regions. What matters is not being connected to other regions per se, but being connected to regions that provide complementary capabilities. Finally, we propose a new indicator that enables regions to identify other regions as strategic partners in their S3 policy, depending on the presence of complementary capabilities in other regions.
Balland et al. (2021) studied this question.