Assessing the role of entropy on economic complexity in Italian regions

Roberto Antonietti and Chiara Burlina

Chapter 7 in Unlocking Regional Innovation and Entrepreneurship, 2021, pp 133-156 from Edward Elgar Publishing

Abstract: This chapter analyses whether a higher level of entropy in a region corresponds to higher economic complexity. We focus on Italian NUTS3 regions, which represent an interesting laboratory due to their high heterogeneity in skill endowment, performance and level of development. We measure entropy through a Theil index of industry variety, that we further split into a within-entropy and a between-entropy component. We capture economic complexity through the Hidalgo and Hausmann index, on regional export data at three-digit industry level for the period 2004-10. Our results do not confirm that, in general, regions where entropy is higher are also those where economic complexity is higher too. Instead, we find that this relation holds only in regions characterised by a low level of complexity, and when entropy increases at the intensive margin.

Keywords: Economics and Finance; Geography; Innovations and Technology; Urban and Regional Studies (search for similar items in EconPapers)
Date: 2021
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