Promoting regional growth and innovation: relatedness, revealed comparative advantage and the product space

We adapt the product-space approach of Hausmann-Hidalgo et al. to the case of Italian provinces, examining the extent to which network connectedness and centrality of a province's exports is related to its economic performance. We construct a new Product Space Position (PSP) index which retains many of the Hausmann-Hidalgo et al. features but which is also much better suited to handling regional and provincial data. The PSP index is found to outperform other indices. Our comparison throws light on fundamental aspects of network-cognitive-distance-trade arguments. A better positioning in the export-network product space is indeed associated with better local economic outcomes.