Regional development traps in Europe: a study of occupational trajectories of regions

Abstract

This paper presents an evolutionary perspective on regional development traps that centres around the structural inability of regions to develop new and complex occupations. Using the European Labour Force Survey, we follow occupational trajectories of 237 European regions and provide evidence on which regions are trapped, what kinds of traps they have fallen into and which regions have managed to escape such traps. We find a clear-cut divide in Europe: Almost all non-trapped regions are in Northern and Western Europe, while trapped regions are found primarily in Southern and Eastern Europe. However, this geographical divide does not apply to all types of regional traps. Our results also show that regional development traps are persistent: Regions often remain in the same trap, but not always. Our study suggests a feasible pathway for low-complexity regions to overcome a development trap is by building capabilities in related occupations and then diversifying into complex occupations. Once complexity levels are high, regions tend not to lose their complexity.