When Specialization Leads to Knowledge Expansion: Linking Industrial Districts to Economic Complexity across Italian Regions

This paper investigates the relationship between industrial districts and economic complexity across Italian provinces (NUTS-3), focusing on how district characteristics influence long-term structural transformation. Using a long-difference estimation framework over the 2012-2018 period, we assess the effect of district presence, numerosity, and relatedness on regions. The results show that the mere presence of industrial districts does not systematically predict complexity growth. Instead, district numerosity is positively associated with capability accumulation. More importantly, district relatedness, capturing productive coherence among co-located districts, emerges as a significant driver of complexity growth. These findings highlight the importance of internal regional economic structure in fostering development, offering relevant policy implications for addressing territorial disparities and promoting sustained, capabilitydriven growth.