Green & non-green relatedness: challenges and diversification opportunities for regional economies in Argentina

This paper analyzes the role of relatedness in the development of new green specializations for the Argentinean provinces between 2008-2019. The development of products with environmental benefits (called green products) is considered one step towards a sustainable transition. These products present a growing demand that may provide an opportunity in terms of green development. The empirical strategy draws on the evolutionary economic geography through indices that capture knowledge bases in the region. The aim is to analyze the role of green and non-green relatedness in the development of new green specializations and to identify potential diversification opportunities. Empirical results show that the green economy has an uneven spatial distribution across the country, that remains stable over time. Furthermore, the development of a new green specialization is positively related to the productive knowledge bases present in the region (proxied by relatedness density). Both, green and non-green relatedness are relevant to develop new specializations in green products. Potential diversification opportunities are also in favor of wealthier regions. Finally, the results reveal a path dependence process on the development of new specialization in green products.