TY  - RPRT
        AU  - D’Alessandro, Francesco
AU  - Santarelli, Enrico
AU  - Vivarelli, Marco
        TI  - The Interplay Between AI and Technological Relatedness in Shaping Regional Innovation in Europe
        PY  - 2026/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18817
        UR  - https://www.iza.org/publications/dp18817
        AB  - This study examines how regional technological relatedness and local AI knowledge influence regional innovative activity, as measured by patenting activity. Using a novel three-way longitudinal dataset  and leveraging a deep learning-based identification of AI patents, we show that two broad mechanisms operate in parallel. First, in accordance with the extant literature, technologies that are cognitively close to a region’s existing patent portfolio enjoy higher patenting activity, confirming that relatedness remains a strong and persistent predictor of innovative output. Second, local AI endowments are positively associated with patenting across technological fields, even after conditioning on relatedness, indicating that AI plays an enabling and cross-cutting role in a given regional innovation system. Moreover, the interaction between relatedness and AI turns out to be negative and statistically significant, implying that AI attenuates the extent to which local innovative efforts depend on the technology’s proximity to the regional portfolio. In sum, AI appears to enhance overall local innovative activity while reducing its reliance on pre-existing regional knowledge structures.
        KW  - Artificial Intelligence
KW  - AI
KW  - technological change
KW  - regional innovation
KW  - relatedness
        ER  -