How ‘Provincial’ Is Your Region? Openness and Regional Performance in Europe

Abstract: By employing 1995-2000 data on European regions, an index of regional openness is constructed based on the share of hotels in the population and the share of the population that speaks a second language. This index has an impact on regional performance after controlling for technological capabilities, agglomeration economies, and other factors. Apart from a direct effect of openness, an indirect effect was found coming through patents. This suggests that open regions tap into wider knowledge networks that then affect performance. From a policy perspective, making a region less 'provincial' can be as important as investments in local infrastructures and networks.