Green-Tech Transition Beyond Regional Borders: The Role of Embodied Green Knowledge Flows

This article investigates how regions’ specialization in new environmental technologies is influenced by their exchange of green knowledge through interregional trade of intermediate commodities. By integrating recombinant innovation and embodied knowledge diffusion theories, we hypothesize that interregional trade flows embed and carry green knowledge, forming a network that promotes regions’ diversification into new green technologies and enhances its exploratory nature. Using EUREGIO input–output data and REGPAT patent data for 237 EU NUTS-2 regions (2000–2019), we examine how regions’ centrality in this knowledge network facilitates their green-tech diversification, distinguishing between acquired (inward) and diffused (outward) knowledge, as well as domestic and foreign flows. Our findings suggest that a region’s ability to specialize in new green technologies in an exploratory manner is primarily linked to its centrality in diffusing embodied green knowledge flows. Furthermore, extensive-margin diversification is mostly driven by centrality in foreign networks, while domestic networks support only intensive-margin diversification. Policy implications are discussed accordingly.