Skill capabilities behind the scenes: the role of occupational portfolio in regional industrial evolution

An increasing number of studies confirm that regional diversification is path dependent, with new industries building on pre-existing ones. However, these studies typically overlook the role of skill capabilities and the interactions between skills and industries. In this research, based on the concept of industry–occupation cross-relatedness, the influence of skill capabilities on industrial diversification across Chinese regions was investigated. The findings indicate that regions can diversify into skill-related activities following a skill path-dependent process. Furthermore, a theoretical framework integrating industry–occupation cross-relatedness and economic complexity was introduced that enabled the adoption of various diversification strategies based on regional skill capabilities.