Table of Contents

Innovation, Global Change and Territorial Resilience

Innovation, Global Change and Territorial Resilience

New Horizons in Regional Science series

Edited by Philip Cooke, Mario Davide Parrilli and José Luis Curbelo

Localized creativity, small high-tech entrepreneurship, related innovation platforms, social capital embedded in dynamically open territorial communities and context-specific though continuously upgrading policy platforms are all means to face new challenges and to promote increased absorptive capacity within local and national territories. The contributors illustrate that these capabilities are much needed in the current globalized economy as a path towards sustainability and for creating new opportunities for their inhabitants. They analyse the challenges and development prospects of local/regional production systems internally, across territories, and in terms of their potential and territorial connectivity which can help exploit opportunities for proactive policy actions. This is increasingly relevant in the current climate, in which the balanced allocation of resources and opportunities, particularly for SMEs, cannot be expected to be the automatic result of the working of the market.

Chapter 16: What Public Policies Can and Cannot do for Regional Development

Mikel Landabaso

Subjects: economics and finance, economics of innovation, industrial economics, regional economics, innovation and technology, economics of innovation, urban and regional studies, regional economics


Mikel Landabaso* Innovation is one of the most fundamental processes underpinning economic growth .  .  . The innovation process requires significant and appropriate public  policy support to secure the social benefits it can deliver. (OECD, 2010, p. 15) Most economists, when confronted in the field with the challenge of designing regional economic development policies, would acknowledge the sheer difficulty of the task due to its complexity and multifaceted character. Most would focus on one particular aspect of the economic development process with the result being an economic analysis and policy choices based on a few interconnected economic problems. Most of the time we are aware of the limitations of our efforts and we feel somehow frustrated by our inability to apprehend the entire problem and provide a satisfactory response which will ‘solve it’. This begs the question: is calling for more labour market flexibility, deregulation, lower salaries and tax rebates to attract foreign direct investment, in regions with high levels of unemployment and little or no influence over macroeconomic policy tools, the best we can do to create jobs and stimulate economic growth? Are we in reality, simply asking the unemployed to emigrate, explaining, of course, that in time the market will adjust and that development will eventually take place in those regions they have left behind? This school of thought argues that after some unavoidable adjustments these regions will start catching up faster, surpassing others, and now ranked, in line with their comparative advantage (see for example World Bank, 2009). Graphs will...

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