Regional Competitiveness and Smart Specialization in Europe

Regional Competitiveness and Smart Specialization in Europe

Place-based Development in International Economic Networks

New Horizons in Regional Science series

Mark Thissen, Frank van Oort, Dario Diodato and Arjan Ruijs

Regions economically differ from each other – they compete in different products and geographical spaces, exhibit different strengths and weaknesses, and provide different possibilities for growth and development. What fosters growth in one region may hamper it in another. This highly original book presents an accessible methodology for identifying competitors and their particular circumstances in Europe, discusses regional competitiveness from a conceptual perspective and explores both past and future regional development policies in Europe.

Chapter 4: Clustering and specialization in European regions

Mark Thissen, Frank van Oort, Dario Diodato and Arjan Ruijs

Subjects: economics and finance, industrial economics, regional economics, geography, economic geography, urban and regional studies, clusters, regional economics

Extract

It would prove hard to discuss regional development without exploring the role of agglomeration economies. According to this idea, regions with a large urban population have a tangible advantage compared to less populous areas. A number of reasons have been put forward to backup this theory. In agglomerated areas, for instance, it is easier to have a good match between workers and employers, because of the wider range of possibilities provided by a larger labour market. It is also easier for a firm to purchase its inputs, as in a large populated region it would have better access to specialized suppliers (Marshall, 1890; Porter, 1990). Next, a number of authors noticed that agglomerated areas are ideal places to create, attract, accumulate and retain knowledge (Jacobs, 1969; Florida and Gates, 2001). Moreover, an enterprise can benefit from the access to a large local market. If the production technology of a sector exhibits increasing returns to scale, selling to a consistent base of local consumers may help firms to reach an efficient output size, which enables firms to compete successfully with firms in other regions (Krugman, 1991; Venables, 1996).

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