Innovation and the Growth of Cities

Innovation and the Growth of Cities

Zoltán J. Ács

This new and original book by Zoltan Acs explores the relationship between industrial innovation and economic growth at the regional level, and reaches conclusions as to why some regions grow but others decline. While the analysis draws on industrial organization, labor economics, regional science, geography and entrepreneurship, the book focuses on innovation and the growth of cities by the use of endogenous growth theory.

Chapter 11: Epilogue: Towards a ‘New Model of Regional Economic Development’?

Zoltán J. Ács

Subjects: economics and finance, economics of innovation, evolutionary economics, geography, cities, innovation and technology, economics of innovation, urban and regional studies, cities


11. Epilogue: towards a ‘new model of regional economic development’? In a recent paper Acs and Varga (2002) examined the relationship between geography, endogenous growth and innovation to probe the question, ‘Why do some regions grow faster than others?’ We surveyed three separate and distinct literatures that have a long and distinguished history, and all three have recently been re-examined. They are: the new economic geography (Krugman 1991), the new growth theory (Romer 1990), and the new economics of innovation (Nelson 1993). These three literatures examine the unit of analysis, how to model endogenous growth and the interactions between the actors and institutions in the innovation process. What we looked for from this new and evolving literature were insights that would help us develop a clear analytical framework which integrates economic growth, spatial interdependencies and the creation of new technology as an explicit production process to formulate productionoriented regional policies (Nijkamp and Poot 1997). Each one of the above approaches has its strengths and weaknesses that can be integrated to develop a model of technology-led regional economic development. As emphasized in Acs and Varga (2002) a ‘spatialized’ theory of technology-led regional economic growth needs to reflect three fundamental issues. First, it should provide an explanation of why knowledge-related economic activities start concentrating in certain regions leaving others relatively underdeveloped, second, it needs to answer the questions of how technological advances occur and what are the key processes and institutions involved and third, it has to present an analytical framework...

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