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Börje Johansson and Charlie Karlsson 13.1 Introduction This chapter examines models depicting and explaining the role of knowledge in regional development and provides an assessment of empirical studies of how knowledge aﬀects growth and development in functional regions. In this endeavour, it is crucial to understand those factors that make knowledge spatially sticky and knowledge-production capacity trapped. It is equally important to explain the conditions for knowledge ﬂows and diﬀusion. The presentation also widens the view by linking knowledge generation to creativity. Regions and regional development In recent decades, the world has witnessed the emergence of a global knowledge economy, in which regions are increasingly being looked upon as independent, dynamic market places, which are connected with each other via knowledge and commodity ﬂows. Each such region has its own base of scientiﬁc, technological and entrepreneurial knowledge, framing the conditions for regional growth. The above picture provides a meaningful description only when we have a clear concept of what a region is. We shall use the concept of ‘functional’ (urban) region, as a place for knowledge creation, appropriation and absorption, as well as a place for transforming knowledge to innovations (Jaﬀe et al., 1993; Glaeser, 1999; Karlsson and Andersson, forthcoming). In essence, a region is an arena for exploiting communication externalities by means of face-to-face interactions (Fujita and Thisse, 2002), Another associated aspect is the concept of labour market region, in which knowledge spreads as individuals change their job aﬃliation (Zucker et al., 1998)...
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