Local Advantage in a Global Context
New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Charlie Karlsson and Börje Johansson The understanding of economic development in regions in developed countries has gone through a fundamental change during recent decades. Nowadays, regions are increasingly looked upon as independent, dynamic marketplaces that are connected via flows of interregional and international trade. Regional development is driven by changes in economic specialization, which can be explained by two different, but complementary, theoretical frameworks for analysing location and trade, one old and one new. The old theoretical framework assumes that changes in the economic specialization of regions depend upon changes in the supply of durable and semi-durable regional characteristics. The new theoretical framework, known as the new economic geography, assumes that changes in the economic specialization of regions are driven by the dynamic interaction of regional market potentials and rational firms experiencing increasing returns. In their pure form, these theoretical frameworks can explain changes in regional economic specialization and thus regional development without any reference to knowledge creation and other changes in knowledge assets. This is certainly a bit odd for a period of history often referred to as the era of the knowledge economy. So, does knowledge have no role to play as a force driving regional specialization and regional development? Or, is it the case that the traditional ‘knowledge-free’ explanations of changes in regional specialization and regional development are missing important points? In this chapter, we claim that knowledge infrastructure, human capital, talent, creativity, knowledge generation, knowledge protection, knowledge accumulation, knowledge appropriation, knowledge flows etc., as well...
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