The institutional basis of capitalism, individual property rights, was an invention of the ancient Greeks, and was subsequently the basis of Roman wealth. Christianity then introduced a new emphasis on the importance of the individual, so that this combination produced a medieval form of capitalism, first in the shape of monastic innovation and wealth, and then in independent cities. Although about Church doctrine, the Reformation was at least equally about who was to own this new wealth, and in the course of this a change was made which reversed a principle that had been accepted for millennia, which was that money could not be lent at interest. Once usury was accepted, capital for investment became available as never before, and this was particularly availed of by followers of John Calvin. Rejection of a religious basis for society required a secular one, and this was provided by what was known as the Enlightenment, which was essentially the application of rationality to the solution of all human problems.
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Capitalism was not an inevitable historical evolution, but a unique combination of a particular emphasis on the value of individuals and individual property rights. During the past three centuries, as McCloskey has estimated it, individuals in the Western world have become richer by a factor of 30. Schumpeter wrote what was intended to be history of it in terms of economic ‘cycles’, but was weak on the causality of these because he did not give enough importance to institutions. However, in the form of changing property rights, these are the key to the origin and development of capitalism. The wealth that this generated came from technological innovation, but the pace of this slowed after World War I, and after a brief resurgence due to the Second World War, it was progressively replaced by innovations in finance. Capitalism’s power to generate real wealth was eroded from within, and Schumpeter’s prediction of its replacement by socialism became increasingly plausible.
Pengfei Ni and Yufei Wang
Accompanying the rapid development in science and technology, newly industrialized countries have been growing and advancing sharply, and the urbanization process has continued apace around the world. Two streams of research have particular importance in this context, the first being the sustainable development of cities, and the other a stream consisting of studies on urban competitiveness. However, only recently have the two been considered together as sustainable urban competitiveness. With an increasing global urban population, sustainable urban competitiveness has increasingly become a hot topic attracting attention from city managers, social organizations, and city experts. This chapter examines the extant literature to develop a conceptual framework and indicator system of sustainable urban competitiveness from which a global index of sustainable urban competitiveness can be created. Drawing on data for 500 cities from five continents, comparisons are made. The results indicate that overall urban sustainable competitiveness in the world is relatively low. Only a minority of the cities display high levels of sustainable competitiveness while the majority display lower levels. Those with the highest levels of sustainable competitiveness are global cities controlling high-end resources, factors and markets. North America has the largest proportion of cities with higher sustainable competitiveness, whilst Europe has the greatest disparity in urban sustainable competitiveness with a large number of cities displaying either high and low levels of sustainable competitiveness. South American cities generally have a weaker performance with regard to sustainable competitiveness as do those in Africa, which lacks any cities displaying higher levels of sustainable competitiveness.
The determinants of a region’s competitive advantage, and therefore its ability to sustain economic progress, are the quality of local productive inputs and how well they complement each other. Theories of regional competitiveness in the advanced global North have placed emphasis on ‘soft’ or intangible assets at the expense of physical resources. The tendency to relegate the importance of the built environment also stems from its perception as an inert productive input with diminishing returns, rather than a dynamic resource and a source of ongoing improvements to productivity and competitive advantage. This chapter argues that the urban land and infrastructure system (ULIS) is a cornerstone of regional prosperity and too important to be neglected. A functional and adaptable ULIS amplifies and reinforces the other, softer drivers of competitiveness. Improving the ULIS is particularly important for countries in the global South that are undergoing rapid urbanization in order to accelerate economic progress. Better urban management could help to prevent worsening urban congestion, land-use conflicts, squalid living conditions and a host of related problems. Neglecting the urban form will give rise to common-pool liabilities rather than decent and productive places. It will lock in inefficiency, poverty and social exclusion for decades. This chapter examines the three core pillars of the ULIS: land management, infrastructure investment and coordination of the built environment. Each has an independent effect on productivity and development, but as the chapter illustrates that their influence is enhanced if they combine together and reinforce each other in a cumulative, city-wide process.
As economic research has increasingly paid more attention to the forces of economic geography, it has become much more ‘location aware’ in its analysis of the drivers of growth, productivity and innovation. The nature of regional policy has also evolved in many countries, with competitiveness upgrading emerging as a more important goal. In Europe, requirements for regions to outline ‘smart specialization strategies’ to be eligible for funds available through the European Union regional policy programmes are an example of this trend. This chapter explores what this new context implies for the role of regional governments. It is motivated by a concern that regional policy is facing an ‘implementation gap’. There is much thinking on the importance of regions, and the policies that should be designed towards them. However, there is comparatively little work on what regional governments’ role should be in implementing these policies relative to that of other levels of government, and what implications this has on the capabilities required. The chapter reviews the literature on regional economies, regional policy and the role of regions in government. These related streams of work provide the backdrop for thinking about the demands that government in general and regional government in particular are facing. The chapter then proposes a new way to look at the role of regional government, focusing on specific functions and the different but often complementary roles that different levels of government play. It draws on this identification of functions to discuss the capabilities that regional governments need to fulfil their tasks.
Territories may be conceived as multidimensional spaces, where each dimension represents the presence of stocks of single types of territorial capital: location, size, quality, internal and external interactions. Relationships of a functional, hierarchical or cooperative nature may take place within the single dimension (economic, social, environmental, cognitive, identitarian) or, more interestingly, among the different dimensions, generating huge and diversified cross-externalities and synergy effects. The conceptual breakthrough allowed by the relatively new concept of territorial capital consists in the almost infinite widening of the structural and functional relationships that are assumed to determine the growth potential of single places/regions, along the scientific trajectory of the last 70 years in the direction of an ideal place-based production function with heterogeneous capital assets. The full spectrum of territorial capital types may be considered and included, provided that good measures or proxies are available. The goal of this chapter is to make an assessment of the utilization of the territorial capital concept in regional development studies, from its development in 2001 to the present day. This includes analysing its definition and role in the interpretation of spatial development, before exploring its theoretical soundness and use in a regional production function. The latest empirical findings that use of the concept are then explored. The questions concerning its nature and intrinsic heterogeneity that remain open are considered, before concluding with the new contents and styles of policies suggested by the utilization of the concept.
David Audretsch, Hugo Menendez, Aileen Richardson and Apexa Mamtora
This chapter suggests a framework for policymakers and thought leaders in conceiving, formulating and implementing policies to enhance regional competitiveness. The discussion links four fundamental underlying forces of regional competitiveness: the first involves production factors and resources within the region; the second comprises the spatial structure and organization of economic activity; the third encompasses the human dimension; the fourth consists of policy. The chapter explains how and why each of these elements contributes to regional competitiveness and how they integrate in shaping the economic performance of regions.
Joan Crespo, Ron Boschma and Pierre-Alexandre Balland
The resilience concept refers to the capacity of regions to deal with shocks. The concept, however, remains ambiguous and under-formalized. This chapter develops a conceptual evolutionary framework for regional resilience that distinguishes three dimensions of resilience: (1) the sensitivity to a shock; (2) the recovery from a shock; and, above all (3) the ability to transform and create new growth paths. It discusses the main factors that affect each of these resilience dimensions: the industrial and technological structure of regions, their network structure, and their institutional setting. In doing so, the chapter sheds light on the links between regional resilience and regional competitiveness.
Roberto Cellini, Paolo Di Caro and Gianpiero Torrisi
The concept of resilience has attracted increasing interest in regional economics. In the flourishing literature, however, results are mixed, even when referring to the same case study. This mixed evidence stems also from different operationalization of the multifaceted resilience concept; the main difference being between studies using gross domestic product (GDP) series and those measuring regional economic performance in terms of fluctuations in employment levels. It is important, therefore, to address what kind of relationship – if any – exists between the two measures. To this end, the chapter analyses and compares results concerning regional resilience in Italy over the last 40 years, focusing on the differences deriving from the choice between the two aforementioned measures. The analysis reveals that the information contained in the different series are not alternative and overlapping but complementary.
Frank van Oort and Mark Thissen
Analysing regional competitiveness by benchmarking regions on various indicators is a common practice. However, such rankings of regions are not based on actual competition; instead, they compare a set of regions on various indicators. This chapter benchmarks regions using a measure for revealed competition based on product-specific spatial market overlap on firms’ export markets, on knowledge cooperation among scientists, and on the attraction of foreign direct investment (FDI). This analysis shows that this revealed competition is not only spatially different for these three types of competition, but that it is also region- and market-specific. This confronts policymakers with complicated place-based decisions concerning investments aimed at enhancing a region’s competitive position in Europe, which is far more complicated than suggested by existing benchmarking exercises. The chapter illustrates this with the example of the city of Utrecht, which is currently the most competitive region according to the European Regional Competitiveness Index.