Handbook of Regional Innovation and Growth
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Handbook of Regional Innovation and Growth

Edited by Philip Cooke, Bjørn Asheim, Ron Boschma, Ron Martin, Dafna Schwartz and Franz Tödtling

Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook.
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Chapter 4: Regional Agglomeration and Growth: The Classical Approach

Eirik Vatne


Eirik Vatne INTRODUCTION Empirically, a rapid diversification and relocation of economic activities has been observed, as well as the rise of very specialized production sites such as ‘Silicon Valleys’ of dissimilar types, financial districts or science parks. Dispersion as well as concentration seem to coexist as economic mechanisms. In both cases, a more profound division of labour between firms, regions and nations is under way. Localized concentration or agglomeration has been an essential part of theories explaining the spatial distribution of production and human settlement. But other lines of economic theory also explain why economic activities are spatially diversifying, caused by comparative advantages, falling distribution costs, the deregulation of national economies and the internationalization of economic activities. Concepts like agglomeration, industrial districts, production complexes, local innovative milieux, regional innovation systems and business clusters all entail economic activity being spatially unevenly distributed and clustered in territories that are specialized in some way or another. The modern theory of embedded clusters focuses on the competitiveness of firms and competitive advantages resulting directly or indirectly from the firm’s localization. The co-location of economic agents can possibly create agglomeration economies. One aspect is the cost advantages and static efficiency brought forward from the increased division of labour, scale economies, lower communication costs and positive externalities. Other economies arrive through dynamic forces such as an increased capability to learn, produce new knowledge and innovate. Regional agglomeration, specialization, innovation and economic growth come together in a modern explanation of regional economic development. The purpose of this...

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