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 5: Innovation, Product Life Cycle and Diffusion: Vernon and Beyond

Gunther Tichy


Gunther Tichy* In its condensed form the regional version of the product-cycle hypothesis states that products are invented in lead markets, characterized by high income and information density. They are manufactured there initially, but the more they get standardized the more manufacturing is shifted to low-income regions and countries. This idea was developed by Vernon (1966) in a short article based the author’s practical experience. As head of the path-breaking ‘Metropolis 1985’ project (Vernon, 1960) he became familiar with the difficulties of explaining New York’s competitiveness by the traditional comparative cost paradigm. The challenging task of this three-year study was to analyse and forecast the region’s economic and demographic features up to 1985. ‘Everyone agrees that the metropolitan behemoth surrounding New York Bay is on the move. But there are considerable differences of view over the direction in which it is moving’ (Vernon, 1960, 1). The results filled nine volumes, the last one a summary by Vernon (1960) himself. The metropolitan area study was concerned with population, employment and production growth, with New York’s competitiveness and its determinants. The results did not yet turn up as a regional version of the product-cycle hypothesis, but collected some of its most important components: ‘The New York area . . . acted as a magnet for many kinds of national-market activities and services that experienced a comparatively fast growth in national employment. The other was a persistent change in the competitive position of the Region’s national-market activities; that is, in individual lines there was a slower...

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