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 9: Human Capital and Labour Mobility Determinants of Regional Innovation

Daniel Felsenstein


Daniel Felsenstein* INTRODUCTION This chapter looks at the role of human capital and labour mobility in determining regional innovation and growth. Innovation as a factor in regional growth is not a new notion and has been addressed in many of the classic antecedents of regional growth theory. The Marshallian tradition assumes local knowledge spillovers to be a central factor in the formation of agglomeration in space, supplemented by local labour pooling and non-traded local inputs (Marshall, 1890). The Jacobian tradition similarly sees knowledge transfer as an important input to local growth although its source is somewhat different, emanating from outside the local production environment and grounded in scope and diversified economic activity rather than scale and concentrated production (Jacobs, 1969). However, it has only been since the advent of new growth theory (NGT) that innovation has become an active component in understanding regional growth (Romer, 1986). Prior to NGT, the region was understood as the arena in which knowledge creation took place. Within this environment, tacit and implicit knowledge was produced and exchanged and the demarcation of the region expressed the territorial limits in which growth could be expected. NGT posits that growth is the result of increasing returns associated with new knowledge or technology. In contrast to previous theory, NGT internalizes (endogenizes) technological progress and knowledge into a model of how markets function. When individuals accumulate new skills and know-how they unwittingly impact on the productivity and human capital levels of others. As such, the production of technological progress...

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