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 36: Venture Capital in Regional Innovation and Growth

Jesper Lindgaard Christensen


Jesper Lindgaard Christensen INTRODUCTION The history of thinking about financing of innovation and growth is often associated with the writings of Joseph Schumpeter. In order for the entrepreneur to carry out entrepreneurial activities, a capitalist is necessary to bear the risk through financing development, according to Schumpeter. As explained by Andersen (Chapter 2) in this Handbook, Schumpeter was also interested in regional aspects of economic evolution, although this was not at the centre of all his writings. Since then, however, the interest in geographical aspects of financing regional innovation and growth has been extremely sparse. It was not until the 1980s that spatial aspects of finance in general, and venture capital in particular, gained interest from researchers. Contributions to increase our understanding of the geography of venture capital from this decade were still few (including Wetzel, 1981, 1983, 1986; Florida and Kenney, 1988a, 1988b; Mason, 1987; Martin, 1989; Thompson, 1989). Economic geography has generally not been very concerned with financial constraints (Pollard, 2003) although there has lately been some interest in what may be denoted the geography of money (Martin, 1999; Mason and Harrison, 2002a; Zook, 2002). This research has primarily focused upon institutional venture capital, while other aspects of the geography of money have focused upon issues such as global financial centres (Agnes, 2000). Within the new economic geography of money it has been shown that the supply of financial capital is spatially heavily skewed, with a relatively large share being invested in metropolitan areas (Martin et al., 2002;...

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