Explaining the growth and change of regions and cities is one of the great challenges for social science. Cities or regions have complex economic development processes that are shaped by an almost infinite range of forces. The frames of reference employed to think about such processes are mostly borrowed from the ‘long view backward’, that is, to how the now-developed economies generated their urban systems at the time they developed, but such an approach must ‘average’ over many development experiences and hence may err in its attribution of causes or in the relationship between universally present causes and nationally or regionally specific contexts. Instead a focus on change and causality, studying cities and regions as forward-moving development processes, should determine what is most relevant in defining the ambitions of the field. This chapter, therefore, seeks to establish how future research investigating regional growth and change might best be adapted to meet the challenges outlined above by outlining the existing branches of spatial economics and their contribution to the debates on regional growth. In particular, attention is paid to the perspectives taken by the New Economic Geography and New Neoclassical Urban Economics branches of the discipline. The focus then turns to exploring the difficulties in identifying the direction of causal relations between the locational choices of firms and workers, as well as the limitations of the methods currently employed. The response of Economic Geography to these difficulties is considered, with the chapter concluding by outlining a framework intended to yield greater insights into processes of regional growth and change.
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Contemporary Theories and Perspectives on Economic Development
Edited by Robert Huggins and Piers Thompson
Andrés Rodríguez-Pose and Callum Wilkie
The European Union (EU) is confronted with a host of ‘knowledge-related pressures’ from an evolving geography of innovation. Simply stated, the EU is in the unenviable position of losing ground to the United States in terms of knowledge production, research and innovation, whilst becoming increasingly susceptible to competition from emerging economies. The EU has responded to these pressures and the need to foster innovation by prioritizing research and development (R & D) investment. Such a strategy, however, may benefit some member states to a greater extent than others. More developed, ‘core’ territories are more conducive to knowledge-intensive, innovative activity and can better capitalize on increased R & D expenditure. Lagging, peripheral territories, on the other hand, are burdened by a host of structural, socioeconomic and institutional deficiencies that may inhibit the emergence of knowledge-intensive activity. The distance between the capabilities of peripheral regions and the technological frontier may be too great to overcome. The aim of this chapter is to address these concerns and assess the effectiveness of the EU’s approach. It explores whether increases in R & D investment have enhanced the innovative capacities, impelled economic growth, or improved labour market outcomes in the peripheral regions of the EU. The chapter undertakes an exploratory analysis of the correlations between increased R & D investment and changes in innovative capacity and socio-economic development within the EU. Factors which may explain these limited returns to R & D expenditure in peripheral territories are explored. The chapter concludes by introducing a series of policy implications formed on the basis of the analysis.
Robert Huggins and Piers Thompson
The field of regional development is subject to an ever increasing multiplicity of concepts and theories seeking to explain uneven development across regional contexts. One concept and theoretical tool that has endured and remained keenly discussed since the 1990s is ‘regional competitiveness’. Indeed, the rise of the concept has led to many frameworks and applications emerging and being employed in various contexts. Such variety has been both a blessing and a curse, with the notion of the ‘competitiveness of regions’ remaining an area of contested theoretical debate, especially arguments concerning the extent to which places actually compete for resources and markets. This chapter presents a broad overview of the evolution of regional competitiveness thinking, and aims to make clear the connections across a variety of contemporary regional development theories. The chapter firstly introduces the regional competitiveness concept and discusses its close association with schools of endogenous growth and development theory. The potential for measuring regional competitiveness is considered, before the chapter turns its attention to providing an introduction to some key contemporary theoretical perspectives on regional development. In particular the ideas of regional growth systems, institutions, ‘upstream’ behavioural theories of regional development concerning both cultural and psychological explanations, and concepts of regional ‘resilience’ and ‘well-being’ are considered. The chapter concludes by considering how the differing theoretical perspectives can be integrated, as well as providing an outline of the volume as a whole.
Paola Annoni and Lewis Dijkstra
The European Regional Competitiveness Index (RCI) was set up as a tool to assist European Union (EU) regions in setting the priorities to increase their competitiveness by measuring the strong and weak points in terms of territorial competitiveness for each of the EU regions. The index builds on the Global Competitiveness Index methodology developed by the World Economic Forum. It covers a wide range of issues related to competitiveness including innovation, quality of institutions, transport and digital infrastructure and measures of health and human capital. As such, the RCI extends the traditional analysis of competitiveness from a purely economic measure to incorporate social elements. In this way, it goes beyond the perspective of businesses to integrate the concerns of residents. In addition, the index takes into account the level of development of a region by shifting the emphasis from more basic issues to innovation-related factors. This chapter presents the RCI and discusses its evolution between the 2010 and 2013 editions. The use of updated and regional-level sourced data, together with method refinements, are considered. These refinements smooth the transition between the different levels of development and take into account commuting patterns. The chapter goes on to outline how regions in Italy, Spain, Belgium, Germany and Luxembourg have already started using the RCI to pick priorities for their development strategies. The index can provide indications of what each region should focus on, taking into account its specific situation and its overall level of development.
Lucía Sáez and Iñaki Periáñez
Globalization has been made possible by the development of worldwide trade, the elimination of trade barriers, and by new information and communication technologies (ICTs). With integration progressing, political borders between countries have become less important, and the roles of cities and the competition between them become more significant. Cities face the challenge of redesigning themselves as systems that can adapt quickly and effectively to the challenges and opportunities entailed by a dynamic global environment. They must compete with one another to attract resources and investment that can create wealth and employment and assure regeneration. Engagement in benchmarking can help city managers identify competitors, establish competition profiles and determine where their competitive advantage may lie on the one hand, and to develop distinctive positioning strategies on the other. In Europe, the expansion of the European Union (EU) has resulted in a union of territories with widely varying levels of economic development, but no current benchmarking studies refer exclusively to cities in Europe. Therefore, the main contribution of this chapter is a benchmarking of European cities in terms of how competitive they are when it comes to attracting businesses and investment. Urban competitiveness is a complex, multidimensional issue, so a scale of measurement has been drawn up based on a synthetic index, the Urban Competitiveness Index (UCI). This index is made up of sub-indicators representing the basic, efficiency and innovation dimensions. The sample comprises 159 cities from 26 EU countries, classed as larger urban zones (LUZs), with populations of at least 100 000.
Robert Huggins and Piers Thompson
Notions and theories of regional competitiveness are broadly cognate with theories of endogenous growth, which focuses on the role of knowledge as a key driver of productivity and economic growth, and departs from the traditional emphasis on the accumulation of physical capital. However, despite contemporary theoretical developments in the field of economic growth, there is a need to further widen our conception of the investment resources underpinning economic growth. Indeed, it is suggested that perhaps the most interesting implications of endogenous growth theory relate to the impact of the spatial organization of regions on flows of knowledge. In particular, it is considered that differences in regional growth can potentially be explained by differences in the conditions for creating, accumulating and _ crucially _ transmitting knowledge. The aim of this chapter is to propose that the inter-organizational networks underpinning the flow of knowledge within and across regions are a key capital input within regional growth and competitiveness processes. The chapter proposes that the concept of ‘network capital’ _ in the form of investments in calculative relations through which organizations gain access to knowledge to enhance expected economic returns _ should be incorporated into regional growth models. The chapter outlines the case and potential methods for integrating network perspectives into theories of regional competitiveness and growth, with the particular importance of the network capital built by entrepreneurs and their firms explored. The case of Silicon Valley provides some empirical insights which are then used to draw implications for regional economic development policy and future research.
Johan Jansson and Anders Waxell
Regional development, growth and competitiveness research has to a large extent come to focus on innovation and technological change. However, it is apparent that some economic activities remain competitive despite little or no innovation. To explore this, the chapter focuses on the role of ‘quality’, or quality processes, which lead to a ‘quality promise’ that is experienced, constructed, mediated and negotiated by systems of actors in specific spatial contexts. Few studies have seriously recognized the relationship between space and quality, especially in explaining global and regional competitiveness. The aim of this chapter, therefore, is to develop a theoretical framework for identifying and analysing quality processes creating and recreating understandings, perceptions and experiences of a quality promise. These processes are deeply rooted in space, stimulated by localized learning, which in turn facilitates place-based branding. Adding quality to the discourse of regional competitiveness may complement a traditional view criticized for treating growth as equivalent to regional prosperity, and thus contributing to regional, urban, and rural resilience and sustainability. Hence, quality is not only pertinent for development in advanced economies, but could also be part of development and progress in developing regions and countries. Additionally, a quality-based regional competiveness framework provides an increased focus on traditional (craft) products and processes. As such it may offer an alternative or additional way of upgrading local and regional products in global production networks, while encouraging local uniqueness and global adaptability.
This chapter presents an overview of various models of regional growth that have appeared in the literature in the last 40 years. It considers the past, and therefore supply-side models such as the standard neoclassical, juxtaposed against essentially demand-side approaches such as the export-base and cumulative causation models (as integrated into the Kaldorian approach); before moving on to the present and more recent versions of the neoclassical model involving spatial weights and ‘convergence clubs’, as well as New Economic Geography core_periphery models, and the ‘innovation systems’ approach. A key feature of the more recent literature is an attempt to explicitly include spatial factors into the model, and thus there is a renewed emphasis on agglomeration economies and spillovers. The discussion of ‘present’ and ‘future’ approaches to regional growth overlaps with the current emphasis in the literature on the importance of more intangible factors such as the role of knowledge and its influence on growth. Lastly, there is a discussion of the greater emphasis that needs to be placed at the micro level when considering what drives growth, and thus factors such as inter alia firm heterogeneity, entrepreneurship and absorptive capacity. Recent micro-level evidence is also presented and related to the earlier discussion of the various models of regional growth.
Karl Aiginger and Matthias Firgo
The term ‘competitiveness’ has been used in conceptually distinct ways at the firm, regional and national level, and after reviewing existing concepts at the national level this chapter introduces a new definition of regional competitiveness, adapting definitions used in the academic literature. Specifically, it assessess ‘outcome competitiveness’ not in reference to gross domestic product (GDP) or employment but under the new perspective of a more socially inclusive and ecologically sustainable growth path, as envisaged in the WWWforEurope research programme, in which 33 European research groups are taking part. Evaluating competitiveness requires both an input assessment (costs, productivity, economic structure, capabilities) and an outcome assessment. The chapter defines regional outcome competitiveness as the ability of a region to deliver Beyond GDP goals. For regions in industrialized countries, this ability depends on innovation, education, institutions, social cohesion and ecological ambition. Given this new perspective (of broader Beyond GDP goals), social investments and ecological ambitions should not be considered costs, but rather drivers of a ‘high-road competitiveness’. This is compatible with a new innovation policy fostering non-technical innovations and a new industrial policy supporting societal goals. Applying this concept to European regions, the chapter shows which regions take the ‘high road’ to competitiveness and compares results with the existing literature.