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This chapter provides a brief review of different theoretical approaches and engages in a critical discussion of how regional growth theories contribute to our understanding of the spatial distribution of economic activities and the long-term growth processes of the regional economy. We contrast the neoclassical model of regional growth, endogenous growth theory and new economic geography. The latter two theories deviate from traditional neoclassical thinking in fundamental ways, suggesting that externalities should be seen as an important element of the economy. The chapter shows that the introduction of externalities leads to a different view of the economy, drawing attention to phenomena that are unknown to the neoclassical model, namely, multiple equilibria, path dependence and lock-in, sensitivity to initial conditions, small disturbances and indirect effects, sensitivity to marginal changes in parameters, chaotic behaviour and convergence toward strange attractors.

The chapter provides a review and discussion of recent conceptual and empirical contributions on the nature and geography of firms’ knowledge acquisition activities. The authors offer a systematic conceptual view of the pattern of knowledge sourcing, bringing into focus and combining the notions of industrial knowledge bases (sectoral contexts), which are supposed to vary considerably with respect to the transferability of their key knowledge types, and regional innovation systems (regional contexts), which are supposed to differ substantially in terms of the availability of knowledge sources. The empirical part of the chapter draws on cases from Austria, Finland, Germany and Sweden and provides an analysis and comparison of knowledge-sourcing activities in analytical, synthetic and symbolic industrial sectors in metropolitan, specialized industrial and peripheral regional contexts.

The post-war period has been characterized by a strong growth of economic interdependencies at a global level. Regional economies and their industrial clusters were challenged to maintain or regain their competitiveness in the new global economy. Some regions – particularly core areas – have undergone successful innovation-based transformation, while many old industrialized and peripheral regions have lost competitiveness, employment and parts of their economic base. In this contribution we deal with conceptual approaches to globalization challenges of regions and clusters, focusing on types of regions, clusters and modes of innovation. We also provide examples of clusters located in different geographical contexts and investigate how they cope with innovation challenges and place-specific innovation barriers.