Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: The understanding of economic development in regions in developed countries has gone through a fundamental change during recent decades. Nowadays, regions are increasingly looked upon as independent, dynamic market places that are connected via flows of interregional and international trade. Regional development is driven by changes in the economic specialisation, which can be explained by two different, but complementary theoretical frameworks for analysing location and trade, one old and one new.The old theoretical framework assumes that changes in the economic specialisation of regions depend upon changes in the supply of durable and semi-durable regional characteristics. The new theoretical framework, known as the new economic geogra¬phy, assumes that changes in the economic specialisation of regions are driven by the dynamic interaction between regional market potentials and rational firms experienc¬ing increasing returns. In their pure form, these theoretical frameworks can explain changes in regional economic specialisation and consequently regional develop¬ment without any reference to knowledge creation and other changes in knowledge assets. This is certainly a bit odd for a period of history often referred to as the era of the knowledge economy. So, does knowledge have no role to play as a force driving re¬gional spe¬cialisation and regional development? Or, is it so that the traditional “knowledge free” explanations of changes in regional specialisation and regional de¬velopment are missing important points? In this paper, we claim that knowledge infrastructure, human capital, talent, creativ¬ity, knowledge generation, knowledge protection, knowl¬edge accumulation, knowl¬edge appropriation, knowl¬edge flows, etc. as well as the creative use of knowledge are basic drivers of the spe¬cialisation of regions and hence of regional development. The purpose is to discuss the role of knowledge and talent in regional de¬velopment seen in both a regional and a global context.

Keywords: creativity; knowledge; innovation; regional development

JEL-codes: O10; R10; R11

32 pages, October 13, 2008

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