Regional Development in the Knowledge-Based

Philip Cooke1
Economy: The Construction of Advantage Loet Leydesdorff 2

ABSTRACT. In this introduction the editors showcase the actually mean the same thing. We shall argue that
papers by way of a structured project and seek to clarify the two ‘knowledge economy’ is the older of the two
key concepts cited in the title. We consider the history of the
idea that knowledge is an economic factor, and discuss the
concepts, with its origins in the 1950s. It focused
question of whether regions provide the relevant system of mainly on the composition of the labour force.
reference for knowledge-based economic development. Current The term ‘knowledge-based economy’ has added
transformations in university-industry-government relations at the structural aspects of technological trajectories
various levels can be considered as a metamorphosis in industry and regimes from a systems perspective. This
organization. The concept of constructed advantage will be
elaborated. The various papers arising from a conference on
perspective leads, for example, to discussions
this subject hosted by Memorial University, Newfoundland, about intellectual property rights as another form
Canada are approached from this perspective. of capital.
Key words: regions, innovation, constructed advantage,
The regional dimension of analysis and policy
knowledge, research. for enhanced economic development provides
another contested area with the notion of ‘regional
JEL Classifications: A14, O33, R11, R58
development’, but in particular the ‘regional’
element of this couplet. A ‘regional innovation
system’ combines the focus on regions with a
1. Introduction systems perspective. On the occasion of a previous
If we are to make progress in understanding the issue focusing on European regions, we have
transformations occurring in economic relations argued that the trajectory of a region can be the
today, it is important to clarify key elements of subject of evolution when systemic innovations are
interest and the perspectives from which they are involved (Leydesdorff et al., 2002).
being observed. Thus, we shall reflect the ethos of The term ‘innovation’ as widely used in
the papers that follow, and the conference that economics and related sub-disciplines is also broad
gave rise to them, by highlighting and defining two and variable. Hence, if confronted with a defini-
key terms in full knowledge that important tion like ‘the commercialisation of new knowl-
elements of both are contested rather than settled edge,’ a practising innovator is likely to wish to
descriptions of reality. debate this meaning. ‘Region’ has some of these
Knowledge economy and knowledge-based econ- characteristics, too. Thus geopolitics has appro-
omy are common terms nowadays that are often priated it to denote subcontinental, geographically
used synonymously. However, this does not settle neighbouring areas of the globe like the ‘Middle
the question of whether or not the two expressions East’, ‘Balkan’ or ‘Baltic’ regions, rather as the
term ‘theatre’ was appropriated for a smaller area
1
in which wars are conducted. It would be more
Centre for Advanced Studies, Cardiff University, Cardiff, CF10
3BB Wales (UK)
accurate to call the former ‘georegions’ to distin-
E-mail: cookePN@cardiff.[Link] guish neighbouring segments of the world from the
[Link] dictionary definition of ‘region’.
2
Amsterdam School of Communications Research (ASCoR) The following papers arose from a conference
University of Amsterdam, Kloveniersburgwal 48, 1012 CX hosted from 3–5 October 2003 by Memorial
Amsterdam, The Netherlands
E-mail: loet@leydesdorff.net
University, St. John’s, Newfoundland, Canada with
[Link] the title ‘Knowledge-Based Economy and Regional

Journal of Technology Transfer, 31: 5–15, 2006.

Ó 2005 Springer Science+Business Media, Inc. Manufactured in The Netherlands.
6 Cooke and Leydesdorff

Economic Development: An International geographical one. However, some countries only

Perspective’. Among the sponsors were the UK have national states and local administrations, but
Regional Studies Association, represented by chief no regions. Some of these, like Finland and Swe-
executive Sally Hardy, and numerous regional devel- den, are evolving toward regional administrations.
opment agencies representing the Maritime Provinces But can they then be said to experience ‘regional
of Canada. The latter, particularly, had a lively development’? We submit that they can; and by
interest in the implications for development in their dint of national or even supranational policy for
regions, represented by Provincial Administrations regional development, or local proactivity, possi-
like the Government of Newfoundland and Labra- bly including local collaborative partnerships of
dor, the Atlantic Canada Opportunities Agency, and municipalities pursuing aims of constructed
the Atlantic Provinces Economic Council. Similarly, advantage, they often do.
sponsorship by Industry Canada, and Human Re-
sources Development Canada showed the federal level
to be a concerned policy actor keen to raise its 3. The knowledge economy
absorptive capacity about the regional implications
It may surprise some readers that using the word
and effects of the rising knowledge economy. The
‘knowledge’ as a structural component from an
conference was successfully organized by Dr. Wade
economic perspective is not a new idea. Apart
Locke and Prof. Scott Lynch of the Department of
from Marx, who exempted mathematics and the
Economics, Memorial University, and this Special
natural sciences from the direct influence of the
Issue of the Journal of Technology Transfer is dedi-
social and economic infrastructure, and argued
cated to them with thanks.
that superstructures were not only mere reflections
of infrastructures but could in turn react upon
them (see Coser, 1977), it was Schumpeter who
2. Regional development first recognized the importance of knowledge in
Region has its origin in the Latin regio which the economy by his reference to ‘new combinations
stems from regere, meaning ‘to govern’. In the field of knowledge’ at the heart of innovation and
of regional development, ‘region’ has been used entrepreneurship (Schumpeter, 1911, p. 57). Nonaka
precisely in this sense, namely to signify the gov- and Takeuchi (1995) also show that Marshall (1916)
ernance of policies to assist processes of economic recognized that:
development. Here, the concept of ‘region’ as
administratively defined is of primary importance. ‘Capital consists in a great part of knowledge and
The administrative dimension leads to the follow- organisation... knowledge is our most powerful
engine of production... organisation aids knowledge’
ing definition: region is an administrative division of (p. 115)
a country. Thus, for example, ‘Tuscany is a region
of Italy’. Typically, however, neoclassical economics neglected
Of course, there are other definitions. A region what was not contained in price information and
can also be ‘any large, indefinite and continuous made no effort to add to economic knowledge by
part of a surface or space’, or ‘a unit for geo- trying to measure its economic contribution. There-
graphical, functional, social or cultural reasons’, after, Hayek (1945, 1948) identified ‘the division of
or in military usage ‘the part of the theatre of war knowledge as the really central problem of eco-
not included in the theatre of operations’. Thus, nomics as a social science’ (1948, p. 51) and saw its
‘region’ is considered as an abstract space, a key question as the puzzle of how localized
cultural area, or a military field of action. None knowledge held by fragmentary firms and indi-
of these definitions captures the precision required viduals nevertheless produces an ordered market
and supplied by the administrative definition. demand and supply:
‘Regional’ is nested territorially beneath the level
of the country, but above the local or municipal ‘The most significant fact about this system is the
level. In objective terms, this is generally how economy of knowledge with which it operates, or
the conceptual level can be aligned with the how little the individual participants need to know in
 Regional Development in the Knowledge-Based Economy 7

order to be able to take the right action. In 4. The knowledge-based economy

abbreviated form, by a kind of symbol, only the
most essential information is passed on, and passed Whereas the concept of a ‘knowledge economy’
on only to those concerned’ (Hayek, 1948, p. 86) emerged within the context of the economic anal-
ysis of the quality of the input factors in the pro-
None of these writers was writing about the duction process (Schumpeter, 1939), the term
knowledge economy per se but rather its funda- ‘knowledge-based economy’ finds its roots in more
mental importance to the functioning of all aspects recent discussions from a systems perspective (e.g.,
of the economy from innovation to production, Sahal, 1981, 1985). National governments, for
organization, and markets. example, need a systems perspective for developing
A further progenitor of the view that knowledge science, technology, and innovation policies (Nelson,
is a most important economic resource was Penrose 1982). Benoı̂t Godin discusses the various definitions
(1959). She founded what has now evolved into the of a knowledge-based economy in his contribution
‘dynamic capabilities of firms’ approach to micro- to this issue entitled ‘The Knowledge-Based Econ-
economics (Teece and Pisano, 1996). She referenced omy: Conceptual Framework or Buzzword?’
the firm’s characteristics as an administrative By the second half of the 1950s, it had become
organization (after Marshall, 1916 and Coase, increasingly clear to both policy makers and
1937) and home to accumulated human and mate- economic analysts that the continuing growth
rial resources. The latter are inputs to services rates of Western economies could no longer be
rendered, and these are the product of the firm’s explained in terms of traditional economic factors
accumulated knowledge: such as land, labour, and capital. The ‘residue’
(Abramowitz, 1956; OECD, 1964) had to be
‘a firm’s rate of growth is limited by the growth of explained in terms of the upgrading of the labour
knowledge within it, but a firm’s size by the extent force, surplus generated by interaction effects, and
[of] administrative efficiency’ (Penrose, 1995, pp. xvi– more generally the role of knowledge in the
xvii)
economy (Rosenberg, 1976). The Organization for
Economic Co-operation and Development (OECD)
In effect, in the words of Nonaka and Takeuchi
was created in 1961 in order to organize and to
(1995), ‘the firm is a repository of knowledge’
coordinate science and technology policies among
(p. 34). Penrose (1995) also acknowledged that had
its member states, that is, the advanced industrial
the term been available in the 1950s, she would have
nations.1 This led in 1963 to the Frascati Manual in
referred to the dynamic capabilities of firms resid-
which parameters were defined for the statistical
ing in knowledge networks (Quéré, 2003). Thus,
monitoring of science and technology on a
Penrose (1995) noted the following crucial feature
comparative basis.
of the massively increased value of transferable
It is but a short step to link insights like these to
knowledge to the wider economy for the firm:
the earliest work to operationalize a notion of the
‘knowledge economy’ arising from the pioneering
‘the rapid and intricate evolution of modern tech-
nology often makes it necessary for firms in related work conducted by Machlup (1962). He sought to
areas around the world to be closely in touch with identify those sectors with a heavy concentration of
developments in the research and innovation of firms knowledge assets. He next attempted to map the
in many centres’ (Penrose, 1995, p. xix) production and distribution of knowledge sectors
in the United States economy. Machlup classified
Importantly, Penrose continues, the rise of business knowledge production into six major sectors:
knowledge networks represents a metamorphosis in education, R&D, artistic creation, communica-
the contemporary economy. The key to the knowl- tions media, information services, and information
edge-based economy is at least partly revealed as technologies. He showed that these account for the
this metamorphosis in the nature of industry largest sectoral share of GDP and employment in
organization to facilitate interaction with valuable the economy, and predicted that this share was
knowledge, and not to conceal it, as was common destined to grow both absolutely and relatively
in the previous phase of the global economy. over time. With brief interventions from Eliasson
8 Cooke and Leydesdorff

et al. (1990) and Burton-Jones (1999) who further in Israel 1995–2002 is consistent with Myrdal and
specified the knowledge intensity of sectors by Hirschman rather than Krugman, who modeled
value and labour qualifications respectively, we spatial increasing returns under conditions of
reach the statements of the Organization for imperfect knowledge as a zero-sum game resulting
Economic Cooperation and Development (1996, in a single spatial monopoly.
1999) calling for the measurement of the knowl- More recently, Krugman (2000) himself warned
edge-intensity of national and regional economies that his ‘two-locations competing’ models can be
(OECD/Eurostat, 1997). misleadingly ‘simplistic’. However, Krugman’s
Studies of the knowledge-based economy focus modelling seems to gain support in the work
not only on human capital, but also on the sectoral presented in this collection by Carol Robbins
characteristics of the knowledge factor (Nelson, entitled ‘The Impact of Gravity-Weighted
1982; Pavitt, 1984). Technological trajectories and Knowledge Spillovers on Productivity in Manu-
regimes shape innovation systems, but with facturing.’ Robbins uses U.S. data to show
dynamics different from those of economic or increasing knowledge returns to scale from local-
geographical factors (Nelson and Winter, 1982). ized knowledge spillovers in six key industries.
The recombination of the economic dynamics of Scott Tiffin and Gonzalo Jimenez, in their contri-
the market, the dynamics of knowledge-based bution entitled ‘Design and Test of an Index to
innovation, and governance generates the systems Measure the Capability of Cities in Latin America
perspective. An innovation system can then be de- to Create Knowledge-Based Enterprises,’ develop
fined at the national level (Freeman, 1987, 1988; a measurement instrument in order to reveal dis-
Lundvall, 1988, 1992; Nelson, 1993), at the regional parities in Latin America. The message also aligns
level (Cooke, 1992; Cooke et al., 2004), or in terms with already published research reported at the
of a dynamic model like the Triple Helix of uni- Memorial University conference showing three
versity-industry-government relations (Leydesdorff, Canadian metropolitan areas to be aggregating an
1994; Etzkowitz and Leydesdorff, 2000). overwhelming amount of knowledge-economy
A key paper in this collection by Dafna Schwartz sectoral assets while medium cities and the
entitled ‘The Regional Location of Knowledge- periphery are losing theirs (Polèse, 2002).
Based Economy Activities in Israel’ uses longitudinal
regional data made available by the Israeli Statistical
Service. Schwartz shows empirically what Myrdal
5. The impact of regions
(1957) and Hirschman (1958) had theorized decades
earlier. Myrdal (1957) proposed that spatial The general argument about the salience of the
development is characterized by ‘cumulative cau- organization of knowledge in the sectoral, skills,
sation’ with associated ‘spread ’ and ‘backwash’ and spatial composition of the economy embraces
effects. This implies Krugman’s (1995) increasing the position of Castells (1996), who is widely
returns to scale (through ‘backwash’) and devel- known for the observation that productivity and
opmental ‘spread’ to other nearby areas. Hirsch- competitiveness are, by and large, a function of
man’s (1958) elaboration on this was that ‘spread’ knowledge generation and information processing,
would be driven by the innovative capacity of and that this has involved a Penrose-type meta-
competing technology users. Under the conditions morphosis entailing a different mode of thinking
of a knowledge-based economy, the key spatial about economies. Thus the balance between
hypothesis is that, over relatively short time peri- knowledge and resources has shifted so far
ods, core cities grow through increasing returns (to towards the former that knowledge has become by
knowledge), with the ‘satellites’ of leading technology far the most important factor determining
innovators ‘spread’ by knowledge exploitation or standards of living—more important than land,
commercialization nearby. capital, or labour. Today’s most advanced
Static pictures of the UK and EU have been economies are fundamentally knowledge-based
consistent with this expectation (Cooke, 2002; (Dunning, 2000). Even neoclassicists like Paul
Cooke and De Laurentis, 2002). However, Romer recognize that technology (and the
Schwartz’s dynamic picture of spatial divergence knowledge on which it is based) has to be viewed
 Regional Development in the Knowledge-Based Economy 9

as an equivalent third factor along with capital by measuring economic welfare differences more
and land in leading economies (Romer, 1990). conventionally.
Inevitably this leads to issues of the generation and Hence, for the industries of the future, the core
exploitation of knowledge. How is the system of cities are highly privileged in most countries while
knowledge production organized and controlled? the peripheries are generally impoverished and
(Whitley, 1984, 2001; Leydesdorff, 1995). becoming more so, presaging major out-migration
In a knowledge-based economy, inequality is of youth and the metamorphosis of such areas
generated by mechanisms of inclusion and exclu- into socially deserted or playground economies.
sion only partially overlapping those of a tradi- The policy imperative to devise mechanisms by
tional (capitalist) economy. With less emphasis, which non-metropolitan regions may, in future,
one can also say that another variant of capitalism participate in the knowledge-based economy is
is induced (Hall and Soskice, 2001). The mecha- clearly overwhelming. For example, Godfrey
nisms of inclusion and exclusion are no longer Baldacchino’s paper in this collection entitled
tightly coupled to one’s class position in the ‘Small Islands versus Big Cities: Lessons in the
production process as in an industrial economy. Political Economy of Regional Development from
The geographical component can be expected to the World’s Small Islands’ points to a competitive
play an independent role in knowledge-based advantage enjoyed by some islands.
dynamics because the newly emerging system is
grounded in communication networks.
Burton-Jones (1999) noted that the gap between
6. Constructed advantage
rich and poor nations is accelerating under
‘knowledge capitalism.’ Knowledge-intensity can It is time to say more about this term and to offer
also lead to a growing gap within societies. what we say as a context for other papers that
Knowledge-intensive dynamics of scale and scope follow this Introduction. It has been suggested that
induce mechanisms for the retention of wealth that the idea originates with Adam Smith, but Foray
are different from the dynamics of mass produc- and Freeman (1993) re-introduced it yet scarcely
tion. The increasing role of the service sector, explored it. More attention has been devoted to it
notably, generates another dynamic (Barras, in comparison to other well-known forms of
1990). In this collection, Carla de Laurentis dis- economic advantage by De la Mothe and Mallory
cusses ‘Digital Knowledge Exploitation: ICT, (2003), as follows:
Memory Institutions, and Innovation from Cul-
tural Assets’ as an example of this process.  Comparative advantage—Regions have been a
The work that has been done spatially to map focus for economists who viewed them
the knowledge-based economy shows how dis- through the lens of development economics
equilibriating its effects can be. The core city usually set in a framework of comparative
moves away statistically from the periphery, as in advantage. This idea, deriving from David
Canada and elsewhere, in the intensity with which Ricardo and trade theory, explained eco-
it accumulates knowledge-based activities. Simul- nomic welfare in terms of initial resource
taneously, new high technology satellite towns endowments traded between regions and na-
‘swarm,’ to use a Schumpeterian term, around the tions. Thus, cotton goods enjoying a compar-
mother city. Even static analysis reveals this ative production advantage from mercantile
pattern, with some satellites scoring much higher and climatic conditions in northwest England
than the main city around which they aggregate. were traded with Port wine from Portugal’s
Peripheral islands and regions or localities may Norte region enjoying a comparable mercan-
score as low as 37% of the index average of 100% tile and climatic comparative advantage. While
compared to 157% for Stockholm (e.g. Aegean policies were not excluded from such an analy-
Islands in the EU context; Cooke and De Laurentis, sis, they mainly added up to forms of mercan-
2002; Dannell and Persson, 2003). Compared to tilism, and Ricardo advocated intervention
GDP disparities a five-to-one ratio in the knowledge regarding technological change. The over-
economy measure is approximately twice that given whelming framework which government policy
10 Cooke and Leydesdorff

gave rise to and which promoted comparative budgets for research; vision-led policy lead-
advantage was laissez-faire. ership; global positioning of local assets.
 Competitive advantage—By the mid-1970s,  Knowledge infrastructure—universities, public
visible cracks were appearing in the economic sector research, mediating agencies, profes-
models and frameworks that characterize sional consultancy, etc. have to be actively in-
pure comparative advantage. Thus countries volved as structural puzzle-solving capacities.
with a large labour supply would naturally  Community and culture—cosmopolitanism;
export goods that were labour-intensive (e.g., sustainability; talented human capital; crea-
China), while countries that were technologi- tive cultural environments; social tolerance.
cally advantaged (e.g., the United States) pro- This public factor provides a background
duced and exported technologically advanced for the dynamics in a Triple Helix of
products. The paradox arose when advanced university-industry-government relations
economies exported labour-intensive goods as (Leydesdorff and Etzkowitz, 2003).
well as technologically intensive goods. The
key weakness was the failure to acknowledge Hence, constructed advantage is both a means of
technological process change as well as understanding the noted metamorphosis in eco-
product innovation as being endogenous to nomic growth activity and a strategic policy
economic growth. Krugman (1995) and Por- perspective of practical use to business firms,
ter (1990, 1998) noted the competitive advan- associations, academics, and policy makers.
tage of firms in which distributed supply In the Triple Helix model constructed advan-
chains and the role of large domestic markets tages have been conceptualized as the surplus
became accepted, and saw this advantage as value of an overlay of relations among the three
central to explanations of inter-firm and firm- components of a knowledge-based economy: (1)
market success. Intra-industry trade and the knowledge-producing sector (science), (2) the
localized demand conditions for market com- market, and (3) governments. Those places with
petitiveness were highlighted. But no explana- research universities witness a growing demand for
tion was offered for why some regions knowledge transfer to industry and, through gov-
prosper while others do not. The emphasis on ernment, to society (Etzkowitz and Leydesdorff,
markets meant that funding and policy sup- 1998; Etzkowitz et al., 2000). Moreover, the geo-
port by the public sector was largely ignored. graphical spread of universities is reasonably
 Constructed advantage—The analytic observa- uniform in advanced industrial countries. For
tions of the two preceding perspectives do not research knowledge, industry and government can
embrace the new dynamics of innovation and be expected to pay more for privileged access to
the capacity to exploit them which are essen- knowledge-based growth opportunities by funding
tial to growth. The ‘new competitive advan- research, stimulating closer interactions among the
tage’ (Best, 2001) highlights regional three institutional partners, subsidizing infra-
development economics, the dynamic of structure (e.g., incubators and science parks), and
which draws upon constructed advantage. This stimulating academic entrepreneurship skills and
knowledge-based construction requires inter- funding.
facing developments in various directions: The exemplar par excellence of this phenome-
non has been the Massachusetts Institute of
 Economy—regionalization of economic devel- Technology (Etzkowitz, 2002). In this issue, Chrys
opment; ‘open systems’ inter-firm interac- Gunasekara’s paper entitled ‘Reframing the Role
tions; integration of knowledge generation of Universities in the Development of Regional
and commercialization; smart infrastructures; Innovation Systems’ uses the Triple Helix model to
strong local and global business networks. investigate non-metropolitan universities in the
 Governance—multi-level governance of asso- quite different context of Australia. Not surpris-
ciational and stakeholder interests; strong ingly, he finds that a model design based on MIT
policy-support for innovators; enhanced works poorly for the more typical universities and
 Regional Development in the Knowledge-Based Economy 11

regions that serve as his laboratory. Nevertheless, chusetts, is a ‘no-brainer’ provided spinouts arrive
the principles of Triple Helix rapprochement are with the three key assets of a business plan, IPR,
valid also for such distinct ‘epistemic communities’ and finance—as they invariably do, ‘friends,
(Haas, 1992) as the three implied, but the bound- family, and fools’ being the principal financiers.
ary-crossing effort required can defeat the unwary.
Early work on regional innovation systems
7. Knowledge and regionally constructed advantage
(Cooke, 1992; Cooke and Morgan, 1994) attempted
to capture the integrative and interactive nature of So what is the difference between a knowledge-
the knowledge-based economy examined from the based economy and a knowledge economy? For
regional perspective. The list of networking part- Dunning (2000) they are the same since his book
ners includes the base institutions like universities, title refers to the former while his introductory
research laboratories, research associations, indus- chapter refers to the latter. Two of its ‘key engines’
try associations, training agencies, technology are ‘the microchip and the computer’ (p. 9); yet
transfer organizations (TTOs), specialist consul- these are pervasive across sectors, but the key
tancies, government development, technology and knowledge is technological. For Machlup, as we
innovation advisory agency programme-funding, have seen, the knowledge economy is a set of
and private investors. This knowledge exploration, sectors which intensely concentrate knowledge
examination and exploitation base supports the assets in terms of both human and fixed capital.
innovation efforts of large and small firms in many This remains the kind of measure favoured by
industries. Not all interactions are only intra- international economic organizations like the
regional; many are also national and global, but in OECD and EU, as we have seen. Does this mean
the most accomplished regional economies like that actors not included in Machlup’s six knowl-
Baden–Württemberg, a majority of such institu- edge sectors are robots without knowledge?
tional networking interactions were regional, and Let us distinguish among knowledge of the
on such regular terms that the networking had analytical (science), synthetic (technical) or
become systemic (Cooke, 2001). symbolic (creative) kind. In all sectors, knowledge
The variability in achieving such seamless has become significantly more important than in
interaction is focused on incubators in Philip previous configurations (industry-based or agrar-
Cooke et al.’s contribution entitled ‘The Bio- ian economies). So we may conclude that as the
sciences Knowledge Value Chain and Compara- base of knowledge evolves institutionally, an
tive Incubation Models’. These authors emphasize increasing portion of the economy becomes
the ways in which regional capabilities condition knowledge-intensive. One key difference, however,
the scale of operations necessary for such interac- is that science-based industries like genomics,
tions to work. They contrast the boundary-cross- research, software and nanotechnologies generate
ing issues for biotechnology spinout incubation value from producing analytical knowledge while
between regions such as Sardinia with a genetic most others create value from exploiting synthetic
resource (the 400-year-old family records of an or symbolic knowledge. Thus, the old definition of
insular population) but with little research or knowledge economy in terms of a few important and
knowledge exploitation capability and, among growing sectors is redundant, while the structural
numerous others, Massachusetts, where $1 billion idea of a knowledge-based economy linking the
in public health-care research funding is spent each knowledge generation sub-system (mainly labora-
year on ‘ahead of the curve’ genomic research. tory research) to the knowledge-exploitation
This has attracted acquisitions from the likes of system (mainly firms and, say, hospitals or schools)
Pfizer, Abbott, Wyeth, Amgen, and AstraZeneca via technology transfer organizations in regional
and a $250 million Institute of Genomics by innovation systems is analytically useful.
Novartis, and shows how the local Cambridge The effect of the growth in importance of
biosciences cluster has spawned a constructed regional (and other) innovation systems is to
advantage statewide and for the U.S. by its mag- pervade the regional and other economies with
netizing effects upon firms, policies and talent. scientific, synthetic and symbolic knowledge to a
Bioincubation, even in distant Worcester, Massa- greater extent than ever before. The organization
12 Cooke and Leydesdorff

of pure and applied knowledge can increasingly knowledge and to deploy that knowledge in
pervade the economy when scientific and techno- economically useful ways and thereby contribute
logical knowledge is institutionally produced and to economic growth and prosperity.
systematically controlled. R&D management and It seems therefore that constructed advantage
S&T policies at relevant government levels enlarge based on regional innovation systems that trans-
the set of options. These, however, are not fixed but ceive over long distances as well as through
evolving distributions in which some regions are regional networks is becoming the model of choice
more developed as knowledge-based economies for achieving accomplished regional economic
than others. Hence, the post-1970s fascination with development. The importance of effective com-
‘high-tech’ regions worldwide. Today, however, as munication in this process is highlighted in Loet
the Triple Helix perspective suggests, with univer- Leydesdorff’s contribution to the issue entitled
sities and their related research laboratories spread ‘‘‘While a Storm is Raging on the Open Sea’’:
throughout most regions, many more economies Regional Development in a Knowledge-based
have the chance to access not only yesterday’s Economy.’ Leydesdorff argues that the knowledge
‘global’ knowledge announced on the Internet and base of an economy can be considered as a second-
exploitable by all, but local knowledge of poten- order interaction effect among Triple Helix inter-
tially high value generated from research con- faces between institutions and functions in differ-
ducted in relation to regional capabilities. Thus, as ent spheres. Proximity enhances the chances for
the knowledge base becomes pervasive, the couplings and, therefore, the formation of tech-
knowledge economy is further reinforced. nological trajectories. In this manner, connections
The paper in this collection by Gary Gorman between regional innovation systems and markets
and Sean McCarthy entitled ‘Business Develop- (an understudied aspect in the broad field of
ment Support and Knowledge-Based Businesses’ innovation studies) may be facilitated.
addresses this issue in terms of the knowledge
requirements of business. In ‘Business Develop-
8. Conclusion
ment Capabilities in Information Technology
SMEs in a Regional Economy: an exploratory Our own contributions and the one by Bercovitz
study’ Charles Davis and Elaine Sun focus on a and Feldman, which also focuses on boundary-
specific sector within this same domain. Both crossing problems experienced by universities in
papers explore the problems of business develop- relation to markets, examine how small events
ment in a localized region like Atlantic Canada. triggered in specific institutions, often in proxim-
The constructed advantage that may accrue ity, can exert a global impact in fields like the
from innovation systems designed in relation to treatment of hitherto incurable diseases by new
regional capabilities is examined in the papers by biotechnologically derived treatments. The trans-
Bjørn Asheim and Lars Coenen and by Janet formation is focused: a trajectory can be shaped at
Bercovits and Maryann Feldman. In ‘Contextu- some places, but not at others. A lock-in functions
alizing Regional Innovation Systems in a Global- like a resonance which transforms the resonating
ising Learning Economy: On Knowledge Bases dynamics. It cannot be known ex ante which
and Institutional Frameworks’ Bjørn Asheim and dimensions in the multi-dimensional arrangement
Lars Coenen give special importance to the linkage of industry, academia, and governance will be able
between the larger institutional frameworks of to retain wealth from the incursive transformation.
the national innovation and business systems and However knowledge-intensive, the geographical
the character of regional innovation systems. dimension always remains always involved be-
In the paper by Janet Bercovitz and Maryann cause the events are also localized (Storper, 1997).
Feldman entitled ‘Entrepreneurial Universities Geographical proximity can be expected to serve
and Technology Transfer: A Conceptual Frame- the incubation of new technologies. However, the
work for Understanding Knowledge-based Eco- regions of origin do not necessarily coincide with
nomic Development,’ the Triple Helix challenge is the contexts that profit from these technologies at
picked up in an attempt to identify the factors that a later stage of development. The dynamics
affect the ability of universities both to create new can evolve with the technology (Hughes, 1987).
 Regional Development in the Knowledge-Based Economy 13

Various Italian industrial districts, for example, Best, M., 2001, The New Competitive Advantage, Oxford:
have witnessed a flux of new developments. As Oxford University Press.
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Schumpeter (1943) called this ‘creative destruction.’ Cooke, P., M. Heidenreich and H. Braczyk, 2004, Regional
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