Regional Development Theories
According to the theory of Cumulative Causation, as explained by Higgins and Savoie, the countries where regional gaps were large, they were increasing further; where regional gaps were small they were diminishing (Higgins & Savoie, 1997). Further, Myrdal noted that the more advanced countries are more likely to introduce an effective welfare state, introducing the measures to reduce regional inequalities, and thus keeping the upward cumulative movement going. He justifies his argument by saying “The more effectively a national state becomes a welfare state the stronger will be both the urge and the capacity to counteract the blind market forces which tend to result in regional inequalities; and this, again, will spur economic development in the country, and so on and so on, in circular causation” (Myrdal, 1962 in Higgins & Savoie, 1997, p.87).
The Location theory addresses the questions regarding types and location of economic activities. By this the location of economic activities can be determined on the regional level or narrowly on some kind of specific zones. Several writers have explained this theory through utilization of theories of prices, production, employment and distribution (Higgins & Savoie, 1997). Hoover (1948) explained the personal preferences of managers, scientists and engineers as vital in this theory as he explains in his book, “Everyone has some preference as to consumer location, i.e., where he would like to live and spend his income. For all but an envied minority there is also the question of producer location, i.e., the best place to earn an income… Most people come to prefer the kind of environment in which they have been living rather than some other social, racial or institutional atmosphere; unfamiliar climate and landscape, or change from urban to rural living or vice versa” (Hoover, 1948, p. 4 – 5). Mobility in regional economics is important, as noted in Higgins and Savoie book, since many enterprises like to work where they were born and stay by summing “personal factors such as proximity to home and family location preferences features prominently in the result of location surveys” (Higgins & Savoie, 1997, p.120). These factors of governing mobility are of prime importance in the theory at hand from the perspective of regional development.
Finally, it is important to refer to the New Growth theory that is also known as the endogenous growth theory. According to endogenous growth theory the economic development comes from inside of a system. “The endogenous growth models and analyses stress that agglomeration and localization phenomena generate positive external effects that outweigh the negative effects, especially if these phenomena are accompanied by appropriate regional infrastructure
The Role of Innovation Zones in Regional Development – Frame of References investments”. (Karlsson, Johansoon & Stough, 2000, p.4). This theory points out the importance of investing in new knowledge creation in order to sustain the growth (Cortright, 2001). The main point of this theory is that knowledge brings growth. Later on in this chapter we will discuss further the importance of knowledge and knowledge creation
Infrastructure & Knowledge Based Infrastructure
It is usually a difficult task to understand how radical technologies in particular, emerges or sustained unless to understand the role of supporting infrastructure (Smith & West, 2007). There are two roles of infrastructure in shaping large-scale technologies; on one side, such technologies often involve significant accompanying infrastructure with the, like automobile or consumer electrical technologies. While on the other hand, turning to knowledge infrastructure can help development in the public sector infrastructural organization building (Geenhuizen et al, 2005). Smith provisionally defines infrastructure as “The economic infrastructure consists of large-scale indivisible capital goods producing products or services, which enter on a multiuser basis as inputs into most or all economic activities” (Smith , 1997 in Remoe, 1999, p.71). The provision of infrastructure can be vital precondition for the diffusion of major technologies (Edquist, 1997). For example the fax machine requires a telephone system, and the diffusion of advanced information technology requires internationally compatible telecommunications (Edquist, 1997).
George Tassey has defined the institutional base and knowledge intersection in his ‘technology infrastructure’ in the following way: “The technology infrastructure consists of science, engineering and technological knowledge available to private industry. Such knowledge can be embodied in human, institutional or facility forms. More specifically, technology infrastructure includes generic technologies, infra-technologies, technical information and research, and test facilities as well as less technically-explicit areas including information relevant for strategic planning and market development, forums for joint industry government planning and collaboration, and assignment of intellectual property rights” (Tassey, 1991 in Edquist, 1997, p.95). Considering infrastructure as generic, multiuser and indivisible enabling activity can lead us to understand the existence of ‘knowledge’ infrastructure (Edquist, 1997). The infrastructure has great significance for the economics of a country, as the industrial production is dependent on the knowledge transfer and utilization. Such knowledge can either be formal or tacit (Edquist, 1997. In the next section we are going to talk about the importance of knowledge (either is tacit or explicit), innovation and regional development
Knowledge, Innovation and Regional Development
Clustering knowledge for development
As Whittington said, superior knowledge is the most priceless resource of all (Whittington, 2001 in Rademakers, 2005). In this paper, in order to capture the meaning of regional development an how the literature has discussed the regional growth through time, it is essential to refer to the
The Role of Innovation Zones in Regional Development – Frame of References importance of knowledge and how knowledge can affect regional development. Especially for regional development, learning and knowledge are essential forces for economic growth (Lundvall/ Johnson, 1994; Gertler/ Worfe, 2002 in Koschatzky, 2004). Starting with the definition of knowledge “Knowledge can be defined as a dynamic framework or structure from which information can be stored, processed and understood […] and it is associated with a process that involves cognitive structures which can assimilate information and put it into a wider context, allowing actions to be undertaken from it” (Howells, 2001, p.872).
Nonaka & Takeuchi, make a distinction between tacit and explicit knowledge. They say that “Tacit knowledge is basically experience gained through action and explicit knowledge refers to knowledge stored and made available in books, databanks or other media” (Nonaka & Takeuchi, 1995 in Evers 2008, p.6). Most of the literature describes tacit knowledge as a kind of knowledge that it is difficult to copy or transfer or imitate because it is embedded in humans as experience. If we take into consideration that eighty percent of knowledge is tacit (Botkin & Seeley, 2001 in Munnich, Schrock & Cook, 2002),we can then see the importance of accumulating activity, and foster knowledge flow (Munnich, Schrock & Cook, 2002) between people and organizations. According to Munnich, Schrock and Cook, (2002) knowledge is clustering geographically not only because it is complex, but also because it is embedded in individuals and it is difficult to be transferred across space, be it tacit or explicit. The development of technology has unquestionably enabled the transfer of knowledge between obscure parties. However, it is not always easy to access it, and so the close contact through specific linkages of organizations and consequently of people is still essential. The importance of close contact of the people lies in the difficulty in knowledge accessibility (explicit or tacit knowledge). When the knowledge is explicit there are times that it might be ambiguous or misunderstood by involved parties that are not directly involved when this knowledge is articulated (Fallah & Ibrahim, 2004). Thus, the real meaning is missing and the level of incorrect import of knowledge is high. In the case of tacit knowledge the difficulty rises behind the assessment of the whole picture or the content that gives meaning to the information (Castillo, 2002 in Fallah & Ibrahim, 2004). Tacit knowledge is a type of knowledge that can be easier misunderstood not only because of its implicit nature, but also because tacit knowledge cannot directly be expressed through organizations’ activities. Thus, it is necessary for this knowledge to be obtained through actual interaction with the environment in a specific time and place (Fallah & Ibrahim, 2004), and have the people collaborate with one each other.
Knowledge is highly connected with the firm’s performance, and consequently with regional development. Knowledge infrastructure, knowledge generation and protection, knowledge agglomeration and appropriation and innovative use of knowledge are the fundamental drivers for regional development (Karlsson & Johansson, 2008). According to Thornhill (2006) firm knowledge, industry power and innovation can influence the performance of a firm. Another reason that knowledge is important for regional development is that knowledge is a unique asset for economic development. It can deliver growing profits to scale and it can be used again with almost no marginal cost (Cortright, 2001). Cortright (2001) also mentioned that in order to achieve continuous growth, it is important to reach increasing knowledge, rather than increase of capital or labor. Although the new information technology has enabled world-wide transfer of explicit knowledge, the mobility of tacit knowledge – which is important source of regional development – is not easy and the present of face-to-face interaction is essential (Maskell & Malmberg, 1999)
Innovation and Knowledge creation for Regional Development
It is very important to our analysis, that we give the definition of innovation in order to finally explain the nature and the purpose of the innovation zones. According to Drucker (2007) innovation is the act that endows resources with a new capacity to create wealth. Innovation lead to competitive advantage, therefore, consequently bringing greater profitability (Roberts, 1999; Roberts & Amit, 2003 in Thornhill, 2006).In a knowledge-based economy, the level of innovation is usually high, and the achievements in these economies are characterized by a high level of development, and regional growth. Knowledge is the key source of innovation and at the same time is an essential driver for economic development (Simmie, 2003). As a firm becomes more innovative and reaches a superior level of growth, consequently the region, to which this firm is affiliated, can benefit from this development. In addition, firms that are characterized by innovation and that belong to an environment of agglomeration of innovation are capable of working across knowledge transfers glocally (Simmie, 2003).
To achieve regional economic growth and regional development, companies need to interact in order to not only create knowledge, but also to further develop it. Margaret Fuller, a very prominent journalist, said that: “If you have knowledge, let others light their candles in it”. Sharing the knowledge that one company has with other firms, can lead to innovation and provide competitive advantage for both parties. However, knowledge in the business environment does not always come from intra-firm interaction. Universities, research institutions, trade associations, and government research engines, are examples of sources of valuable consistent knowledge to which not all firms have access. Clustering activities and agglomerations of knowledge intensive institutions and create a high level knowledge-based environment where knowledge infrastructure, knowledge generation and protection, knowledge agglomeration and appropriation and innovative use of knowledge will deliver the fundamental drivers for regional development (Karlsson & Johansson, 2008). According to Porter, “Clusters are geographic concentrations of interconnected companies, specialized suppliers and service providers, firms in related industries, and associated institutions (e.g. universities, standard agencies, and trade associations) in particular fields that compete but also cooperate” (Porter, 2000 in Carpineti, Galdamez & Gerolamo, 2008, p.406). A cluster can be a way to build relationships between companies, universities and governmental institutions in order to foster the cooperation between them, and increase the communication and knowledge creation. The Information Design Associates and the ICF Kaiser International (1997) mentioned that clustering can become a priceless tool to deliver successful economic change. In this economic change, universities and other research institutions can positively influence the growth in a region (Andersson, Anderstig & Hårsman, 1990). The positive effect of interaction between universities, research institutes and companies can be highlighted here. Interaction and networking with universities and research institutes creates positive effect on the innovation of a region and can bring benefits to both the region and the industries (Rond´e & Hussler, 2005). In order to be clearer on the role of knowledge intensive institutions we are going to present a model of the connection between the universities’ outputs and the regional development
1.2.Purpose and Research Questions
2.Research Design and Method .
2.1.Theory of Science
2.4.Realization of Study
3.Frame of Reference
3.1.Regional Development Theories
3.2.Infrastructure & Knowledge Based Infrastructure
3.3.Knowledge, Innovation and Regional Development
4.Empirical Findings and Analysis
4.3.Comparison of the innovation zones and Further Analysis
6.Discussion and Further Research
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