Exploiting the technology-driven structural shift to creative work in regional catching-up: toward an institutional framework

The development and application of technologies such as robots and artificial intelligence drive a shift toward non-routinized, creative work. A stylized narrative is that a few regions dominate the making of these technologies and enjoy a virtuous cycle of increasing employment, innovativeness, and in-migration of the creative class. Regions merely applying these technologies may get into a vicious cycle of increasing unemployment, out-migration, and decreasing innovativeness. Following the normative governance turn in regional political economics, this theoretical policy paper pitches a framework of three complementary institutions to direct the technology-driven structural change for regional catching-up. Firstly, a system for innovation and entrepreneurial activity creates jobs by supporting exploitation of complementarities of application, co-development activities, and product innovation within mature and emerging sectors. Secondly, education provides creative and entrepreneurial skills to exploit technological opportunities and upskills workers for emerging sectors. Thirdly, labour market and social security institutions are to allow rationalization in mature sectors, incentivize hiring and learning on the job, as well as encourage innovative ventures, notably in emerging sectors. Challenges of implementation of the framework due to path-dependence, co-evolution, and multi-scalarity as well as applicability in different varieties of capitalism are examined.