Making Regional Competence Blocs Attractive - On the Critical Role of Entrepreneurship and Firm Turnover in Regional Economic Growth
AbstractRadically new technology offers the prospect of a New and high productivity Economy for the industrially advanced economies. These opportunities are rapidly taken advantage of by innovative firms operating across national borders. Rapid globalization, therefore, makes the regional dimension of economic growth increasingly overshadow the national dimension. Economic transformation, furthermore, is also being pushed by a still ongoing (2003) severe recession , forcing previously successful firms to shed resources and making industrial assets available in the market at depressed prices. Technologies embodied in those assets are often globally mobile. Even large regions or nations, however, may lack a sufficiently broad commercialization competence to locally identify, capture and industrialize all free floating technologies. Hence, also previously prosperous regions may risk missing the boat to the New Economy, and history is full of such regional failures. Therefore, even large regional economies will depend on foreign investors, and policy authorities in many industrial regions have initiated policy races both to attract new resources and to shore up the outward flow that might otherwise occur through the intermediation of global companies. The outcome of all this may be the creation of other concentrations of excellence among the rich industrial economies than those created in the wake of the previous industrial revolution some 150 years ago. Being attractive for advanced investments is synonymous to being both internationally competitive and offering a rich supply of complementary industrial services to potential investors. The local capacity (receiver competence) to identify and locally commercialize technological spillovers is always more narrow than the supplies of technology. Competence bloc theory is used to explain and characterize the locally attractive attributes and to demonstrate how they can be enhanced through policy to attract global resources.The Lake Mälar/Baltic region in Sweden is used to clarify how policy action may stem the outward flow by making the region attractive for imports of industrial competence and inward investment emphasizing the need to import industrially competent venture capital to broaden the local receiver competence and to support local new firm establishement based on locally available technology. The Bavaria/Baden- Württemberg (B/W-W) region in Southern Germany is used to illustrate the opposite, namely a region that may possess the broad based capacity to locally reinvest in locally released technologies. For Sweden this amounts to a repeat of the 17th and 18th century industrial policy of Swedish kings to stimulate the foreign immigration of skilled labor, only that this time the purpose is to build new industry for economic growth, not to build an imperial war machine. The dramatic restructuring over markets in Sweden holds the promise, if succesful, to be more innovative than the B/B-W restructuring, but the Swedish case is more risky, not least because of a political unwillingness to introduce the necessary institutional reforms.
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Bibliographic InfoPaper provided by The Ratio Institute in its series Ratio Working Papers with number 45.
Length: 32 pages
Date of creation: 24 May 2004
Date of revision:
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Competence Bloc theory; Experimentally Organized Economy; Globalization; New Economy; Policy Competition; Regional Industrial Attractor; Social Capital; Venture Capital Competence;
Find related papers by JEL classification:
- D20 - Microeconomics - - Production and Organizations - - - General
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F15 - International Economics - - Trade - - - Economic Integration
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-26 (All new papers)
- NEP-ENT-2004-05-26 (Entrepreneurship)
- NEP-GEO-2004-05-26 (Economic Geography)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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NBER Working Papers
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- Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
- Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers.
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