Arriving at the Dawn of the New Economy: Is Knowledge-Based Industrial Renewal Possible in a Peripheral Region?

In the contemporary knowledge economy, characterized by both globalization and localization of economic activities, the ability of both firms and their respective regions to adapt to changes in their external environment and to retain their competitiveness is closely related to their capacity to innovate and to continually upgrade existing structures, practices and knowledge bases. In this respect, co-location of firms operating in the new knowledge-intensive sectors is typically considered to be beneficial for both the firms themselves and for their respective regional economies. In this study, we considered whether knowledge-based industrial renewal is possible in peripheral regions. The empirical study was designed to identify tendencies towards and potential concentrations of new knowledge-intensive industries in the relatively peripheral region of Pohjois-Savo in Finland. The strength of such tendencies was determined by employing the Herfindahl index and location-quotient methods. The analysis indicates that while the more traditional industries still appear to be dominating the region's economic landscape, the new knowledge-intensive industries have gained at least a foothold in the region, indicating a potential target for local policymakers' further development efforts. Pohjois-Savo can be considered to be a typical Finnish region, characterized by a large central city with a university, a few smaller sub-regional centres and the surrounding large rural periphery. However, earlier literature with the same focus is lacking and regional strategies and entrepreneurial structures differ in different regions; thus, we cannot establish whether these conclusions hold in other regions in Finland or how applicable these results are in an international context.