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Regional Knowledge Economies Markets, Clusters and Innovation

Philip Cooke, Carla De Laurentis, Franz Todtling, Michaela Trippl

Edward Elgar, Cheltenham (2007), 336 pages, Hardback (£71.96), ISBN: 978 1 84542 529 6.

Reviewed by Dr. Atle Hauge, Post Doctoral Fellow, Department of Geography, University of Toronto, Canada.

Regional knowledge economies markets, clusters and innovation deals with one of the key questions in the contemporary debate in economic geography and regional development: do firms in agglomerations and/or clusters perform better or worse than similar firms not located in a cluster? The book’s origin is a comparative research project focusing on collective learning in the knowledge economy.

This book may appeal to academics and students in economic geography and others interested in regional development, innovation and industrial dynamics. It provides clear and comprehensible policy recommendations, and as such so it could be an interesting input for policymakers at local, regional and national levels. The book is set firmly in the leading discourse on firm and regional competitiveness, which sees knowledge as the key resource and thus learning is a crucial process. Together, they underlie all innovative activity. Hence, innovation is best understood as relational based actions. In addition, by using comparative analyses between UK and Austria it highlights different modes of industrial organisation and which policy tools might be used to support regional based economic activity. These two countries are presented as different varieties of capitalism; Austria close to a ‘coordinated market’ model and UK as representative of a ‘liberal market’. 

The book is divided in two parts. In the first, the theoretical framework is laid out. In the second, empirical evidence from the ICT and biotechnology industries is used to develop analytical case-studies. Together, the book seeks to explore and develop conceptual issues, both theoretically and empirically. Concepts such as ‘platform policy’, ‘knowledge economy’, ‘knowledge bases’, ‘related varieties’ are first discussed theoretically and then informs the empirical study.

The theoretical section explores some of the main concepts discussed in contemporary economic geography and related disciplines. It starts out with an engagement on the theory of ‘varieties of capitalism’, and how political and institutional frameworks affect innovation governance. It continues by presenting ideas on the knowledge economy, and the spatiality of knowledge production and diffusion. This chapter both presents conceptual issues and empirical evidence. The next section takes the reader through a discussion of the knowledge based sectors, presenting key drivers of innovation and how knowledge moves and transfers between different economic actors. This section engages in a discussion on different knowledge bases, namely synthetic, analytical and symbolic. The fourth chapter deals with a discussion of the local milieu’s role and the global nature of the contemporary economy. This chapter concludes that the region is the most relevant analytical level for innovation support, but that the national component should not be overlooked. The theoretical part of the book ends by highlighting variations among regional economies.

The empirical part of the book is divided between UK and Austria. The former is portrayed as a first mover towards the knowledge economy, whereas the latter is a “latecomer”. A similar set of data is used for a comparative analysis of ICT and Biotech in the two countries; they look at same two industries in two different nations. As such, the authors deserve credit for keeping the variables at a minimum. This makes the empirical findings comprehensible, and useful for comparison. The investigation is clear on the fact that institutional set up plays a role in how the economy performs. Interestingly, even though the two countries can be seen as different varies of capitalism, the analysis concludes that the clear cut distinctions might not be that relevant as the countries are moving towards each other. The book calls for a methodology that steps outside the rather rigid industrial sector distinctions common in economic geography. This is important both for researchers but also for policy representatives. The economy is best understood in systemic terms; as a system of different actors, their mutual relationships and how they form, and the socio-economic settings in which they operate. In addition there is a call for a contextual approach, which recognises the characteristics of the “regional knowledge ecosystem”.

One of the main contributions of the book is the unpacking of some of the theoretical discussions on regional industrial clusters. Much of the recent debate has focused on theoretical viewpoints. This book, on the other hand, uses empirical findings that inform the argument. The findings and assertions in this book give interesting depth and new insights to this debate. For example, the empirical data show that ICT and biotechnology firms have somewhat contrary motivations for location in clusters. For biotech firms, proximity to important research and development institutions is the main argument for cluster location. ICT, on the other hand, wants to be close to their customers. The different industries seek different sources for their knowledge bases.

The last section of the book comes with advice and recommendations for policymakers and academics working on analysis of regional development. The guidance rests heavily on arguments on ‘related varieties’ – economic activities and regions benefit from diverse economic landscape. However, the diversity cannot be totally random; some types of activities profit more from being close to each other. An innovation related regional growth strategy should rest upon a so-called ‘platform policy’. This is a policy that acknowledges the contextual varieties of firms and regions, and seeks to overcome rigid sectoral barriers.

In my opinion, the empirical part of the book is the strongest. Unfortunately, the theoretical chapter is not as solid and it does not add much insight to the current debates. There is a certain lack of flow in the discussion and the argument, and bridging the chapters could be improved. Some parts of the text seem unnecessarily complicated, and some of the central concepts are discussed multiple times in the text. The debate on the benefits of specialisation versus diversification is, for example, handled very similarly on pages 32 and 96. This is a shame, because many of these weaknesses could be avoided with firmer editing. The book would be more interesting and sound as whole if the theoretical framework had the same high standard as the empirical section.

However, this reviewer has no problem in recommending the book; the empirical findings offer valuable and very interesting contributions to the field.

(Added 11 February 2008)