Policies to promote new knowledge-intensive industrial agglomerations

Abstract

This paper explores the role of policymakers in encouraging endogenous growth in regions. Policymakers in many regions have sought to create the local conditions and the knowledge base that will allow a dynamic and innovative cohort of new knowledge-intensive entrepreneurial firms to emerge. We review existing models of agglomeration to identify the critical antecedents and dynamic processes that lead to agglomeration formation. The policy interventions and instruments that impact on these antecedents and processes are then outlined. We describe the evolution of two new knowledge-based agglomerations, Dublin in Ireland and Tampere in Finland, emphasizing the role of policy interventions in the process of agglomeration formation. We show how policy interventions play an important role in stimulating the development of new agglomerations. However, because the process of agglomeration formation is dependent on local resources and processes, efforts to directly transpose a development model from an established district are likely to be ineffective.

Keywords:

• development policy
• knowledge-intensive industries
• industrial districts
• clustering
• technopolis
• innovation milieu
• Ireland
• Finland

Acknowledgements

The authors wish to acknowledge the financial support of the European Union under Phare ACE, Research Project P95-2114-R, Baltic Cities – Economic Transformation Through New Industries; the financial support of the National Technology Agency of Finland in Research Project 40345/00, Networks, Innovation Milieux, and Regions; and the financial support provided under a Marie Curie Fellowship of the European Community programme (Improving Human Research Potential programme), under contract New Venture Creation Processes in High Growth Potential SMEs (No. HPMF-CT-2001-01489).