Territorial Capital: Theory, Empirics and Critical Remarks

Abstract

Territorial capital has gained considerable attention in the past few years. The aim with this work is to throw light on some underlying aspects of territorial capital research. The study focuses on the theoretical and empirical issues of territorial capital and highlights some critical remarks related to the topic. On the one hand, the focus of the study is on the comparison of concepts and approaches in connection with territorial capital; then an in-depth look is taken at “capital frameworks” related to the research field. On the other hand, a comprehensive overview is presented of empirical investigations by comparing the applied methods, dimensions and variables of territorial capital. An argument is also made for a critical assessment concerning the topic with regard to the sense and function of territorial capital in regional economics and local economic development and highlights some further dilemmas concerning the “properties of capital” and “territorial capital paradigm”. Finally, some suggestions are provided for the future of territorial capital analysis. The main result of the study is an own belief in the concept of territorial capital.

Acknowledgments

The author wishes to thank Roberto Camagni, Roberta Capello, Andrea Caragliu, Giovanni Perucca and the two anonymous reviewers for their valuable comments and suggestions to improve the quality of the paper.

Notes

1. Three versions of MASST-model have been introduced so far. The model comprises two blocks, one explaining national growth and the other explaining regional differential growth. In the latest version of the model, regional growth is an endogenous process stemming from local resource endowment (regional innovation, dynamics of sectoral structure, population growth, urbanization economies and unemployment growth).

2. About properties of “capital” see e.g. Elster (1997), Adler and Kwon (1999), Solow (1999) and Robison et al. (2002). The essential and common used characteristics discussed in this paper are transformation capacity, durability, substitutability, alienability and decay (maintenance).

3. The theoretical elements that support the territorial capital approach are the followings: theory of bounded rationality and decision-making under conditions of uncertainty, “theory of contracts”, Italian “cognitive” school, French “proximity” school, Groupe de recherche européen sur les milieux innovateurs approach to local innovative environments and concept of “untraded interdependencies” (Camagni, 2008).

4. The Oxford English Dictionary defines the basic meaning of the term paradigm as “a typical example or pattern of something; a pattern or model”. Kuhn (1962, p. 46) defines a scientific paradigm as “universally recognized scientific achievements that for a time provide model problems and solutions for a community of practitioners”.