The New Economics of Positioning: places as knowledge platforms

The first chapter reviews the traditional innovation literature dealing with the relationship between market structures, technological and geographic space in promoting innovation. A large body of literature has studied which form of market was best suited to promote innovation, with mixed results leading to the emergence of the so-called innovation puzzle. The literature on the evolutionary economics of innovation has helped solve the puzzle through the identification of different innovation regimes based on technological characteristics. Thanks to the concept of relatedness, it is possible to consider these properties of knowledge in relation to place. In fact, the relationship between localized externalities and innovation is mediated by the degree of relatedness between the two, which constrains the flow of knowledge. From this perspective, a framework is proposed that jointly analyzes the characteristics of knowledge and spatial dynamics. This framework can help provide new insights into the innovation puzzle by helping to disentangle four different patterns of innovation in geographic and technological space based on the characteristics of knowledge and its relationship to the knowledge bases of places.