Regional Regional EconomicsEconomics

Lecture 4Lecture 4

Sedef AkgüngörSedef Akgüngör

Some Suggested Websites Some Suggested Websites for Your Interestfor Your Interest

http://www.dpt.gov.tr/bgyu/bgyu.hthttp://www.dpt.gov.tr/bgyu/bgyu.htmlml

(DPT bolgesel gelişme ana sayfası)(DPT bolgesel gelişme ana sayfası) http://www.egev.org/http://www.egev.org/

Ege Ekonomiyi Geliştirme VakfıEge Ekonomiyi Geliştirme Vakfı http://www.weforum.org/gcrhttp://www.weforum.org/gcr (Global (Global

Competitiveness Report)Competitiveness Report)

"The top rankings of Switzerland and the "The top rankings of Switzerland and the Nordic countries show that good Nordic countries show that good institutions and competent institutions and competent macroeconomic management, coupled macroeconomic management, coupled with world-class educational attainment with world-class educational attainment and a focus on technology and and a focus on technology and innovation, are a successful strategy for innovation, are a successful strategy for boosting competitiveness in an boosting competitiveness in an increasingly complex global economy."increasingly complex global economy."AugustoAugusto Lopez- Lopez-ClarosClaros, Chief Economist; Director, , Chief Economist; Director, Global Competitiveness NetworkGlobal Competitiveness Network

Innovation as a key Pillar to Innovation as a key Pillar to DevelopmentDevelopment

Innovation through Innovation through Knowledge Sharing and Knowledge Sharing and Regional DevelopmentRegional Development

Depends on the relations of activities Depends on the relations of activities within a region:within a region: 1. Vertical relationships1. Vertical relationships 2. Horizontal relationships2. Horizontal relationships 3. Complementary relationships3. Complementary relationships

Vertical RelationshipVertical Relationship

Backward and forward linkagesBackward and forward linkages Backward linkage: Purchasing of inputs, Backward linkage: Purchasing of inputs,

subcontracting.subcontracting. Forward linkage: Transmission of the Forward linkage: Transmission of the

activity further along the sequence of activity further along the sequence of operations.operations.

Horizontal RelationshipsHorizontal Relationships

The relation involve the competition The relation involve the competition of activities or units of activityof activities or units of activity

Complementary Complementary RelationshipsRelationships

Forward linkage effectForward linkage effect Backward linkage effectBackward linkage effect Mutual attraction among suppliers Mutual attraction among suppliers

of complementary products. As of complementary products. As additional producers come into additional producers come into region, they help the region to region, they help the region to become the center of a become the center of a certain/specific activity.certain/specific activity.

Economies of scale and Economies of scale and agglomerationagglomeration

Regional specializationRegional specialization

Learning RegionsLearning Regions Silicon Valley: A global center for new Silicon Valley: A global center for new

technology. Enterpreneurs and technologists technology. Enterpreneurs and technologists from around the world backed by global from around the world backed by global venture capital.venture capital.

Tokyo, New York, London as financial centers Tokyo, New York, London as financial centers of the world.of the world.

Los Angeles: Computer technicans…Los Angeles: Computer technicans… Italy: Designer of fashion goods.Italy: Designer of fashion goods. Los Angeles, Tokyo, Milan: Land of Los Angeles, Tokyo, Milan: Land of

automobile desighersautomobile desighers New industrial revolution in Taiwan, New industrial revolution in Taiwan,

Singapore, Korea, Malaysia, Thailand, Singapore, Korea, Malaysia, Thailand, IndonesiaIndonesia

Regions become more important Regions become more important modes of economic and technical modes of economic and technical organization.organization.

Dynamics of individual regions.Dynamics of individual regions. The role of regions in the new age of The role of regions in the new age of

knowledge intensive capitalism.knowledge intensive capitalism. Regions are key elements of the new Regions are key elements of the new

age of global, knowledge based age of global, knowledge based capitalism.capitalism.

Integrated Economic Integrated Economic SystemSystem

Transplant factoriesTransplant factories Multinational companiesMultinational companies Transnational companiesTransnational companies These are sources of productivity growth because:These are sources of productivity growth because:

1. The directly contribute to higher levels of domestic 1. The directly contribute to higher levels of domestic productivityproductivity

2. Prove that leading edge productivity can be achieved 2. Prove that leading edge productivity can be achieved with local inputswith local inputs

3. Put competitive pressure on other domestic 3. Put competitive pressure on other domestic producersproducers

4. Transfer knowledge of best practcices to other 4. Transfer knowledge of best practcices to other domestic producers through a natural movement of domestic producers through a natural movement of personnel.personnel.

Source: Florida, R. “Toward the Learning Region”. Futures 27(5): 527-536.