FROM THE GEOGRAPHY OF INNOVATION TO DEVELOPMENT POLICY ANALYSIS: THE GMR-APPROACH

Abstract

Knowledge based local economic development policies (often labeled also as “cluster
development” or policies designed to distribute Structural Funds over the EU territory within
the framework of “national development plans”) are implemented with an explicit or implicit
aim towards broader state, national or even supra national interests. The main issues are
growth (at the supra regional level) and convergence (across regions). How different mixtures
of the instruments of local development policies can help approach theses aims – or more
precisely to what extent these policies may serve either of the targets or perhaps both of them?
The related theoretical and empirical literature in the new economic geography, economic
growth and the geography of innovation fields is extensive. However economic models
drawing from this literature and constructed for the aim of evaluating actual development
policy decisions in the light of the growth and convergence targets are rare. This paper serves
two aims. First it explains a manner how the geography of innovation literature can contribute
to develop a sub-model that can be used for assessing the static impacts of development
policy interventions in the GMR-Hungary model. Second to demonstrate the power of such a
model that incorporates the lessons from the geography of innovation literature policy
simulation results with GMR at the regional, interregional and macro levels are provided.