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Regional economic development has experienced considerable dynamism over the recent past. Perhaps the most stunning cases are China and India rising to emergent country status by the turn of the millennium, when most development economists believed in the mid to late twentieth century that such developments could not and would never occur. Paralleling these developments are similar stories of rapid growth at both the national (for example, the four little dragons-Hong Kong, Korea, Singapore and Taiwan; and also Malaysia and Brazil) and the sub-national regional level, which are elaborated on below. With time now for hindsight, some of the reasons these development successes are beginning to emerge are becoming known. The four little dragons' success is tied to what has come to be known as export-dominated development. By focusing on sizeable export markets for non-durable and to some extent durable goods at first and then later, on durables coupled with disciplined, educated and educable labor forces, these countries rose to developed status by the closing decade of the twentieth century. While all of this was going on, new thinking about economic growth-such as the 'new growth theory', along with recognition of emerging patterns of change such as agglomeration, clustering and entrepreneurship-began to modify the quasi-static development views of the neo-classical perspective on economic growth that had changed little since the 1950s following the work of Solow.

The purpose of this chapter is to analyse the effects of national and international knowledge flows on innovative activity. Therefore a knowledge production function is estimated with patent applications in Swedish municipalities as the measure of innovation. The knowledge resources applied are R&D investments and high-valued imports. In order to account for the importance of proximity, the knowledge resources are expressed as accessibilities. The total accessibility of a municipality is decomposed into local, intraregional and interregional accessibility. The main results indicate that knowledge resources in a given municipality tend to have a positive effect on the innovative activity of another municipality, given that the municipalities belong to the same functional region. Thus the results of the analysis indicate that knowledge flows transcend municipal borders, but that they tend to be bounded within functional regions. This result holds for both R&D investments and high-valued import products.

Growth and regional growth are regularly concepts of current interest. Studies of regional growth have been conducted by numerous scholars but the way that the growth concept is defined and the way it is measured varies a great deal. Lack of proper regional data may be a reason why this discrepancy occurs. Economic growth is closely related to the industrial structure, health, and demography and income distribution of the economy. The measure used for national economic growth is the change in gross domestic product (GDP). GDP measures the value added of all goods and services produced in the economy. The production of goods and services generates primary incomes for households; another method of measuring GDP is therefore to add up all incomes. One part of this income consists of the sum of all wages paid to households. Hence wage sum data are sometimes used as an alternative measure of economic growth. There are different ways to use GDP and wage sum data to measure economic growth at the regional level. In Sweden, the gross regional product (GRP) change is used by Statistics Sweden and Swedish Agency for Economic and Regional Growth. The Swedish Agency for Growth Policy Analysis (Growth Analysis) on the other hand uses changes in labor productivity as a measure of economic growth in regions. Growth analysis then uses wage sum per employee or wage sum per capita as an estimator of labor productivity.

In the contemporary market-oriented society, we seem to be more globally interdependent. The market economy system enhances large-scale production where search for increased productivity strives to 'compress' time. At the same time, the market economy tends to expand in space, for example sells products over longer distances. A result of this 'space expansion' and 'time compression' through the conventional economic market system is that local small-scale production and trade have increasing difficulty in competing and surviving (Assmo and Wihlborg, 2007). Even so, conventional economic growth (valued in monetary terms) is commonly seen as the only way to cure any development problem arising from poverty, unemployment, crime, pollution and depletion of natural resources. In a provocative manner similar to Daly (1992), one can argue that this conventional monetary valued growth perspective is trapped in a terminal state of 'growthmania'. People's organization of daily activities to improve or sustain their livelihood is much more than what is generally calculated and thereby shown in monetary values.

The contributions forming the different chapters in this book were first presented and discussed at the Seventh Uddevalla Symposium 2004 on 'Regions in competition and Co-operation'.

The contributions forming the different chapters in this book were first presented and discussed at the Seventh Uddevalla Symposium 2004 on 'Regions in competition and Co-operation".