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Walecki
space is inadequate, their understanding of economic spaces of businesses is basically lacking. In
his book Kotkin warned that some urban centers could experience declines if governments did not
pay attention to changing growth patterns and locational factors (Kotkin, 2000).
The end results of most regional development programs have often been mixed. It seems that
government agencies have received rather limited support from business schools over the years,
which may have been partly due to a lack of interest and even expertise in regional economic
development. As a result it was often up to public agencies to take on a leadership position and
try to identify major regional economic challenges and come up with solutions. Today the
increased interest in the ‘new economic geography’ and the theory of clusters may finally bring
some help. Michael Porter has not only provided much needed leadership in regional economic
development, but also recognized the important role of governments. He reminds us that:
“governments have a great stake in the influence of location in competition, because it is
governments that are directly responsible for improving the well being of citizens in particular
geographic areas” (Porter, 1998b, p.11 & 2003). Porter is convinced that economic growth is
strongly affected by regional clusters, which stimulate productivity growth and innovation. He
has been quite active in designing new regional development strategies based on clusters, such as
the South Carolina’s tourism program. Porter’s cluster’s strategy for the state emphasizes the
importance of local infrastructure, as a key factor (Flowers and Easterling, 2006). Harmut and
Falkinger’s study also confirms the impact of public infrastructure and subsidies on firm location
decisions, and shows that they may indeed alter initial locational factors and lower international
outsourcing (Hartmut & Falkinger, 2006).
At the same time, throughout the recent history there has always been a danger for consultants
and practitioners to overstate the importance of one tool in regional development. In that sense
the contribution of the theory of clusters at this time may not be much different from the previous
rather simplistic solutions. The main concepts are still subject to various misinterpretations and
often lack clarity needed for policy making, which may lead to unintended results. For example,
the notion that ‘all clusters can be desirable’ and should be supported by governments (Porter,
2000b) may encourage some local authorities, interested in protecting their regional employment
levels, to hold on to inefficient industries as long as these economic activities are identified as
part of the existing clusters.
There are some success stories too when it comes to regional development initiatives, which
reveal a significant progress in our understanding of the spatial dimensions of economic and
business growth. In California and other states there are examples of regional and local
development strategies that are innovative and have already generated positive results. For
example, among the local governments in the greater Los Angeles area the City of Irvine and the
City of Ontario have taken a pro-active role in business and regional development by focusing on
their competitive and comparative advantages. In both cases geographic space and particularly
open land have played a crucial role in attracting new investments. The City of Irvine is a clear
example of the importance of agglomeration economies, but it also shows non-traditional location
factors that firms are considering when deciding on their physical location, including different
amenities. At the same time both cities will still have to invest a lot more in learning about
interdependencies between geographic and economic spaces if they want to assure sustainable
economic development in the future.
There are encouraging news at a higher regional level as well, as different local governments
team up together, work on solving regional challenges and plan for their common future. For
example, in 2004 the Southern California Association of Governments (SCAG) came up with a
new regional development program named “Compass, Charting the Course for a Sustainable
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