ABSTRACT
Regions are characterized not only by their physical attributes, but also by the economic and cultural attributes of people, firms, and cities. The process of differentiation of economic activities can lead either to a cumulative attraction of cities and regions - due to the spatial clustering of economic activities in certain regions - or to advantages of agglomeration (Jacobs, 1984). Agglomeration advantages, in turn, result in a stronger attractiveness of certain city regions. However, in many regions, the economic system is not well developed due to the regions specific economic or institutional attributes and its location (e.g. regions with anti-business cultures, or those located in poor rural or woodland areas). Urban and regional development has to be connected with the development of a variety of resources, both from within the regional system and from other regions. Those cities and regions where firms and other organizations are located that are the best in getting and combining the resources in the most productive manner, can be expected to be successful. Enterprises are the most important organizers of the use of resources, but they are embedded in regional or national resource systems and in institutional structures. Cities and regions depend strongly on enterprises and entrepreneurs for their development. In the process of differentiation, firms and workers develop specific attributes, more in partic ular certain kinds of tacit or codified knowledge (Lambooy, 2000). Adam Smith already posited that the growth of an urban economy depends on the actual level of the division of labor, and on the level of specialization in cer tain activities or tasks. He argued that the size of cities and regions is a function of both specialization and the division of labor, inside the region as well as with other regions by means of trade relations. Urban and regional development is for an important part dependent on the economic develop
ment of related external urban and regional systems. The own resource system, the set of relations with other regions (or the connectivity), and the configuration of economic activities (or the production structure), determine for a large part the capacity of economic growth. The relations consist of trade and the geographical transmission of people, information, and knowledge (Lambooy, 2000). The carriers of these relations and knowl edge are often concentrated in such organizations as universities and firms, but are also personified in workers and other individuals who transmit ideas on how to do and how to think, and in urban systems.
