ABSTRACT
This Chapter discusses the relations between regional growth and the factors that provide competitive advantages to regions, such as clustering, innovation and human capital with reference to both territorial models of growth and also the new growth theory of neo-classical economics. Although, these two perspectives have different starting points they have several focal concepts in common, which is used in the empirical work on the European regions. Innovation, which can lead to monopolistic conditions for firms and organizations, provides certain advantages to innovative agents compared with others. The share of small and medium enterprises (SMEs) in total firms has wide variation among the European regions. While the theoretical studies emphasize the role of SMEs in economic growth, most of the literature related to the dynamics of clusters provides evidence about individual success stories. The last variable is added to see whether the growth performance of countries has any significant impact on regional performance.
