ABSTRACT
This chapter investigates the contribution of agglomeration economies to economic growth in European regions that received objective-one funds compared to regions that did not. The knowledge economy, reflected in localized skills and a higher educated workforce, R&D-expenditures both public and private, and innovation, as well as networks of knowledge in inventors and researchers collaboration patterns. The role of knowledge and human capital as a determinant of economic growth has gained greater appeal after its incorporation in economic growth models. Employment and labour productivity data are obtained from the Cambridge Econometrics statistical database on European regions. Levels of productivity and employment, R&D and the degree of specialization and diversity are important determinants of employment and productivity growth. Concerning the agglomeration variables, both density and degree of specialization are positively related to productivity growth in European regions. The type of agglomeration economies related to the type of growth and embedded in knowledge-economic circumstances is important for regional economic growth.
