ABSTRACT
This chapter provides the axioms of economic action and governance which emerge from a theorization of the economy rooted in institutional economics and socio-economics. It discusses applications of institutionalist thought within regional development studies that seek to explain the importance of territorial proximity for economic competitiveness. The chapter explains the just ex-post generalizations based on the experience of a small number of regions, but also ex-ante suggestions based on a particular conceptualization/abstraction of the economy and its territoriality. The institutionalist perspective suggests that region-building cannot stop at simply securing regional political autonomy. There is a risk that the institutionalist turns in regional thought and practice reinforces a parochial optimism centred on the belief that building local capabilities might be sufficient for establishing a privileged position within global networks. The experience of some of the most dynamic economies in Europe shows that supply-side upgrading of a generic nature though desirable is not sufficient to secure regional economic competitiveness.
