ABSTRACT
This chapter discusses the role of regional specialization, the capability of producing and absorbing new knowledge and socio-economic characteristics for regional growth within different streams of literature. It reviews the debate on manufacturing versus services showing how it has shifted from the initial emphasis on the capability of different activities to create a surplus to their different contribution to innovation and technical change. The chapter emphasizes the increasing interdependence between manufacturing and service activities suggesting that virtuous models of growth rely on a strict linkage between industry and knowledge intensive services (KIS). It also discusses the new debate on smart specialization. The chapter describes the role of innovation and human capital for growth focusing on the regional dimension. It then presents the methodology used to classify regions into knowledge groups and comment on the position and dynamics of EU-27 regions between 2004 and 2010.
