Localized Learning and Industrial Competitiveness

This paper attempts to place regional development within the context of modern resource base theory. Firms do not locate or relocate in order to make use of ubiquities, but to utilise appropriate differences in regional capabilities, and the paper discusses the nature of such capabilities in enhancing or abating the competitiveness of firms, emphasising the crucial role of collective learning and tacit knowledge of firms and markets. Learning processes are inherently interactive in nature and generally characterised by uncertainty. Most new knowledge is related to problem-solving, often on a trial-and-error basis, and as such it is normally arrived at incrementally. The interactive processes of solving problems, where the needs of one party becomes the driving force for action of another, contain both codified and tacit elements. Indeed, we argue that in an era when codified knowledge is globally disseminated faster than ever before, tacit, and spatially much less mobile, forms of knowledge are becoming more important as a basis for sustaining competitive advantage. Regional capabilities can be seen as the combination of the human and physical resources available, the structures established in the region through time, and the regions specific institutional endowment as it is shaped by the prevoius rounds of knowledge creation. By embodying knowledge useful for particular classes of activities the institutional endowment reinforce the parth-dependent nature of regional economic development. Over time, regional capabilities change as resources are exhausted, as structures decay and as institutions degenerate or become outdated leading to a deterioration of regional competitiveness. Others might even imitate some of the regions capabilities thereby turning them into ubiquities. Sustainable regional competitiveness imply that the process of asset erosion must be compensated by the formation of new capabilities through the replacement of decrepit resources, the rebuilding of obsolete structures or the renewal of outdated institutions. The paper argues that the ability of regions to adjust there institutional endowment to meet contemporary demands of the firms increasingly require "un-learning". The process of unlearning necessitate the disintegration and removal of formerly important institutions which now acts as a hindrance to further development. This might jeopardise the interest of some individuals or larger groups with the power to prevent or impede the process, thus leading to regional lock-ins. It is finally claimed, that in the ongoing movement towards a knowledge based economy the adaptness of regions to unlearn are of growing significance for a region's perpetual ability to participate …