The focus of this article is the empirical identification of factors influencing Foreign Direct Investment (FDI) in the knowledge-intensive business service (KIBS) sector on the regional level of «Raumordnungsregionen» in East Germany. The analysis focuses on the impact of regional agglomeration and technological capability on the location decision of foreign investors and West German MNEs. It shows that localisation, patent activity and the share of employees with an R&D occupation affect significantly the location decision of FDI. This result provides an explanation for the strong concentration of KIBS in urban areas in a post-transition economy.

Innovation is the result of an interactive process. Knowledge-intensive interactions among different partners are associated with a variety of advantages and disadvantages for the actors involved. Therefore, a rich body of literature investigating the impact of R&D collaboration networks on the innovation performance of firms and regions has developed over the last two decades. Those studies come to different results. The aims of this paper are manifold. First, the paper summarizes the results of the relevant literature. Second, a brief overview of the established methods and approaches used in the literature to investigate this research question is given. The third objective is to answer the question whether the achieved results in the literature are predetermined by the employed methods. Finally, relevant gaps for further research are identified. To answer these questions a meta-analysis of the relevant literature is conducted. This study shows that knowledge-intensive interactions have a rather positive impact on the performance of firms and regions. There is also evidence that the employed methods and approaches used in the literature to investigate this research question predetermine the outcome of the research.

Traditional models of technology transfer via FDI rely upon technology gap and absorptive capacity arguments to explain host economies’ potential to benefit from technological spillovers. This paper emphasizes foreign affiliates’ technological heterogeneity. We apply a novel approach differentiating extent and intensity of backward linkages between foreign affiliates and local suppliers. We use survey data on 809 foreign affiliates in five transition economies. Our evidence shows that foreign affiliates’ technological capability, embeddedness and autonomy are positively related to knowledge transfer via backward linkages. In contrast to what is widely assumed, we find a non-linear relationship between extent of local sourcing and knowledge transfer to domestic suppliers.

The paper accounts for the determinants of inward foreign direct investment in business services across the EU-27 regions. Together with the traditional variables considered in the literature (market size, market quality, agglomeration economies, labour cost, technology, human capital), we focus on the role of forward linkages with manufacturing sectors and other service sectors as

attractors of business services FDI at the regional level. This hypothesis is based on the evidence that the growth of business services is mostly due to increasing intermediate demand by other services industries and by manufacturing industries and on the importance of geographical proximity for forward linkages in services.

To our knowledge, there are no studies investigating the role of forward linkages for the location of FDI. This paper aims therefore to fill this gap and add to the FDI literature by providing a picture of the specificities of the determinants of FDI in business services at the regional level. The empirical analysis draws upon the database fDi Markets, from which we selected projects having as a destination NUTS 2 European regions in the sectors of Business services over the period 2003-2008. Data on FDI have been matched with data drawn from the Eurostat Regio

database. Forward linkages have been constructed using the OECD Input/Output database. By estimating a negative binomial model, we find that regions specialised in those (manufacturing) sectors that are high potential users of business services attract more FDI than other regions. This confirms the role of forward linkages for the localisation of business service FDI, particularly in the case of manufacturing.

With this inquiry we attribute cause for the current and “Great Crisis“ to Veblen's predator. After summarizing origins and manifestations of this crisis we juxtapose Veblen's emphasis upon the predator to other potential causes for crisis and crises. Noted to have emerged when our stock of human knowledge provided for the creation of surplus, Veblen's predator is presented as capable of metamorphosis and also driving evolution of our capitalistic system: whether this means emerging as the businessman in the “era of the machine,“ or the investment banker promoting a financial metaphysics in the current “era of finance.“

The author discusses the role of competitions in urban development strategies based on the cooperation of higher education institutions. The experience with similar strategies in regional policy and in innovation policy is reflected upon. After the presentation of some cases, the advantages and disadvantages of development strategies based on competitions are compared.

Within incubator-incubation research, there is a predominant focus on incubator organizations located in industrialized or developed economies. Knowledge regarding the evolution of incubators located in transition economies is almost non-existent. However, meanwhile a significant number of incubators have been established since the fall of the iron curtain in many Central and Eastern European (CEE) countries as well. Here, the present paper sets in through providing evidence on the development, distribution and structural characteristics of incubators in six selected CEE countries (Poland, Czech Republic, Slovakia, Lithuania, Estonia and Latvia). We show that incubator organizations have become a central element of support infrastructure for SME and entrepreneurship in CEE countries during the past 20 years. We further argue that by drawing upon the accumulated experience with incubators in developed Western (European) economies, there are important lessons to be learned for incubator stakeholders in transition economies. We, therefore, outline particular suggestions considered to be vital for long-term successful incubation processes in transition economies.

Foreign direct investment (FDI) assumed a prominent role in Central East Europe (CEE) early on in the transition process. Foreign investors were assigned the task of restructuring markets, providing capital and knowledge for investment in technologically outdated and financially ailing firms.

Drawing on the systems perspective of innovation processes, this article proposes a conceptual approach for a comprehensive analysis of regional knowledge generation and transfer. Instead of focusing on one single indicator, the approach emphasizes the importance to take multiple channels of knowledge transfer into account. This provides valuable insights into the spatial structure of innovation processes on different levels. We disentangle the innovation process and consider four different layers: i.) publications in peer-reviewed journals, ii.) patent applications, iii.) formal R&D collaboration projects, the iv.) localized input-output relations. Further, we demonstrate the relevance of the „multi-layer approach‟ by applying it empirically to a specific regional innovation system: The Free State of Saxony – a federal state in Germany. We argue that the approach could be a valuable tool to inform policy-makers about knowledge-based regional development strategies.

The topic of this special issue refers to the observation that many larger and middle-sized cities dispose of a considerable potential of institutions creating and disseminating knowledge. This kind of endowment seems to be especially valuable in an upcoming knowledge-based economy. Recent strategic concepts and inter-city competitions referring to ‘knowledge-based urban development’, ‘knowledge city’, ‘creative city’, ‘science city’ or ‘entrepreneurial university’ indicate that urban planners and politicians are beginning to search for strategies to take advantage and to make use of this potential. The papers in this special issue a) present case studies of cities trying to activate their knowledge resources for local economic growth, b) deal with regulatory barriers and problems for cities applying ‘knowledge city’ strategies, c) analyze the university support for entrepreneurial activities, and d) discuss some implications of ‘knowledge city’ strategies for architecture and urban planning.