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Dynamic regions in a knowledge-driven global economy: lessons and policy implications for the EU

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Insights to a more competitive economy

There is much to be learned in studying dynamic emerging regions such as China and India. One such study led to greater insight on how the EU could build on relations to foster growth in its own economies and benefit from global trade.

Climate Change and Environment

How do knowledge and innovation foster growth and competitiveness in emerging regions? The EU-funded project 'Dynamic regions in a knowledge-driven global economy: lessons and policy implications for the EU' (Dynreg) looked into the issue in order to improve policymaking in this respect. The project researched the role of knowledge, innovation and public policy to enhance the economy. It identified factors that spur growth in dynamic regions, looking at the mechanisms of innovation at firm, industry, regional and national levels. Dynreg found that economic dynamism is emerging in China and India, followed by new EU countries. It also found that in time, convergence trends will be replaced by divergence trends, with human capital and communication technology driving growth. The project advised policymakers to address educational inequalities within regions rather than among regions or countries. Project results covered many areas of innovation and knowledge, such as trends in human capital, impact of international experience, role of infrastructure investments, contribution of social capital and others. With respect to globalisation and competitiveness, Dynreg discovered that trade with China and other emerging economies benefitted European manufacturing firms. It recommended tweaking foreign direct investment (FDI) promotion policies and incentives for foreign firms to obtain benefits for local firms. Other topics investigated include foreign intermediates on global markets for European countries, involvement in international markets, the positive impact of export decisions and the relationship between immigration and trade. Dynreg advised policymakers to encourage investment in research and development (R&D) to encourage economic growth. It also touched on location choices for multinationals in the information and communication technologies (ICT) sector, the positive effect of foreign acquisitions on labour productivity, capital flight in unhealthy environments and effects of inflation. Other important themes that the project looked into are institutional and global controls for sustainability, as well as competitiveness strategies based on culture, sector and country. Trends in human resources and management have also been changing with respect to research and innovation, representing important topics for policymakers to consider. Overall the project released 56 working papers of findings and recommendations which could be downloaded from the project website.

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