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The role of the growth of new activities in an urban economy can be explained by means of three models: a supply, a demand, and a network model. First, the growth of the supply in a new sector may determine a corresponding increase in the demand and the product of the area considered. Second, cities may internally develop new sectors which may respond to the demand of local consumers and to the needs for intermediate inputs of exporting firms. Third, new knowledge promotes the continuous differentiation of the internal needs and demand of users and the reconversion of the specialized human capabilities and internal supply, thus enhancing the creation of new firms and employment. Economic growth is tightly linked with the turnover of productions and of firms, and it is determined by a Schumpeterian process of creation of new productions, new skills and new preferences which replace traditional productions, skills and preferences. According to this model, the role of national and local governments is to promote the growth of internal demand and to create institutions and physical infrastructures in order to facilitate the process of interactive learning, which leads to knowledge creation in urban areas.

Cities are the core of the far-reaching sectoral transformation of the national and international economy into the model of the "knowledge economy," and the competitive advantage of cities and regions is determined by a faster adoption of innovation. This article considers the relationships between the changes in the spatial structure and the transition to the knowledge economy, as innovation affects the structure of the territory at the regional, national, and international level, but also how territorial structure and policies affect the patterns of innovation. It first illustrates the differences between the related concepts of information, knowledge, and learning economy. Then it defines the systemic and interactive nature of the process of knowledge creation and illustrates the methodology of territorial knowledge management. That highlights how spatial planning may affect the innovation potential of a region and the differences with respect to the traditional approach in industrial and innovation policies.

Nowadays, it is widely accepted that knowledge and learning are the core of competitiveness, international division of labour and agglomeration and exclusion phenomena. Yet we are still in need of a better understanding of the processes which allow access by individual regions both to codified knowledge and RTD networks as well as tacit knowledge and know‐how at the international/interregional level. This paper will discuss possible approaches to analyse the mechanisms which operate at the international/interregional level and lead to higher forms of integration of industrial and service firms, not only in a commercial or financial perspective but also in knowledge and innovation networks. It will point to a need to develop policy strategies in support of institutions that create and transfer knowledge on a European scale and outline open questions for the creation of the necessary institutional background for the creation and the support of knowledge and innovation networks at this level and for the conditions of its transferability to Objective 1 regions and the EU new member states and candidate countries.

Nowadays, it is widely accepted that knowledge & learning are the core of competitiveness, international division of labor, & agglomeration & exclusion phenomena. Yet we are still in need of a better understanding of the processes that allow access by individual regions both to codified knowledge & RTD networks as well as tacit knowledge & know-how at the international/interregional level. This paper will discuss possible approaches to analyze the mechanisms that operate at the international/interregional level & lead to higher forms of integration of industrial & service firms, not only in a commercial or financial perspective but also in knowledge & innovation networks. It will point to a need to develop policy strategies in support of institutions that create & transfer knowledge on a European scale & outline open questions for the creation of the necessary institutional background for the creation & the support of knowledge & innovation networks at this level & for the conditions of its transferability to Objective 1 regions & the EU new member states & candidate countries. 4 Figures, 100 References. Adapted from the source document.

The paper illustrates the model of territorial networks and it investigates the role of institutions in a bottom-up approach of economic and institutional integration aiming to tackle the negative impacts of the globalization process on the economic development. The first chapter illustrates in analytical terms the model of territorial networks and the multidimen-sional nature of the process of integration, in a regional and international setting and it contrasts it with the traditional neoclassical model of price competition and of aggregate efficiency. The second chapter illustrates the concept of organizational/institutional distance and it analyses the various forms of interregional interdependence between developed and less developed regions and it contrasts them with the neoclassical model of market integration and interregional competition. The third chapter investigates the impact of the European Union enlargement on a reform of the aims and instruments of EU regional policy and the characteristics of a regional policy appropriate to the aim of the integration of the new accessing countries in the European Union. Finally, the fourth chapter illustrates the role of institutions in the governance of the international economic relations and the lessons which may be derived from the process of European integration in order to tackle the impact of the globalization process on less developed countries. Key words: Globalization, European Integration, networks, distance, institutions Prof. Riccardo Cappellin