Cities in the transition from an industrial to a knowledge based economy – Analytical framework and methodological issues for a future research project Wolfgang Gerstlberger Iciar Dominguez Lacasa Paper presented at the Expertenkonferenz: Innovation, Erfolg, Nachhaltigkeit Internationales Begegnungszentrum (IBZ)- St. Marienthal 1. März 2007 Abstract There is a large body of literature in economics and economic geography developing theoretical and empirical work exploring innovation and economic growth processes at the local level (for recent reviews on the relevant literature see Doloreux, (2005) Hatakenaka (2006), Caniëls (2005)). Accordingly, economists and economic geographers have widely accepted that sub-national territorial layers (such as clusters, learning regions, regional systems of innovation, milieus, agglomeration economies, Marshallian industrial districts or city-regions) are suitable levels of analysis to study innovation and economic growth. Our main research interest focuses on the processes of innovation and economic growth in cities going through the transition from an industrial to knowledge based economy. Drawing on research on the socio-economic processes taking place in the last two decades we characterise this transition trough the accelerating pace of development of innovations driven by the application of knowledge to develop devices for knowledge codification and diffusion (Castells 2001), through the increased international integration of economic activities (Archibugi and Iammarino 2002) and through the establishment of a new system of industrial organization composed of decentralised networks linking vertically disintegrated nodes along the value chain (Langlois 2003). Additionally, in European post-socialist economies these processes have been accompanied by the transition to a market based economy. Accordingly, besides the challenge of keeping up with the accelerating innovation pace, with globalization forces and with the vertical disintegration in the organization of industrial value chains, economies in European post-socialist countries have faced the task of transforming their centrally-planned production systems into decentralized market systems (Fritsch and Werker 1999; Radosevic 1999). Against this background, and considering that cities may have different economic roles and draw on different capabilities for innovation, we are interested on studying the impacts of these socio- economic changes on urban development in the last two decades and the way cities can prosper in this new environment. Our contribution to the conference will sketch our current efforts to design an interdisciplinary research project tackling these issues. The project should carry out comparative case studies in multiple locations, each focused on a different industrial sector. The case studies should involve quantitative and qualitative analysis at 3 levels of analysis: (i) the firm level, (ii) the city-region level and (iii) the sectoral level. The project should take into account less favored cities. The analytical framework and the main methodological issues will be presented for discussion.