REGIONAL INNOVATION SYSTEMS - COMPETITIVE REGULATION IN THE NEW EUROPE

This paper is concerned with the concept of regulation. Formerly, economic regulation was seen as a necessary corrective to capitalism's cyclical and spatially variable tendencies, enabling a competitive system of economic activity to remain in place without collapsing under the strains of its own internal centrifugal forces. Increasingly, the role of regulation has been reinterpreted, being viewed either as a major source of unnecessary restraint upon enterprise or as a necessary element in enabling firms to compete more effectively. This paper examines the role regulation can play as a form of proactive support for industry. It does so in three key sections. The first focusses upon three different approaches to regional innovation, drawing on material evidence from Japan, Germany and France. The second focusses upon regional innovation within the United Kingdom, with particular reference to Wales. The third reports upon developments which have attempted to move the microregulatory structure of Wales towards European best practice within the sphere of regional innovation through a process of 'learning through interaction' with more dynamic, institutionally networked regions in Europe. The main conclusions of the paper are that such interactive learning can produce evidence of very rapid institutional reactions, although there is a time lag before the economic performance and dynamism of business is harmonized across regions. Nevertheless, the case of regulatory intervention in the development of a network innovation system in Wales testifies to the importance of a regulatory perspective which is equal to tackling the liberating, as well as the controlling, dimensions of regulatory activity.