Alain Rallet

Is geographical proximity necessary in the innovation networks in the era of global economy

In the analysis of geographical spillovers, a commonly accepted hypothesis is that the different actors of innovation need to be physically closed to one another because the transfer of tacit knowledge implies frequent face-to-face relations. This hypothesis is put under closer examination in this paper. The first section analyses the need for economic agents to be closely located to develop research and innovative activities, starting with the analysis of their need for co-ordination and using some case studies. Based on the example of three French regions, the second section examines the importance given by the local development policies to geographical proximity in order to support the rapid development of local networks favouring innovation. In both sections, nonlocal relations appear as a key factor to develop innovation. As a conclusion, nonlocal relations should be encouraged by local development policies in the same way as local relations.