Innovating but still poor: The challenges of regional development in regions with mature industries

Abstract

The persistence of patterns of decline or stagnation in developed countries has led to a renewed interest in the study of less developed regions. This renewed interest is informed by a variety of approaches, which range from studies on the unequal distribution of economic power and resources to analysis of regional endowments, such as human capital or quality of institutions. However, a persistent misconception in some of this literature is that the primary factor explaining levels of development is innovation happening within firms. In particular, this narrative fails to consider the role of national and international agents and processes, the impact of value chain management on value appropriation, and the challenges to diversification within peripheral regions. This paper will contribute to this debate by developing these matters theoretically and by drawing on an analysis of three wine regions in Portugal.