Geographical Proximity: A tool for Supporting Innovation

In the neoclassical and evolutionary economics, the emphasis is placed on the importance of proximity to facilitate the innovation process. Neoclassical economics with the focus on the aggregation advantages, such as cost savings and economy of scale and the evolutionary economics with the emphasis on the benefits of firms’ proximity such as knowledge spillovers, emply the necessity of designing policies and tools based on the geographical proximity. In the geographical proximity structures, teams, technological firms, startups and industrial companies are located together. The teams and companies located in these structures, while having a joint infrastructure at a lower cost, benefit from the knowledge and technology spillovers. In this chapter, the importance of geographical proximity in innovation is presented from different theories’ perspective, and then various structures based on geographical proximity, including accelerator, incubator, science and technology park, science and technology town, technology town and industrial estate commensurate with different stages of the firms’ life cycle, are reviewed and compared. Finally, an example of aggregation of these structures in a geographical region, i.e. Isfahan province has been presented.