In the Wealth of Nations, Adam Smith introduced the metaphor of an invisible hand, which alluded to market equilibration. Leon Walras and later Gustav Cassel conjectured the existence of a general equilibrium. Their ``proofs'' were based on counting variables and equations, concluding that a general equilibrium of all markets exists. In the 1930s, Abraham Wald proved the existence of a general equilibrium in Cassel's model. Later, Gerard Debreu proved the existence of a generalized Walrasian equilibrium. Mathematical economists tried in vain to prove the uniqueness and stability of General Equilibrium Theory (GET). Its lack of realism is obvious. Walras acknowledged that GET is metaphysical because it lacks the dimensions of time and space and is thus pre-institutional and lacks trading processes. Mathematicians such as Donald Saari later introduced a dynamic version of GET, while some mathematical economists incorporated space in a dynamic GET. However, a realistic spatial version of GET requires a theory with multiple time scales. This implies that the dynamic processes relevant in markets for goods are too fast for the slow processes of institutional change and network dynamics. We thus reformulate GET as a synergetic theory of fast and slow processes of equilibration and phase transitions.

This chapter describes a model for balanced regional growth. It is argued that a model of regional transport flows cannot be based on a micro-economic approach. The chapter concludes with a few remarks on computational experience. Few if any topics in economics have been studied in greater depth than general equilibrium theory. The equilibrium problem of trip distribution according to gravity principles and route assignment according to cost minimisation, where transport costs on the links are non-decreasing functions of the flows, has attracted a lot of interest in transport research. The 'inner solution' over a very short time span corresponds to an equilibrium where the slow variables related to the production and transport system can be regarded as given, i.e. an adiabatic process. The 'outer' solution for large time-periods gives the 'slow manifold' for which the trade pattern is always in equilibrium.

Europe has a long history as a global center of scientific research, but not all European regions are alike. Regions such as Île de France and the corridor that stretches from Cambridge to Oxford via London produce a disproportionate share of Europe’s science output. An econometric analysis sheds light on the factors that explain the spatial distribution of European science. One result is that the regional volume of Web of Science publications depends on the regional number of researchers in higher education institutions. This is however not the only cause of high output. Universities and their surrounding regions are slowly evolving institutional structures. Some regions host universities that are more than 500 years old. A second key result is that an increase in the age of a region’s oldest university is associated with greater output, other things being equal. Third, interregional accessibility via road, rail, and air networks is important for small regions, but not for large ones. Conversely, regional high-tech R&D employment is important for large but not for small regions.

A dynamic model that distinguishes between slow and fast processes shows that a triple helix model is impossible as a tool for promoting interdependencies among science, industry and government. We present a theorem to demonstrate that a triple helix strategy is logically impossible as a means of funding scientific research in universities. In spite of this logical impossibility, national and regional triple helix strategies to improve productivity and innovative capacity have been favoured by politicians of almost every ideological stripe. Coordination of science and industry by governments is not new; it harks back to the mercantilism of seventeenth-century Britain and France. In the twentieth and twenty-first centuries, triple helix policies have led to a short-term bias in favour of applied technological research. Several examples, ranging from the military use of scientists in World War II to Chinese high technology parks show how triple helix strategies tilt playing fields, suppress academic freedom0 and expose scientists to the whims of politicians.

A sustainable city combines stable long-term economic growth with a resilient ecological system. It is also a region of social sustainability with low levels of spatial segregation of different socio-economic groups. Spatial inclusion primarily involves provision of equalized city-wide access to territorial public goods. High durability of physical networks and buildings facilitates economic, environmental and social sustainability. This study shows that durability varies considerably between Asian, European and North American cities, with mean life expectancies of buildings that range from below 20 years in Chinese cities to over 100 years in European cities such as Paris. Urban planning principles that focus on the slow and steady expansion of accessibility and density within a durable built environment are consistent with general economic equilibria, while avoiding the pitfalls of political planning of the markets for private goods.

This essay describes the global climate changes in the form of rising sea levels, which are problematized based on how its consequences may affect the physical planning in coastal areas and also problematize the difficulties regarding implementation of adaptation strategies. The thesis aims to answer the research questions Which of the sustainability aspects does the municipality work more / less actively with? How are the conflicts dealt with between the three sustainability dimensions in the municipality's planning? Which adaption strategy is implemented in Karlskrona municipality /will be applied in the physical planning? This has thus been done through a case study of Karlskrona municipality in order to examine the municipality's continued work and future challenges regarding adaptation strategies in the physical planning towards rising sea levels. The focus of the thesis lies on the municipality´s southern parts by the coast and thus investigate how the municipality's planning opposes the three sustainability dimensions of ecological, social and economic sustainability. By the use of the theories Fainstein and Campbells (2012) Planner's triangle and Building Futures and the Institution of Civil Engineer's (2010) adaptation strategies one could answer the set of research questions. Furthermore, the material has been analyzed and explained as to which aspect of sustainability the municipality prioritizes, which conflicts in planner’s triangle are manifested in the municipality and finally which adaption strategy the municipality uses in the continued work on rising sea levels. The study finds that the municipality uses two adaption strategies- to some extent in the planning of rising sea levels. In order to achieve a successful adaption, it is necessary that the three adaption strategies are intertwined. The municipality's conflicts are also manifested and treated in different ways, since the municipality's priorities of the three sustainability dimensions differ in the municipal planning. Thus, one can conclude that it is essential that the municipality prioritizes all aspects of sustainability to achieve a long-term sustainable planning. (Less)

Interaction across geographical space is made possible and facilitated by different categories of interdependent networks, in urban regions and between regions. Changes in the pertinent spatial interdependencies will have consequences for spatial equilibrium patterns of urban regions and systems of regions, for the distribution of economic activities and population, for productivity change and growth, the size of urban regions and a series of social conditions. The described interdependence between fast and slow adjustments concern the development of new networks for capital markets, stock exchange organizations, mobile phone and Internet systems. In a superficial discussion one would definitely argue that globalization of markets is an issue that refers to a region's external markets. Short distance to external markets is of course not completely independent of geographical distance. The chapter also presents an overview of the key concepts discussed in this book.

Houses are normally safe, stable, and predictable. Increasing interdependencies necessarily increase the problems of prediction by increasing the complexity of the dynamic process. Differences in time-scales are essential to the understanding and predictability of inherently complex dynamic systems. Differences in speeds of change are inherent in the mixing of different physical processes. The physical depreciation of the house is sliding on a qualitatively different time scale, quite undisturbed by such fast irregularities of the inhabitants. With many inhabitants, the house would be inherently chaotic. It would be deterministic, bounded, and yet unpredictable. Chaos and unpredictability do not breed feelings of safety and reliability. Rather, social and economic frictions are giving rise to slow and sufficiently collective variables, characterizing the dynamics of the social system. Frictions are important determinants of structural stability and order, and could therefore be seen as an enemy of creativity.

This chapter addresses the role of knowledge in regional development. Knowledge is a multidimensional concept that includes private knowledge embodied in an individual’s brain (human capital); technical advances embodied in computers, machinery and other production equipment; knowledge embodied in production recipes, patenting documents or computer software; and public knowledge in scientific journals. For the individual firm, innovation is driven by the conjunction of its knowledge arising from internal research and external knowledge. The dynamic interactions of these different representations of knowledge is a complicated process. The chapter presents a conceptual framework for identifying interaction processes in the global system of knowledge creation and exploitation, as well as formal models of economic theory, to draw conclusions about characteristics of the knowledge economy including the emergence of some places as knowledge centres and the decline of other research-poor peripheral regions.

Economic development spans centuries and continents. Underlying infrastructural causes of development, such as institutions and networks, are subject to slow but persistent change. Accumulated infrastructural changes eventually become so substantial that they trigger a phase transition. Such transitions disrupt the prior conditions for economic activities and network interdependencies, requiring radically transformed production techniques, organizations and location patterns. The interplay of economic equilibria and structural changes requires a theoretical integration of the slow time scale of infrastructural change and the fast time scale of market equilibration. This paper presents a theory that encompasses both rapidly and slowly changing variables and illustrates how infrequent phase transitions caused four logistical revolutions in Europe over the past millennium.

Production theory has remained substantially unchanged since the publication of the theory of production by Frisch (Theory of production, D. Reidel, Dordrecht, 1928 ; Nord 613 Tidskr Tek Økon 1:12–27, 1935 ). The theory is based on the idea of a firm deciding on the possible input and output combinations of a single unit of production. His theory was substantially copied in contributions by Carlson (A study on the pure theory of production, University of Chicago, Chicago, 1939 ) and Schneider (Einführung in die Wirtschaftstheorie. 4 Bände, Mohr, Tübingen, 1947 ), and later by practically all textbooks in microeconomics. The idea is to model the firm as a “black box” in which a finite number of externally purchased inputs are transformed into a finite number of outputs to be sold in the market(s). Most of the time, the prices are externally determined. Often, the production process is summarized by some simplified production function as, for example, in the form of a CES function. Another and conceptually richer approach is the formulation of an activity analysis model. In the latter case, simple internal interdependencies can be included. In this paper, we indicate how internal interdependencies can also be modeled within a special CES framework. In recent decades, there has been a remarkable growth in the number of production units of firms such as IKEA, Walmart and Apple to name a few such global networking firms. Most of the analysis of these network firms has been modeled by logistics and other operations-research analysts (Simchi-Levi et al. 2008 ) and to a limited extent by researchers in business administration schools. Very little has been done in economics. We propose a modeling approach consistent with the microeconomic theory.

This chapter deals with entrepreneurial factors that support the long-term development of a region. The analysis focuses on decisions on investment in durable public resources that constitute the regional and economic infrastructure. Politicians and planners mostly use the term infrastructure to refer to physical networks links such as roads, railways and utility networks. Here, we use it in the broader sense of all durable and shared systems that support the regional economy. The infrastructure thus includes material public capital such as roads, but also non-material public capital, including regional accessibility to knowledge and markets and a region’s formal and informal institutions. The first section includes a discussion on the infrastructural conditions and their geographical extension for economic development and what constitutes the material and non-material dimensions of infrastructure that favour economic development. It is followed by a historical approach to the role of infrastructure in the Swedish Industrial Revolution and the transformation into a creative knowledge society. This section identifies how the Swedish infrastructure planning and policies of the 1970s and afterwards have changed from national towards regional perspectives and also how the private sector has come to play an active role in pushing for new initiatives on infrastructure development. Two illustrative examples of material public capital are analysed.

The world experienced three major urbanization processes between the eleventh and the twentieth century. All three periods of city growth were associated with revolutionary improvements in the logistical systems. In large parts of the world the third logistical revolution (the Industrial Revolution) has not yet come to an end. In industrializing countries and regions urbanization is thus very rapid. Concurrently, a new and fourth logistical revolution is changing the economic, social and regional structure of the post-industrial parts of the world, leading to the creation of a new Creative Society. A key aspect of this development is the increasing role of creative and innovative city regions with global linkages. These regions now form a new supranational rank-size distribution, which is centred on a few conurbations in Europe, North America and East Asia. Most post-industrial economic development is taking place in a small number of highly ranked creative regions, while other regions are suffering from the “creative destruction” of their traditional industries. One consequence of this restructuring is increasing regional income inequalities in the post-industrial nations.

Unemployment rates differ dramatically across European regions. This article analyses these differences by integrating institutional and spatial perspectives into a unified dynamic framework distinguishing between slow and fast processes of change. The framework forms the basis for an econometric model that is used to analyse labour market differences among European Nomenclature des unit,s territoriales statistiques 2 regions. The results of random-effects models indicate that four key factors-all of which are of the slowly changing type-explain a large part of the variation in unemployment as well as employment rates. Flexible labour market regulations and above-average levels of interpersonal trust are institutional factors that reduce unemployment. Accessibility factors such as inter-regional transport connectivity and local access to skilled workers have similarly substantial effects. Whether a region belongs to the Eurozone or not seems to be less important.