Chapter 8: The Return of Economic Geography in a Fragmented World: Attracting and Anchoring Talent and Firms

With every new step towards enlarging or deepening the European Union, there is a need to ensure that everyone can both benefit and contribute to Europe’s collective prosperity, addressing existing disparities and preventing new ones from emerging. This chapter provides a reflection based on the lasting legacy of John Dunning’s OLI paradigm to demonstrate the relevance of place-based approaches in EU policy making and reviews recent empirical and theoretical developments to argue that the resurgence of economic geography matches the growing importance of regional policy for economic development. European integration has been a strong driver for growth for all EU Member States. However, market forces alone do not ensure that every European region benefits from such integration. This is why regional policy – and the EU Cohesion Policy – are essential to help all regions to reap the benefits generated by the single market. The role of business investment and participation in global value chains in ‘anchoring’ firms into places is highlighted as a key component of regional development in an era of geo-economic and technological shifts.