| Summary: | In the last few decades, innovation has been widely recognised to be the engine of wealth and prosperity as it intensifies competition and increases productivity, which both in turn lead to significant economic benefits such as higher income per capita and increased employment. However, recent empirical studies indicate the existence of an innovation-regional growth paradox, that of innovation seem not to have paid off for some of the most innovative regions in Europe. These regions, despite being highly innovative, grow at a slower pace than their national counterparts, as well as presenting poor economic outcomes such as low income per capita and high unemployment rates. The primary aim of this paper is to develop an explanation that could account for the contrast in observation. In particular, this paper develops a theoretical framework based on the burgeoning literature of regional competitiveness, and tests its explanatory power in the context of seven regions (e.g. Berlin, Braunschweig, Dresden, East-Middle Sweden, North Finland, South Sweden and West Sweden) that demonstrate the innovation-growth paradox. One the main conclusions of this paper is that an evolutionary conceptualisation of regional competitiveness casts significant light on the observation that innovation does not pay-off for some of the most innovative regions in Europe.
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