Center for Regional Economic Development (CRED)

Location dynamics and regional economic policy 

Core competence: Capital regions

Capital cities are not only the political centers of a country, but they also function as specific regional economic systems. We analyze capital city economies and focus not only on the economic implications of the presence of politics and administration but also on the innovation dynamics and networking activities between the public and private sectors in the context of public procurement. Bern is one of the so-called secondary capital cities, which function as political centers of their country but are not considered to be the country`s primary economic centers. Secondary capital cities must position themselves clearly by recognizing specific competitive characteristics and using these for location policy.

Our approach focuses on the comparative analysis of regional innovation and start-up dynamics as well as location policy in capital city regions. We use quantitative and qualitative data for the analysis of capital city functions.

How does the capital city economy function, and which location policy makes sense?

Secondary capital cities are the political but not the economic centers of a country. Recent developments in the global world economy, such as the increasing importance of global cities, transnational institutions, and the formation of metropolitan regions, challenge the traditionally central role of capitals.

This research project is designed as a comparative study of four secondary capital cities: Bern, The Hague, Ottawa, Washington. Supported by the Swiss National Science Foundation, we conducted field research in all four capital regions, for which a total of 179 expert interviews were conducted. In addition, data on economic structure and dynamics, public procurement, and innovation were analyzed from an economic geography and a political science perspective. In doing so, we answered the following research questions:

  • How can public procurement stimulate innovation activities in capital regions? How does the capital city Regional Innovation System work?
  • How do capital city regions act in the knowledge-intensive and globalized competition between cities?
  • Which location promotion measures are formulated by capital cities, and why are they formulated?
CRED: Hauptstadtregionen / Capital regions
Figure 1: Regional Innovation System of a capital region.

Our results, which have been published in a book by Routledge, show that the increasingly internationalized competitive pressure is a particular challenge for secondary capital cities such as Bern, The Hague, Ottawa and Washington D.C. because they have an economic power that is not very competitive compared with the dominant economic centers in their country. In addition, public procurement plays an important role for their economic development. Companies, institutions, and universities, as well as intermediary organizations, play an important role in networking. Start-up dynamics in the context of a capital city region will become more important in the future as they contribute to the diversification of the economy.

Current projects

Working title Research question
Capital City Dynamics: A Comparative Analysis of Innovation and Positioning of Secondary Capital City Regions

Wie funktioniert die Hauptstadtökonomie und welche Standortpolitik ist sinnvoll?

Heike Mayer, Frit Sager (KPM), David Kaufmann (KPM), Martin Warland (Livit Real Estate AG)
Gründungsdynamiken im Kontext einer Hauptstadtregion Welche Rolle spielen Unternehmensgründungen in einer Hauptstadtregion? Heike Mayer