This study investigates the scope of action open to regions in the world economy. Approaches concerned with the growing importance of ‘regions in the global economy’ seldom address the issue of altered global rule systems and governance structures. Instead, they focus on the challenges ‘inside’ regions, for example, the growing need for local networking among actors as a means of developing endogenous technological competence.
The study develops the concept of the ‘world economic triangle’ that emerges in the process of interaction between industrial locations, global value chains and global networks dedicated to setting standards. Regions are:
(1) increasingly tied into global value chains that are characterised by forms of ‘private global governance’ beyond pure market coordination; and (2) increasingly faced with global (technical, social, ecological, etc.) standards which are defined and often monitored by global policy networks.
Taking into account the interactions between local and global governance in the ‘world economic triangle’ helps to show new challenges, options and limits for local firms and for local policymakers. New forms of transnational networks often emerge between the local cluster and the global value chain, as well as between local policy networks and the ?world of global standards?. The triangle concept highlights that for regions seeking to strengthen their competitiveness, it is not enough to use locational policy focused on local forces. Firms and local policy makers have to learn to deal with complex tension fields defined by local and global governance structures in the ‘world economic triangle’.