In recent years, stimulated by globalization, technological innovation and intensifying international competition, there has been a growing trend towards the increasing institutional and geographical concentration of financial systems and markets. At the same time, there has been mounting academic and policy interest in the financing problems faced by new and small firms, which are widely considered to suffer from a 'funding gap'. These twin developments provide the motivation for this paper, which seeks to throw some theoretical and empirical light on the question of whether the spatial organization of the financial system impacts on the flows of capital to small firms across regions. Is it the case that a heavily spatially-centralized financial system, like that in the UK, militates against the ready access to capital by new and small firms in peripheral regions, while a more decentralized financial system, like that in Germany, results in a more even regional distribution? The paper first discusses this question theoretically in the context of the regional finance literature. It then compares capital market structures and the regional distribution of equity for SMEs in the UK and Germany. This comparison lends some support to the view that capital markets do not function in a space-neutral way, and that a highly centralized system like that in the UK may well introduce spatial bias in the flows of capital to SMEs. It also shows, though, as the case of Germany illustrates, that the actual impact of the geographical organization of capital markets depends on, and is mitigated by, other institutional and regulatory conditions. Our analysis suggests while a geographically decentralized financial system with sizable and well-embedded regional/ local clusters of institutions, networks, agents, and markets could be advantageous in various ways, regional/local capital markets also face a number of major challenges and problems. The paper indicates the need for more research in this somewhat neglected area.

The issue of ‘equity gaps’ has loomed large in recent discussions of enterprise formation and development, both in the United Kingdom and in Germany. One particularly intriguing, but highly elusive, aspect of this issue is the question of whether equity gaps have a regional dimension: are certain regions at a systematic disadvantage with respect to the provision of equity capital? In this paper, we explore this question in the context of the UK and German venture capital industries, drawing both on unpublished industry data and on information obtained from original surveys of venture capital firms in the two countries. We report clear evidence that the venture industries in both countries are spatially constituted. Despite important national differences, venture capital firms tend to be concentrated in identifiable clusters and their investment outcomes show clear evidence of spatial proximity effects; investment is disproportionately concentrated in those regions that also contain the major clusters of venture capital firms. However, how far this spatial form produces regional equity gaps is hard to determine. Venture capitalists themselves argue that they do not intentionally discriminate between regions in their decisionmaking, and many acknowledge the existence of funding and deal-size gaps but not regional gaps per se. But their perception of project risk is, nevertheless, regionally sensitive. We argue that the notion of a simple supply gap overlooks the way in which the localised form of the industry is based on a dynamic learning process in which demand and supply processes combine with their embeddedness in social networks and individual perceptions in a mutually reinforcing way. Less-favoured regions, with low investment rates, few local venture capital firms, and a dearth of experienced specialist intermediaries, may thus be trapped in a situation of both depressed demand for and supply of venture capital investment.

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It is by now well known that return migration of the highly skilled can have a significant impact on knowledge-based development in the regions to which they return. Whereas previous research has mainly focused on developing and newly industrializing countries, this paper looks at high-skilled return migration in an East European transformation economy, namely Poland. In our paper, we propose an analytical framework which integrates migration theory and regional development perspectives. Based on narrative interviews with high-skilled return migrants in Warsaw and Poznań, we show that high-skilled return migrants have an impact on economic development by acting as both investors and innovators, i.e. that they transfer and successfully integrate financial means as well as different types of knowledge into these local economies. Furthermore, the Polish example illustrates that social relations and institutional context are crucial in understanding how high-skilled return migrants contribute to knowledge-based development.

Sunley P., Klagge B., Berndt C. and Martin R. (2005) Venture capital programmes in the UK and Germany: in what sense regional policies?, Regional Studies 39 , 255-273. The paper considers how far and in what ways venture capital policies in the UK and Germany have been constructed as regional policy interventions. It begins by explaining two justifications for adding a regional dimension to venture capital policy and outlines the development of such policy in the two states. It explains the contrasting policy regimes and the means of intervention employed. Despite their marked differences, venture capital policies in both states are regionalized to only a limited degree. However, the uneven regional operations and effects of such policies are likely to produce an unintended regionalization of outcomes that may contradict the aims of closing regional disparities in risk finance and entrepreneurialism.Venture capital, Policy, Regions, Britain, Germany, Capital-risque, Politique, Regions, Grande-Bretagne, Allemagne, Riskokapital, Politik, Regionen, Grossbritannien, Deutschland, Politicas de capital de riesgo, Regiones, Reino Unido, Alemania, JEL classifications: G24, R58,

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Because of their democratic governance and value-driven approach cooperatives are often regarded as a prime example for alternative economies and contributing to (more) equitable economic development. Furthermore, they theoretically combine production and consumption and are often regionally-oriented. The recent boom of German renewable-energy cooperatives provides an interesting example of how cooperatives can also make an important contribution to sustainable development, here the German energy transition, and its social acceptance. The paper will first show how a specific regulatory environment supported this development and then analyse how German energy cooperatives cope with legal changes leading to less favourable institutional conditions. Based on a comprehensive survey, we examine whether they can, apart from their legal form, be regarded as alternative economies. Our analysis is guided by a set of criteria derived from Gibson-Graham's diverse-economies framework, including voluntary and paid work, (origin of) borrowed capital, size and structure of membership, business goals and strategies, especially after the legal changes, as well as regional orientation. We will show how different categories of German energy cooperatives differ with regard to their business models, alternative-economy characteristics and coping strategies. The future development of energy cooperatives in Germany will very likely be as diverse as their recent history, thus illustrating the diversity of alternative-economy organisations as stipulated by Gibson-Graham. Most of them, however, deal with the new regulatory environment pro-actively and are developing business models, which are independent from public support and might lead to new cooperative strategies at the shifting interfaces between state, market and civil society.

Participation of citizens in local energy decisions is increasingly recognized as helpful for a successful decentralized energy transition. In this article, we focus on energy cooperatives in which private individuals jointly develop facilities to generate energy from renewable sources, thus involving citizens both politically and economically. Focusing on Switzerland and Germany, we show that there is a strong linkage between such cooperatives and municipalities, characterized by collaboration and support, and that the cooperatives are well suited as collaborating partners. We also show that federalist structures are most suited for such local arrangements as municipalities must have leeway to support cooperatives in a targeted manner and to compensate for shortcomings in the energy policy of superordinate governmental levels. Based on these results, we suggest that local governments should be given sufficient financial capacities and autonomy to strengthen implementation of a decentralized energy transition that involves citizens. However, we also recognize that municipal structures alone are often insufficient and that superordinate policies, especially national subsidies, remain essential. Hence, policies at the municipal and national levels should take greater account of citizen initiatives, such as energy cooperatives, which exhibit various noncommodifiable advantages relevant to the energy transition.