In this paper we carry out a meta-analytic review of the literature on culture-led local development models. We identify and discuss three typical fallacies characterising mono-causal culture-led development schemes: instrumentalism, over-engineering, and parochialism. We then discuss their analytical background, and provide examples illustrating the consequences of each. Based upon this critical discussion, we make a case for a ‘new territorial thinking’ approach that takes into account the tangled hierarchy of global and local viewpoints that is connatural to spatially situated cultural production, and focuses upon a non-linear, multi-causal scheme as the only possible framework for the policy design of credible, socially accountable, culture-led development strategies.

We develop a new conceptual framework to analyze the evolution of the relationship between cultural production and different forms of economic and social value creation in terms of three alternative socio-technical regimes that have emerged over time. We show how, with the emergence of the Culture 3.0 regime characterized by novel forms of active cultural participation, where the distinction between producers and users of cultural and creative contents is increasingly blurred, new channels of social and economic value creation through cultural participation acquire increasing importance. We characterize them through an eight-tier classification, and argue on this basis why cultural policy is going to acquire a central role in the policy design approaches of the future. Whether Europe will play the role of a strategic leader in this scenario in the context of future cohesion policies is an open question.

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Building on the early works of Alfred Marshall, analyses of local economies have emphasized the spatial function of clusters and industrial districts in terms of external economies of localization and agglomeration. Recent literature has emphasized the importance of culture and the complementarities between culture and local tangible and intangible assets. This paper aims to provide an analytical foundation for these processes with a view to developing tools for policy design, analysis and evaluation. By "system-wide cultural districts," we refer to a new approach to local development where cultural production and participation present significant strategic complementarities with other production chains. In this view, culture drives the accumulation of intangible assets such as human, social, and cultural/symbolic capital, thereby fostering economic and social growth and environmental sustainability.

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