The main argument of this paper is that a convergence of forces such as the deepening of the Single Market in the EU, the wider process of globalization and the growing embedded use of information and communication technologies (ICT) in economic and business practices, among others, have brought about a structural break in the theory and practice of regional innovation policy. In this context we need novel approaches to both theory and practice which though building on the traditional regional innovation policy approaches they encapsulate the key dimensions of this new phase and better enable all relevant stakeholders address the challenges confronted by regional economies. The concept of extended and dynamic clustering is designed to address this need through constructive dialogue with existing approaches to regional clusters. The concept refers to cluster arrangements that have the following characteristics: though embedded in,they transcend geographical location, they focus on global markets, they operate as ad-hoc and/or long term business networks, they are ICT-enabled, and they are based on dynamic aggregations of capabilities of different, often small andmedium size enterprises (SME).
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