or for the latter is innovation. Therefore regions and the European institutions are now working together with national government to promote regional growth. Indeed there is a strong need for adjustment because of the new global conditions: no regions have been totally immuned to the pressure of global competition. The increase in globalisation of markets has changed the environment of the European companies, making them face intensive price, time and quality competition abroad but also at home. To stay competitive regions have to innovate. This concept is used in connection with the analysis of processes of technological change. Once can state three different stages in technological change: invention, innovation and diffusion. Invention is defined as the stage of production of new knowledge; innovation as the first application of the existing knowledge to production; and diffusion as the broadening use of new technologies. An innovation system is therefore a social system. For instance they are the results of social interactions between economic actors. Hence it is an open system, which interacts with its environment. It is technological progress, which initiates the process of economic growth. Technological progress usually reflects an improvement in the quality of capital goods and the efficiency with which inputs are combined. Technological advance includes not merely new production techniques but also new managerial methods and new forms of business organisation. It is generally linked with the discovery of new knowledge, which permits firms to combine a specific amount of resources in new ways to achieve a greater output. It is also important to mention that technological advance and capital formation are closely related; technological advance often requires investment in new machinery and equipment. The European Commission seeks to maximize the innovation potential of firms in its leading technology: the general move towards r...
