Economies of diversity: Knowledge spillovers, financial relations and technological change in Munich's Jacobian cluster context

Knowledge and learning are today generally acknowledged as major sources of growth in regional development processes. Likewise, it is widely accepted that a functioning financial system is crucial for the economic development of firms and regions. Taking the economic history of Munich as an illustrative case, this paper aims to combine these two perspectives and elucidates the connections between flows of capital on the one hand and knowledge externalities and technological change on the other. The presented research traces the trajectories of the knowledge clusters said to exist in Munich and discusses the influence that local and non-local banks and other capital providers have had on the evolution of these clusters and Munich's industry structure in general. The results indicate that financial relations contributed considerably to a differentiation of the local economy by means of intermediating between varying technological paths.