*Faculty of Economics

The modern growth literature pays much attention to innovation and knowledge as drivers of new developments in a competitive open economic system. This paper reviews concisely the literature in this field and addresses in particular micro- and macro-economic interactions at local or regional levels, based on clustering and networking principles, in which also sustainability conditions play a core role. The paper then develops a so-called knowledge circuit model comprising all relevant stakeholders, which aims to offer a novel framework for applied policy research at the meso-economic level