Design in the Local Economy: Location Factors and Externalities of Design

This article deals with the relation between design and local economy. The study explains the mechanisms, which lead innovative and knowledge intensive activities to concentrate in metropolises and major cities. In addition, there is a tendency that within cities, these activities concentrate to certain locations. Intensive and easy communication with deep social dimension connected to it creates positive externalities and spillover effects of knowledge. This is fruitful not only for the design business itself but also to a large extent to other innovative activities. The location of design industry is illustrated by empirical data in the Helsinki Metropolitan Area, Finland. Design has a great significance for brand and value creation processes of many important, global businesses, like mobile phone industry or machinery, in addition to design industries itself. Via this, link design firms together with research and education institutions are an important part of the global industrial clusters.