Chapter 15 Innovation and changes in regional structure This chapter reviews the innovation and changes made in regional structure. Innovation or technological change is a principal source of change in the economic structure of regions and nations. Although innovation has been studied as a critical variable in the production and management of firms and nations technology has remained for the most part a black box within economic research. The chapter reviews the theoretical and model based research on innovation and regional structure and explains regional differences in productivity. Labor inputs are considerably more heterogeneous and variable than traditionally considered. The chapter surveys the wide range of empirical studies that have contributed to the knowledge of the effects of technology on regional structure and change. Some effects of technology on regional development are outlined in the chapter. The organization of multiregional firms and their use of technology as an explicit strategic variable adds further complication to conventional theoretical treatments of urban and regional change. This review of the available empirical evidence on these topics focuses primarily on experience in the USA and Western Europe. The chapter also presents some comparisons between firms and regions in the context of innovation.