In a modern, learning-based economy the primary task of industrial and innovation policies should be to promote innovative interactions between economic sub-systems, organisations and individuals (Lundvall, 1992). KIBS are particularly important in these processes not only because of the significance of their own growth and innovativeness, but also because of their systemic role in influencing the innovation activities of client firms (Miles, 2005). A number of studies also show that the expertise provided by KIBS is associated with economic growth and can therefore be treated as a factor of production alongside capital and labour (Miles, 2000). There are many opportunities for KIBS growth in the 21st century, associated with increasing demand for specialist expertise, the widening of international markets through globalisation, and the alignment of international regulations, for example in the EU. On the other hand, international competition is increasing, especially from newer markets such as India and China (European Foundation for the Improvement of Living and Working Conditions, 2008). It also appears that the recent economic downturn has particularly affected internationally tradable services. The future of KIBS as sources of economic growth and innovation is therefore more uncertain than at any time for the past 30 years.

This Research Network is therefore proposed to take stock of the current and prospective role of KIBS, and its implications for national and regional development and innovation policies. The theme is also timely in drawing on one of the applicant's PhD research (Maja Savic). The other applicants are her Director of Studies (Helen Lawton Smith) and second supervisor (Peter Wood), an internationally recognised expert in the field.