This title was first published in 2003. Development is a complex and heterogeneous phenomenon, driven by the expansion of one or more sectors and their influence on the others. It is the outcome of local interdependencies among firms, households and institutions which give rise to specific territorial patterns of local systems. Policies of development cannot therefore restrict themselves to undifferentiated intervention from the centre to the periphery, but must be able to stimulate and sustain endogenous bottom-up growth by means of specific programmes. Thus, individuals and organizations, public or private interact, take decisions and devise strategies in a context that is simultaneously co-operative and competitive. The first in a series, this volume brings together a team of leading international social scientists from the IGU study group on local development. Illustrated by a wide range of global case studies, it analyses what knowledge is required for industrial production and how best to organize this knowledge, embedded as it is in physical, human and social capital. It focuses on the formation of social capital and the various forms into which this may evolve, in particular, the sets of institutions which regulate relationships within and among firms. It provides an understanding of how such institutions encourage co-operation in conditions of uncertainty, overcoming suspicion and caution, managing participation and ensuring compliance with agreements by applying sanctions.