What is the Transition Theory in Economics?

It seeks to explain transitions in the nature of capitalism and their significance on local and regional development. Themes were specific forms of local and especially regional economies whose particular social, technological and institutional foundations had underpinned relatively faster growth performance. It focuses on systemic discontinues in the social organization and regulation of production – between the pre-industrial era and mass production and then from the era of mass production to “flexible specialization Flexible Specialization anticipated the return to the “industrial districts: characterized by the regional industrial specialization typical before the regional functional specialization – captured in the spatial division of labor approach – of the mass production era. Building upon the transaction costs and external economies traditions of eminent economists, neo-Marshallian theories of regional agglomeration and growth develop to explain the formation and success of the regional resurgence of “new industrial spaces” Local and regional development focused on the extent to which localities and regions were exhibiting characteristics of growing and economically successful places.

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