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Abstract
This paper addresses the coordination and innovation issues needed for promoting
value added at the rural and regional level. There are two sides to value added: the
ability to meet consumer demand, and to identify least cost ways of supplying the
demanded goods. Human and social capital plays an important role on both sides.
At the municipality level the supply side issues are complex. First, because the production
space has far more dimensions than for the single entrepreneur. Second, because
the value of some goods and services produced depend on what other goods and
services those are available. On the supply side networks are important to solve the coordination
issues, while networks for identifying and understanding consumer preferences
are important on the demand side. Participation in these two network types
compete for the same scarce resource, the time of the inhabitants of a municipality.
We address these issues in more detail. A major insight from our work is that in
addition to the time conflict, innovation and new information may make it more
difficult to maintain coordination networks.