The analysis builds on the growing body of research demonstrating how “place matters” to the quality of life for all citizens and to the prosperity of nations. [...] Knowledge-based innovation is the critical ingredient for prosperity and well-being in the 21st century, and it seems to thrive in local places that value diversity, encourage the flow of new ideas, and include all residents in the economic, social, and political life of the community. [...] In turn, residents and representative organizations have the opportunity to shape the application of external expertise, recognizing that they have practical knowledge about the problem’s local expression and the day-to-day experience with the unique constraints and opportunities of their places. [...] As the editors of a recent analysis of new urban governance trends summarize: “From the literatures on regional economic innovation, on health and welfare and on the management of environmental qualities, there is an increasing emphasis on the qualities of ‘milieux,’ a concept which combines the material and mental experience of place” (Cars et al., 2002: 20). [...] Yet, acknowledging the political significance and policy strengths of the locality also means taking account of the potential risks inherent in the place focus and ensuring that the “upper levels” of government continue to play their role.