This article examines the prospects for the Welsh economy in a changing European context. To a large extent Wales' economic transformation in recent years has been enabled and supported by regional aid funding at UK and European levels. The run-down of regional support may have major implications for Wales' attractiveness to mobile international investment, which is itself changing in volume and nature, as well as the promotion of indigenous firm growth. These concerns together with local difficulties affecting the role of the development agencies cast doubt on the economy's capability for maintaining progress.
Wales is certainly not unique among the EU's 'northern' regions in facing an uncertain future in the 'new' Europe but its case would seem to be particularly interesting for two reasons. First the Welsh economy's performance in recent years has been widely presented as an economic success story. Secondly Wales has been presented as possessing a reasonable degree of institutional capacity by UK standards, reflecting a quasi-regional state with the potential for developing a regional innovation system.
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