The OECD small (TL3) regions are contained in a TL2 region. The capacity of less productive firms to learn from leading firms might also have diminished, as the cumulative and frequently tacit and localised nature of knowledge makes it progressively more difficult for laggards to catch up with innovation leaders (OECD, 2015h, OECD, 2016a). This is frequently referred to as the “dual economy” problem, i.e. where the innovative, technologically advanced and highly productive sectors coexist with the traditional, low productive sectors that benefit little from new technology.