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Over the last three decades, the rise and growth of knowledge-based economies have become central to the economic development of global and local economies. However, the 2008 crisis and the subsequent major economic restructuring process requires that we re-build our understanding of the knowledge economy (KE). Based on the foundations of recent agglomeration economies, the article discusses the relation between the knowledge economies and the spatial reconfiguration of regions and economic restructuring during a period of expansion (2000–2007) and a period of recession (2007–2015) using the case of the Madrid city-region. The article finds that: (1) the KE in metropolitan regions is anchored in a multicore network composed of a large or first-rank city and some medium-sized or second-rank cities; (2) employment in the KE is more resilient to a crisis period than other industries; (3) second-rank cities respond better than first-rank cities to a recession; (4) the city’s hierarchy profile (first- or second-rank) influences the KE’s sectorial composition; (5) the KE locates in relation to a complex combination of agglomeration economies, functions, amenities, and proximity to the metropolitan core. Finally, results also suggest that localisation economies and the cities’ economic functions are important for the KE concentration and specialisation.

Dynamics and distribution of the knowledge economy in contemporary crisis (2000–2015) in the Madrid city-region