Traditional welfare states have gradually become more involved in competition politics. In order to sustain economic growth in a globalising economy these states get increasingly supply oriented and act to promote technological change, innovations and entrepreneurship. In Sweden, efforts to develop knowledge based niches have become key elements in an increasingly growth oriented regional/industrial policy. This paper will address the spatial implications of these changes. Two territorial approaches can be fruitfully identified. First, the growth policy is based on an economic geography in which the promotion of regional specialisation and industrial clusters are vital parts. Thus, focus is turning from the periphery towards the centre as aims and means are directed towards international competitiveness. Second, the decentralisation of regional policy and the orientation towards partnerships, networks and cross sector co-operations is driving towards a spatial fragmentation where time and space specific regions are created on a project basis. The contours of a development system of regions partly over-lapping each others can be identified.