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Flanders is a densely populated, strongly urbanised region in Northwest Europe, but with still recognisable peri-urban rural territories. These territories have a distinct economic profile that is far from being marginal, but which has a diminishing role for agriculturally related economic activities. From a regionally-based economic approach, the authors argue that these rural areas act as flanking areas for the nearby urban areas, with mutual benefits. Therefore a model representing local economic development in these flanking rural territories can only be relevant if it takes into account this urban-rural partnership, in respect to the territorial identity and cultural features of both these types of areas. The rural-urban partnership should also be an important basis for a rural renewal policy. This policy will undoubtedly contain traditional rural elements stemming from traditional agricultural activities. However, it must also consider economic activities, in particular those of manufacturing and service industries in the countryside. It should also foster those characteristics of the rural environment which can play a decisive role in creating the new opportunities offered by the new localisation factors which are intrinsic to the rise of the new knowledge-based economy.