To be globally competitive, regions need to take into account the dual phenomena of increasing international linkages and the persisting importance of geographic proximity. However, even when innovation actors are in proximity, the presence of an international border is a barrier for collaboration, one that is increasing in recent years. For many regions, there are a number of reasons why collaborating with an international neighbour makes sense for both sides. For innovation purposes, the definition of the “functional” area for cross-border policy requires some assessment of both the innovation relationships that are (or could be) relevant, as well as the other functional ties and institutional arrangements. The definition should seek to avoid simply creating rigid new borders.