In recent work by John Friedmann (1976) and by Stöhr and Tödtling (1977, 1978) considerable attention is paid to what Friedmann calls the 'contradiction' between 'territory' (or broadly speaking, regional interests and development) and 'function' (or in simple terms, industrial and services interests and development). The objective of this paper is to clarify these concepts and to see whether they can be used to constitute a framework for the analysis of regional development problems.