The new paradigm of local and regional development emphasises the identification and mobilisation of endogenous potential, that is, the ability of places to grow drawing on their own resources, notably their human capital and innovative capacities. This approach aims to develop locally-owned strategies that can tap into unused economic potential in all regions and are the basis for strategies that tackle questions of sustainable development and human wellbeing. Such approaches require strong and adaptable local institutions, such as regional development agencies, which are increasingly commonplace around the world. At the same time, such approaches require the involvement of a wide range of stakeholders and mechanisms for identifying assets in the local economy that can be the basis for local growth strategies.
Examples of this new approach are drawn from the European Union. Although Australian and European experiences are different, the relative success of some European regions is worth studying. The report looks in detail at the performance of three regions from different parts of Europe that outperformed their respective national economies in recent years. While revealing a diversity of experiences and conditions, the regions have a number of attributes in common, including a strong focus on innovation and human capital, clear long-term strategies and robust and accountable institutions.
The report notes the distinctive and diverse conditions of Australia's cities and regions and, in international terms, the relatively benign prevailing economic conditions compared to Europe. It notes that in some respects Australian policy is moving in the direction of place-based thinking, but that this development could be accelerated.
The report concludes:
Placed-based thinking is being adopted in many places around the world and it could be applied with equal value both in metropolitan regions and regional Australia.
Place-based approaches require strengthened local and regional institutions that are able to assess and develop local economic assets in ways that amount to more than "tailoring national policies".
The active role of local stakeholders is critical to the success of place-based approaches but this places new demands on local business and other bodies to actively shape local policy, rather than merely make demands on State and Federal agencies.
Successful place-based approaches place the development of human capital and the promotion of innovation at their centre.
Successful place-based economic development is generally a long-term process.
Australia's system of fiscal federalism potentially provides a supportive framework for the emergence of place-based approaches.
"Place-based thinking" has the potential to open new approaches to the development of Australian cities and regions. But its implications require careful consideration and assessment, not just by governments, but also by stakeholders such as business.