The New Context of Regional Development Strategies

imageBearing is often working on city and regional development strategies, and most often, the places we work with face similar challenges. Retention and attraction of talents and Investments has always been important to economic development, but it is even more critical to building competitive regions in today’s post-crises economy. Through the history of economic development, the nature of these investments has shifted.

We can see three overlapping eras in the past half century:

· The Era of Industrial Recruiting has its roots in the Great Depression of the 1930s and accelerated after World War II. During this period, economic development strategies emphasized financial incentives to attract factories, and focused on investments in physical infrastructure to move inputs to factories and finished goods to markets.

· The Era of Cost Competition, which began in the early 1980s, emphasized industry consolidation and achieving economies of scale. During this period, multinational companies began globalizing their production operations. To compete, based economic development organizations focused on providing more aggressive, deeper incentives.

The focus in this era was more diffuse and relied on creating a business and regulatory climate that encouraged private investment by achieving competitive costs levels.

· Our current Era of Regional Competitiveness, which began in the late 1990s, emphasizes identifying each region’s competitive advantages and then prioritizing public and private investments necessary to exploit those advantages. This period is seeing the blurring of lines between economic and workforce development, as innovation emerges as a key element around which economic development strategies are organizing.

The regional competitiveness approach weaves together three important findings about how regional economies work.

  1. The first is the importance of clusters to regional economic growth (Porter 1998)[1], and with clusters I is important to understand that they can be both industry or value chain related.
  2. The second advocates that the clustering of economic activity gives rise to “agglomeration economies” that are critical to understanding the new economic geography of why some regions attract industrial investment and others do not (Krugman 1991)[2].
  3. The third focuses more on the regional, systematic character of organic growth through innovation and entrepreneurship.


It is in this current era of Regional Development that an understanding has developed[3] that especially in the context of innovative clusters it is critical to involve resourceful people, not as representatives, but as resourceful entrepreneurs. Christer Asplund and I described this in a blog article three years ago.

The new Quad Helix approach focuses on talented people in Government, Business, Academia and Civil Society who are open minded and capable to combine complex and disparate factors in collaboration towards the same visions, no matter if these visions are on the regional, city or cluster level.

The Quad-Helix model recognizes that the traditional drain pipe approach to work in isolation in each of the four sectors is not competitive any more (but unfortunately common). It also illustrates the key importance of the central context management, connecting the civil society with talented people irrespective of their home base.

The role of a Regional Development Strategy and the Regional Innovation Strategies for Smart Specialisation in the new European Union context are to create clear, fact and evidence based visions and development strategies and focus development work in programmes and projects in joint collaboration platforms (the “context management” in the illustration). The prime background is if the resourceful individuals are capable to connect diverse facts, curiosity and sometimes even economic resources of their own or via their networks.

[1] Porter, M. E. 1998. Clusters and the new economics of competition. Harvard Business Review 76(6): 77-90.

[2] Krugman, P. 1991. Increasing returns and economic geography. Journal of Political Economy99: 483-99.

[3] Wilson, Ernest J. 2012, How to Make a Region Innovative, Booz & Co, Strategy and Business, issue 66, Spring 2012

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