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18.1 Introduction
The importance of endogenous factors in regional economic development and growth has
long been recognized and is largely the basis of the so-called ‘new growth theory’ that has
been popularized since the 1980s. Theories of regional endogenous growth place empha-
sis not only on regional resource endowments and human capital – which have always
been viewed as important factors affecting the economic development of regions – but
also on technology, entrepreneurship and institutional factors, including the role of lead-
ership. However, there is neither a standard definition of endogenous growth, nor a
specification of an operational model including those factors that determine spatial vari-
ations in regional endogenous growth performance. In fact, there is no universally
accepted measure of endogenous growth.1
This chapter first provides an overview discussion of endogenous growth factors. It
then proposes a measure of regional endogenous change which is readily calculable from
secondary analysis of regional employment data available in the national census. The
regional or differential/regional shift component derived from shift-share analysis of
employment change over time is proposed as a viable proxy measure as a dependent vari-
able in an endogenous growth model. A series of independent variables which also may
be derived from census data are specified in the model as factors likely to explain spatial
variability in regional performance on that dependent variable. Those variables are taken
as reflecting the types of factors that are proposed in the regional economic development
literature as potentially influencing endogenous growth. The results derived from the
application of the model across non-metropolitan regions in the state of Queensland,
Australia are presented. The chapter concludes with some thoughts on the emergence of
a new paradigm for regional economic development analysis and planning.
354
Measuring regional endogenous growth 355
endogenous-related concepts, such as product cycle theory (see Norton and Rees, 1979),
innovative milieux (see Saxenian, 1994), learning regions (see Simmie, 1997), regional
systems of innovation, new industrial spaces (see Scott, 1988), new economic geography
(see Krugman, 1991), trust (see Fukuyama, 1995) and competitive advantage (see Porter,
1990). These have all become increasingly incorporated under the ‘endogenous regional
growth theory’ umbrella.
cycle, when incorporated into a spatial setting, may impact differentially on regions
through three stages, namely:
● an innovation stage;
● a growth stage;
● a standardization stage.
In this transition, production can shift from the original high-cost home region to a
lower-cost location. This has often been offshore, which has been hastened through the
evolution of the internationalization of the production process.2 Thus some regions are
the innovators, while others become the branch plants or recipients of the innovation
production, and these might even then become innovators via endogenous growth.
Markusen (1985) extended the product cycle theory of regional economic development
by articulating how profit cycles and oligopoly in various types of industrial organiza-
tion and corporate development can magnify regional economic development differen-
tials.
The concept of the ‘innovative milieu’ was formulated to explain the ‘how, when and
why’ of new technology generation. That notion linked back to the importance of
agglomeration economies and localization economies that may lead to the development
of new industrial spaces (Scott, 1988; Porter, 1990; Krugman, 1991). This relates to the
possibility of increasing returns to scale and divergence discussed by Romer and Lucas
(and referred to previously) in endogenous growth theory.
Some theorists, such as Fukuyama (1995), have suggested that not just economic but
also value and cultural factors – including social capital and trust – are important in
the rise of technology agglomerations as seen in the Silicon Valley phenomenon.
Collaboration among small and medium-sized enterprises through networks and
alliances and links with universities forged a powerful research and development (R&D)
and entrepreneurial business climate. Nonetheless, Castells and Hall (1994), in discussing
innovative industrial milieu, note the following: ‘despite all this activity . . . most of the
world’s actual high-technology production and innovation still comes from areas that are
not usually heralded as innovative milieus . . . the great metropolitan areas of the indus-
trial world’ (p. 11). However, as Rees (2001) points out, technology-based theories of
regional economic development need to incorporate the role of entrepreneurship and
leadership, particularly as factors in the endogenous growth of regions, and it is the ‘link
between the role of technology change and leadership that can lead to the growth of new
industrial regions and to the regeneration of older ones’ (p. 107).
Thus, in the new growth theory models, allowance is made for both agglomeration
effects (economies of scale and externalities), and market imperfections, with the price
mechanism not necessarily generating an optimal outcome through efficient allocation of
resources in the long run. Also, the processes of capital accumulation and free trade do
not necessarily lead to convergence between regions, with positive agglomeration effects
concentrating activity in one or a few regions through self-enforcing effects that attract
new investment. Most importantly, the new growth theory allows for both concentration
and divergence.
Factors such as those referred to above are being seen as fundamental processes affecting
regional economic growth and development, arising from the resource endowments and the
Measuring regional endogenous growth 357
knowledge base of a region, and being enhanced through entrepreneurship, innovation, the
adoption of new technologies, leadership, institutional capacity and capability, and
learning.
As part of this evolution in regional growth and development theory, there has been
also been a shift from concerns about developing a regional comparative advantage to
developing a regional competitive advantage. There has also been a shift in regional devel-
opment planning strategy from master planning and structural planning to strategic
planning paradigms – a new way of conceptualizing regional economic growth and devel-
opment has emerged within the ‘new growth theory’, thus extending it from the pure
Lucas and Romer concepts of endogenous growth discussed previously.
Stimson et al. (2005) have proposed a new model framework which explicitly incorpo-
rates a wide set of endogenous factors as intervening variables that are hypothesized to
have a catalytic impact on the regional endogenous economic growth and development
process. They propose an operational model may be represented as:
Here the outcome of the regional economic development process (RED) is the degree to
which a region has achieved competitive performance, displays entrepreneurship, and has
achieved sustainable development. Those outcome states are defined as the dependent
variable(s) in the model. An outcome state is conceptualized as being dependent on a set
of quasi-independent variables relating to a city or region’s resource endowments (RE)
and its ‘fit’ with market conditions (M), that being mediated through the interaction
between sets of intervening variables that encompass factors defined as leadership (L) and
institutions (I) which may interact to facilitate or suppress entrepreneurship (E). This new
model framework incorporates both direct and indirect effects in the interactions between
RE, M (the quasi-independent variables) and L, I and E (the intervening or mediating
variables). Also, the interactions between the intervening or mediating variables L, I and
E may be both direct and indirect.
It is thus evident that there have emerged a number of key themes as to what consti-
tutes regional economic growth and development and regional competitiveness. Not sur-
prisingly there are differences of views among regional economic development scholars,
and some of those differences relate to the relative focus given to the roles of exogenous
forces on the one hand and the roles of endogenous processes and factors on the other
hand. But there does now seem to be an almost universal realization of what Garlick et al.
(2006) refer to as the institutional embeddedness of endogenous processes and factors in
regional development.
Of course exogenous factors do remain important to a region’s economic performance
and how it develops over time; but increasing importance is being placed on endogenous
forces as determinants of a region’s competitiveness. However, regional economic devel-
opment policy initiatives now tend to be more oriented towards measures that enhance
local capacity and capability for a city or region to develop and cope with rapid change
in an increasingly competitive global environment. While endogenous growth theory
makes mention of leadership, entrepreneurship and institutional factors, little systematic
analysis has occurred to thoroughly conceptualize or, even more, measure their roles as
endogenous factors in the development process.
358 Handbook of regional growth and development theories
Some findings from empirical analyses of endogenous factors associated with regional
growth
Differentials in the pattern of regional economic performance discussed here may be
attributed to many factors, both exogenous and endogenous to a region. The increasing
focus on endogenous factors tends to canvass issues such as regional economic diversity,
population size and agglomeration, levels of human capital, and income. Numerous
cross-sectional techniques, as well as portfolio theoretic approaches, have been used by
researchers to investigate such relationships.
Much of the recent empirical analysis and modelling of regional performance has
tended to pay specific attention to investigating the influence of endogenous factors relat-
ing to aspects of regional industrial structure and human capital.
Regarding the effect of industrial structure on regional stability and growth, one argu-
ment is that industrial diversity and a trend towards diversification of industry sector
employment enhances opportunities for growth and development (see, for example,
Henderson et al., 1995; Gordon and McCann, 2000), although some researchers claim
that there is scant empirical evidence for that proposition (Kaufman, 1993; Lande, 1994;
Productivity Commission, 1998). There is also debate on the influence of urban scale and
agglomeration (Taylor et al., 2002) on regional performance. A study by Duranton and
Measuring regional endogenous growth 359
Puga (2000) reviewing national urban systems suggested that larger cities are more
diversified, that individual city-size rankings and individual city specialization tend to be
stable over time, and that specialised and diversified cities co-exist across a national urban
system.
In Australia, empirical analysis by the Bureau of Transport and Regional Economics
(2004a) shows that there has emerged a more diverse industry structure outside the major
cities over the decade 1991 to 2001. Approximately 20 per cent of the variation in employ-
ment rates across the nation’s labour market regions may be explained by the industry
structure of regional employment at the beginning of the decade 1991–2001. Potentially,
other important influences on regional economic growth might include endogenous
factors such as amenities, remoteness, investment leadership and a region’s resource base
and skills base. For example, Garnaut et al. (2001) have found that metropolitan and
coastal regions experience stronger population and employment growth over time com-
pared to inland and remote areas; and Bradley and Gans (1998) have found that labour
force growth is correlated positively to levels of industrial diversity and negatively to the
initial size of a city. Lawson and Dwyer (2002) have found that regions with high levels of
employment in accommodation, cafes and restaurants, or with high industrial diversity
at the start of a period, have higher employment growth.4 A higher level of industrial
diversity also has a positive effect on levels of regional growth. In addition they found that
regions experiencing high rates of structural change were more likely to have recorded
employment growth. But less significant is the likelihood that employment growth is asso-
ciated with a coastal location.
In addition, there has also been much discussion of the important effects of human
capital skills and income in explaining differential levels of regional economic perfor-
mance (see, for example, Hanushek and Kimko, 2000; Goetz and Rapasingla, 2001). In
Australia, empirical analysis by Draca et al. (2003) shows how levels of education, skills
and qualifications explain between 10 per cent and 20 per cent of the variation between
the states in gross state product in Victoria, Queensland and South Australia. Research
by Lawson and Dwyer (2002), Harrison (1997), Norris and Wooden (1996), Garnett and
Lewis (2000) and Stimson et al. (2004) points to the effect of geographically uneven pat-
terns in the level of skills and qualifications across Australia’s regions being related to
differential levels of population growth (and decline) and issues of employment across
industry sectors. However, the Bureau of Transport and Regional Economics (2004b)
research suggests the links between education, labour quality and productivity, and
regional growth are complex, but that the level of human capital does seem to be related
to well-being and regional productivity.
A definition of regional employment growth: a proxy measure for the dependent variable
In general economic analysis, most studies derive and measure a variable for endogenous
growth by using ordinary least squares or, more recently, panel data analysis. However,
such data are not usually readily available at the disaggregated regional level across a
nation. As such, many economic geographers and regional economists have turned to
other techniques. One such approach used to measure regional endogenous economic
growth and development has been proposed by Stimson et al. (2005). It takes a proxy
measure such as:
● the aggregated (across all industry sectors) regional differential shift component
value in a shift-share analysis, a common technique in analysing regional diff-
erential performance used by economic geographers and regional economists;
or
● an employment scale weighted location quotient change over time, standardized by
the size of the region’s labour force.
Such a measure can then be used as the dependent variable in a model of regional endoge-
nous economic growth and development.
In the model application discussed in this chapter, we have attempted to combine a
range of endogenous factors that reflect economic growth (measured by employment,
given data constraints on measuring production at the regional level) rather than one
measure, such as technology or level of savings. We do this by using shift-share analysis
as proposed by Stimson et al. (2005). One reason for adopting this approach is that sec-
ondary data tend to be readily available in most countries to perform a shift-share analy-
sis, and typically that may be achieved using census data for industry employment in
regions. The regional shift component is a reasonable surrogate measure of the degree to
which employment growth or decline in a region is due to endogenous or ‘within-region’
processes and to exogenous factors, such as national shift and the industry-mix shift
effects. Indeed, that is what the regional shift component is purported to measure. While
the authors recognize that using the differential/regional shift component from a shift-
share analysis is not an ideal method of measuring regional endogenous regional eco-
nomic growth (or decline), it is nonetheless considered to be the most optimal given the
lack of data at the regional level to operationalize other measurement approaches.
Unfortunately it has not been possible to use the full new model framework proposed
by Stimson et al. (2005) because of the non-availability of regional-level data for the inter-
vening variables relating to leadership, institutional and entrepreneurship factors. Thus a
more restricted model has been operationalized as explained in the sections that follow.
regional Queensland – from the most populous LGA, Gold Coast City, with a popula-
tion of over 418 000 in 2001, to several LGAs in the inland western parts of the state with
populations of under 1000 in 2001 – it was necessary to standardize the REG_SHIF
variable to account for the size of the LGA labour force in 1991. This is used as the depen-
dent variable in the model which seeks to identify factors that explain spatial varia-
tions in regional endogenous employment growth performance across that state’s
non-metropolitan LGAs.
The choice of independent variables was guided by the findings in the literature on
regional economic growth and development, such as in the literature referred to in the pre-
vious section. In their study, Stimson et al. (2004) were confined to using variables that
could be derived from the census data for 1991 and 2001. A total of 27 independent vari-
ables were selected for use in the model. They are listed in Table 18.1, and the reason for
their choice is discussed below.
Industrial structure and size effects A series of variables were compiled to enable us to
test the impact on regional endogenous growth of both industrial diversity and size. This
was addressed first by compiling an industry specialization index for 1991 (SPEC_91) and
for 2001, and then calculating a measure of change in the specialization index over the
decade (SPEC_CH). For this purpose employment data in LGAS in 17 broad industry
sectors were used. Second, a structural change index was computed for 1991 to 2001
(SCI_91-01), and a measure of change in the structural change index for the period from
1991–96 to 1996–2001 was compiled (SCI_CH).
The log of the population of LGAs in 1991 (L_POP_91) was used as a measure of size
of a region at the beginning of the decade, and the percentage point growth (or decline)
in population size over the decade 1991–2001 (POP_CH) was used as a dynamic measure
of local market size. In order to address the effect of proximity to the metro-region, a
dummy variable (D_METRO) was used to indicate whether an LGA was adjacent to the
Brisbane Statistical Division.
To investigate further the nature of the industry structure of LGAs and the effect of
industry specialization on regional endogenous growth, a location quotient for three key
industry sectors in 1991 was calculated for each LGA: namely, for employment in manu-
facturing (LQ_MAN_91), for property and business services (LQPBS_91) and for per-
sonal and other services (LQPER_91). In addition, variables measuring the change in the
location quotient of employment in these three industry sectors over the decade
1991–2001 were derived (LQMAN_CH, LQPBS_CH, and LQPER_CH).
Labour force utilization To investigate the effect on endogenous growth of labour force
utilisation, a simple measure of the unemployment rate in 1991 (UNEMP_91) was used,
along with a measure of change in the unemployment rate over the decade 1991–2001
(UNEMP_CH).
Human capital and income It is often proposed that regional economic growth is
enhanced by the existence of skilled workers, the availability of employment opportuni-
ties, opportunities for a wide range of skills, and the existence of higher-income jobs. A
number of variables were incorporated in the model to assess those effects. First, a vari-
able was derived to measure income levels by taking the log of average annual income5 for
362 Handbook of regional growth and development theories
Variable Definition
REG_SHIF Regional shift (from 1991 to 2001)/Labour Force (1991) (i.e. employment
unemployed)
SPEC_91 Specialization index for 1991 across 17 industry sectors
SPEC_CH Change in specialization index from 1991 to 2001
SCI_91_01 Structural change index for 1991 to 2001
SCI_CH Change in the structure change index from 199196 to 1996–2001
L_INC_01 Log(average annual income for 2001)
UNEMP_91 Unemployment rate in 1991 (for all persons)
UNEMP_CH Unemployment rate change from 1991 to 2001 (for all persons)
L_POP_91 Log(Population for all persons in 1991)
POP_CH Percentage point change in population from 1991 to 2001
LQMAN_91 Location quotient for the manufacturing industry in 1991
LQMAN_CH Change in the location quotient for the manufacturing industry from 1991
to 2001
LQPBS_91 Location quotient for the property and business services industry in 1991
LQPBS_CH Change in the location quotient for the property and business services
industry from 1991 to 2001
LQPER_91 Location quotient for the personal and other services industry in 1991
LQPER_CH Change in the location quotient for the personal and other services
industry from 1991 to 2001
UNIQUALS_91 Proportion of the population with a Bachelors degree or higher in 1991
UNIQUALS_CH Change in the proportion of the population with a Bachelors degree or
higher from 1991 to 2001
TECHQUALS_91 Proportion of the population with a technical qualification in 1991
TECHQUALS_CH Change in the proportion of the population with a technical qualification
from 1991 to 2001
ROUTW_91 Proportion of total occupations (all persons) as routine production
workers for 1991
INPERS_91 Proportion of total occupations (all persons) as in-person service workers
for 1991
SYMBA_91 Proportion of total occupations (all persons) as symbolic analysts for 1991
ROUTW_CH Change in proportion of total occupations (all persons) as routine
production workers from 1991 to 2001
INPERS_CH Change in proportion of total occupations (all persons) as in-person
service workers from 1991 to 2001
SYMBA_CH Change in proportion of total occupations (all persons) as symbolic
analysts from 1991 to 2001
D_COAST Border is adjacent to coastline (dummy variable 0 NO, 1 YES)
D_METRO Adjacent to the state capital statistical district (SD) (dummy variable 0
NO, 1 YES)
an LGA at 2001 (L_INC_01). Then a series of measures of the level of human capital
were derived, namely the proportion of an LGA’s population with a bachelors or higher
degree qualification in 1991 (UNIQUALS_91) and the proportion with a technical
qualification (TECHQUALS_91). To measure the effect of shifts in those levels of human
capital, two variables were created on the change from 1991 to 2001 in the incidence of
those qualifications (UNIQUALS_CH and TECHQUALS_CH).
Occupational shifts It has been argued by Reich (1991) and others that the evolution of
the knowledge-based economy and of information-intensive activities has led to a restruc-
turing of occupations vis-à-vis skills and functions. Thus, it was decided to reorganise the
1991 census data on the occupational structure of LGAs into three broad groupings that
represent Reich’s (1991) symbolic analysis, in-person service workers, and routine pro-
duction workers (SYMBA_91, INPE_91, and ROUTW_91). A measure of change
over the decade 1991–2001 in employment in those categories was also calculated
(SYMBA_CH, INPERS_CH, and ROUTW_CH).
Coastal and inland effects Some of the research in Australia inquiring into regional eco-
nomic performance has investigated the spatial patterns of variations in the context of
geographic variables such as remoteness, and coastal and inland environments and loca-
tions. To at least incorporate the potential effect of a coastal location on regional employ-
ment endogenous growth (or decline), a dummy variable was included to indicate whether
or not an LGA is located adjacent to the coast of Queensland (D_COAST).
Figure 18.1 Spatial pattern of LGA performance on the regional endogenous growth
variable
has experienced employment growth over the decade on the regional shift component
derived from the shift-share analysis, standardized by size of the labour force of the LGA
in 1991. A triangle symbol represents a negative score on the REG_SHIF variable, indi-
cating loss of jobs over the decade 1991–2001 due to endogenous processes and factors.
The map also uses black and white circles (positive) and triangles (negative) to indicate
the magnitude of the endogenous growth or decline effect. Some of the larger regional
cities and towns are identified.
Overall, 39 of Queensland’s non-metropolitan LGAs are shown to have experienced
endogenous growth in employment over the decade 1991–2001, while a total of 79 LGAs
Measuring regional endogenous growth 365
display a decline in employment due to endogenous processes and factors. Figure 18.1
clearly shows that endogenous employment growth is most evident in some of the larger
coastal LGAs in the south-eastern corner of the state adjacent to and inland from the
Brisbane metro-area, and as well across a few of the inland small-population rural LGAs
and some of the inland regional centres.
Figure 18.1 also shows that negative scores indicating employment decline due to
endogenous processes and factors are widely apparent across much of western rural and
regional Queensland, and as well in many of the LGAs (particularly those with smaller
populations) along the coast and in near coastal locations.
Estimate t value
Sign Value Sign Value Pr(|t|) value
(Intercept) 3.43 9.39 1.37e–15
SPEC_91
0.27
2.41 0.02
SPEC_CH
0.45
2.12 0.03
L_INC_01
0.73
8.85 2.21e–14
UNEMP_CH 1.10 3.88 0.00
L_POP_91
0.04
2.66 0.01
POP_CH
0.80
22.19 2e-16
LQPER_CH
0.01
2.26 0.02
UNIQUALS_91 2.58 3.19 0.01
UNIQUALS_CH
1.88
2.39 0.02
TECHQUALS_91 1.635 4.64 1.00e-05
ROUTW_CH
0.79
3.66 0.00
INPERS_CH
1.17
4.07 8.90e-05
Notes: Residual standard error: 0.06 on 105 degrees of freedom; Multiple R-Squared: 0.89, Adjusted R-
squared: 0.88; F-statistic: 77.52 on 12 and 105 DF, p-value: 2e-16.
whether this autocorrelation occurs from a true spatial process or an error process
(Anselin et al., 1996). To address these problems, the LM error and LM lag tests were
introduced in this test, allowing an indication of which process is best represented in the
general model. However, given that the Moran I test statistic indicated no spatial auto-
correlation, those other tests were not utilized.
A feature for a reasonable OLS regression is non-constant variance in the residuals.
This was not found to be a problem with the estimated model in the specific model. The
line of the fit of the residuals to the regression of the specific model showed no visual
relationship between the residuals and the fitted regression line.
Patterns of residuals
Figure 18.2 plots the deviation of the residuals for LGAs from the line of best fit derived
from the specific model. It is evident there are two outlier LGAs: Whitsunday (negative)
located on the central coast barrier reef, and Waggamba located in inland southern
Queensland. The positions of the major regional centres are indicated on this plot. It is
evident that the large majority of residual scores for the LGAs fall within the range of
0.05 to 0.05.
The spatial patterns of the residuals are mapped in Figure 18.3. There are 79 LGAs
which fall within the +0.05 to -0.05 range of residuals. There are 45 LGAs for which the
model estimates are positive or above the regression line, and these are largely found to be
located around the Brisbane metro-area in the south-east of Queensland, while some such
LGAs are also small places located across the inland areas of the state. The 34 LGAs for
which the model estimates are negative or below the regression line within this range are
typically larger coastal centres or small rural places on the coast, and as well some of them
are found in the inland south-eastern parts of the state.
Measuring regional endogenous growth 367
0.25
0.2
Waggamba
0.15
0.1
Emerald
Mount Isa
0.05
Redisuals
Hervey Bay
Mackay
Townsville
0
0 20 40 60 80 100 Cairns 120
Gold Coast
–0.05
Gladstone Toowoomba
–0.1
Rockhampton
–0.15
–0.2
Whitsunday
–0.25
LGAs
Residuals
Figure 18.3 also identifies those LGAs for which the model estimates are well above or
well below the regression line. There are 17 LGAs with residuals greater than +0.05, and
these are located mainly around Cairns in the far north of Queensland and across the
rural areas of the south-eastern part of the state inland from the coast. There are 20 LGAs
with negative residuals greater than -0.05, and they include the coastal regional centres of
Cairns and Rockhampton, the Gold Coast, some coastal rural places, and some iso-
lated largely Indigenous places around the Gulf of Carpentaria and the Torres Strait
islands.
Summary
The results of modelling conducted to identify the key factors that might explain the
endogenous employment growth performance of LGAs across regional Queensland, using
OLS regression and step-wise regression models (a general and a specific model), indicate
that a reasonably small number of independent variables are important, with the model
resulting in high R-squared values that explain over 88 per cent of the variance. The results
tend to lend support to the importance of variables relating to industrial structure, popu-
lation size and human capital as explanatory factors in explaining differential endogenous
growth performance. Population growth emerges as a particularly strong positive factor, as
is the level of income at the beginning of the decade period analysed. Population size at the
beginning of the period is also important. But in addition, change in levels of unemploy-
ment as well as change in the concentration of occupational employment in Reich’s routine
production workers and in-person service workers, along with change in the concentration
of employment in personal service, are also found to be significant determinants of regional
endogenous employment growth/decline across Queensland’s rural and regional LGAs.
Finally, the modelling also identifies the significance of industrial specialization at the
368 Handbook of regional growth and development theories
Figure 18.3 Spatial pattern of LGA residuals for the specific model
18.4 Towards a new paradigm for regional endogenous economic growth and
development planning strategy
Because of the changing role of regional economies within nations and the impact of
globalization, and given the context of contemporary concerns about how to achieve
Measuring regional endogenous growth 369
sustainable development, a set of new considerations are now being taken into account in
formulating and implementing economic development strategies for regions. These are
outlined below:
Thus, thinking is diverse on how to plan for and how to facilitate regional economic devel-
opment in an environment of global competition, rapid change and a concern over
sustainability.
All of this means that regions and regional economic development agencies need to give
explicit attention not only to exogenous factors but also to endogenous factors in formu-
lating regional development policy and in framing strategy and implementing plans to
achieve regional economic growth and development, and to enhance regional perfor-
mance. In arguing the need for an emerging paradigm of regional economic development
planning, and to assist regions to undertake the processes involved in regional economic
development strategy, it is important to identify the key elements for regional economic
development strategy building and implementation, and to place those in a process that
pulls together resources, infrastructure, social capital and technology to facilitate the
370 Handbook of regional growth and development theories
● the identification of regional core competencies, how to maintain them, and how to
accumulate new core competencies;
● developing social capital;
● building and maintaining strategic leadership;
● the continuous rejuvenation or re-engineering of the processes of governance and
the structure and functions of institutions;
● the more effective and efficient exploitation and management of resources;
● building market intelligence;
● providing strategic and smart infrastructure;
● identifying regional risks, and developing a risk management capability;
● incorporating the principles of sustainability into regional economic development
strategies.
There is, however, no universal model or framework guaranteeing success for regional
economic development. Stimson et al. (2006) propose a contemporary ‘best-practice’
approach to regional economic development. That approach suggests that the intent of
regional economic development strategy might be to:
● establish a platform for change to guide the development of a region and to facili-
tate its competitiveness in a global environment in the pursuit of a sustainable
future;
● mobilize key actors or facilitators and agents of change, through partnership
approaches encompassing strategic alliances and partnerships between business,
markets, government and community.
Finally, in the contemporary era of the global economy, increasingly the pursuit of
regional economic development also needs to take place within the context of principles
for achieving a sustainable future.
Acknowledgement
The research on which this chapter is based is supported in part by a grant from the
Australian Research Council, Discovery project # DP0558722.
Notes
1. For this chapter we define regional endogenous growth as the summation across all industry sectors of the
differential/regional shift component derived from a shift-share analysis of employment change over a
specified period of time, standardized by the size of a region’s labour force. Whilst it is arguable exactly how
to define regional endogenous growth, this definition has the advantage of being readily calculable using
widely available census data and of being readily understood as a technique.
2. Particularly more recently to China and India.
3. Such as competition policy and tariff reductions.
4. While higher employment may appear to be desirable for a region, the value added by higher employment
is also an important consideration. Growth in low value-added employment may produce other effects, such
as housing affordability issues.
5. Derived from the Needleman technique (1978).
6. A p-value is the probability of obtaining a result at least as extreme, assuming the data point was the result
of chance alone. Thus, the higher the p-value the greater the chance of it being obtained by chance alone.
7. Equivalent to a confidence interval of 95 per cent.
8. In some instances a p-value of marginally larger than 0.05 was included.
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