Regional development is the policy process by which a region creates and sustains good jobs and economic opportunity, improves quality infrastructure and supports local innovation. It is crucial for national, regional and local governments, businesses, academics and communities. It can help address megatrends and develop resilience to the impacts of globalisation, climate change, digitalisation and demographic shifts, which vary widely within OECD countries.
In general, a successful regional economy is characterized by high productivity, R&D intensity and human capital intensity. These characteristics facilitate the regional connection to a higher-level economic system and to international value chains. However, a high-performing regional economy also needs the right incentives to attract investment, which can be provided by a range of government policies. For example, a region may offer tax rebates, free land sites, interest subsidies or other benefits to companies seeking to expand or relocate to that area.
The institutional environment, which shapes technological dynamics, is a powerful force that interacts with purposeful human agency in complex ways (Boschma 2004). This is especially true given the multi-scalar architecture of institutions – local cultures, national and international laws, regional and corporate governance structures, conventions of specific industries and professions – and their interaction with each other across regions.
This explains why regions often show idiosyncratic growth paths that are not explained by general structural factors. A deeper understanding of these regionally specific trajectories could yield new knowledge and insights about how to support regional growth.