Regions and Innovation: A Reflection

Abstract

AbstractAfter reflecting on the worthy contributions in this volume, this chapter poses a challenge to the regional development sector: to create a new theory of sustainable regional prosperity that will explain how to scale up innovative local initiatives and apply their principles nationally, so that effective regional development becomes routine.In Australia, ‘economic rationalism’ (neoliberalism) is the pre-eminent conceptual framework within which regional policy is crafted. After identifying four inherent shortcomings of this ideology – based upon mainstream economics – four related obstacles to regional prosperity are explained. First, the concentrated sources of energy needed for transport fuel are limited. Second, growth in throughput of energy and materials cannot continue indefinitely in a finite planet. These two limitations can be side-stepped in part by re-localising population and economic activity into regions. However, regional vitality is drained away by two other impediments – free trade in goods, services and investment; and budget cuts that starve the public preconditions for economic activity.Policy-making in this field is compromised by the shortcomings of gross domestic product, the mainstream headline measure of growth. It is a flow account and is blind to the depletion of natural, manufactured and human capital.Innovation is simply a label for the creative spirit of a free community. Innovation is intangible. It cannot substitute for the physical energy and materials that drive an industrial economy and it is easily dissipated when its tangible expressions such as intellectual property flow outwards. It is essential to sustain a prosperous community, but it is not sufficient.KeywordsGross Domestic ProductFree TradeTrade DeficitMainstream EconomicPrivate DebtThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.