Getting regional development right

A collaborative craft malting facility for brewers, distillers and bakers and the development of new bio and geothermal renewable energy sources are just a few of the new pilot projects about to get underway in Gippsland, as the region charts a new path beyond coal-fired power generation.

Located in the east of the Australian state of Victoria, Gippsland is demonstrating how a joined up strategic approach can revitalise regions outside big cities by harnessing local creativity and innovation to develop a productive and sustainable economy.

It is based around adopting a so-called Smart Specialisation Strategy which is now the endorsed process in the European Union’s regional development policy and was adapted for Gippsland by our researcher team from the University of Melbourne and RMIT working with the local Latrobe Valley Authority (LVA).

Our recently published project report argues that the new forms of partnerships, co-design and knowledge exchange between government, industry, tertiary education and community that are now emerging in Gippsland might be the answer for revitalising regional economies across the country.

Experts are increasingly criticising the ‘urban bias’ that regards innovation and creativity as the preserve of cities. Regional communities and their small businesses are actually more innovative than is often thought – a fact that was highlighted in our separate report on business innovation in Gippsland.

When Gippsland’s Hazelwood Power Station closed down in late 2016, the Victorian State Government established the LVA to provide support to the region. In addition to direct support for workers and their families affected by the closure, the LVA introduced Smart Specialisation as a different approach to transitioning the region’s economy.

Gippsland was the first region outside Europe to be registered on the EU’s Joint Research Centre’s Smart Specialisation Platform that now includes 150 regions.

Smart Specialisation is an alternative to the top-down and technology-focused strategies of regional development that dominated thinking until the early 2000s. Today, the focus is on tailoring region-specific strategies and actions that are led by local communities and leaders, and are based on identified existing strengths and competencies.

The most significant contribution that Smart Specialisation has made is in answering the question of how regional development can best be designed and organised. The approach focuses on building institutional capacity to create new ‘specialities’ through discovery and experimentation based on region-specific economic and institutional structures and skills.

The underlying key mechanism of Smart Specialisation is the so-called Entrepreneurial Discovery Process – an approach in which policy makers and administrators are prepared to listen to stakeholders from across the community, as well as the public, industry, research and education sectors.

The focus is on understanding the needs of the regions and their potential, and using the collective understanding of problems to find solutions through knowledge exchange.

For Gippsland, four sectors have been identified which could provide opportunities for specialisation and investment – Energy, Food & Fibre, Visitor Economy and Health & Wellbeing. In each of the sectors ‘innovation groups’, which each consist of local experts, developed concrete opportunities and themes over the last three years.

In total more than a thousand individuals were involved in the ‘discovery process’ for the key Energy theme alone.

There is now wide agreement in Gippsland that there is significant value in this new collaborative approach and progress has been made in breaking down barriers and existing silos, creating a new way of working cooperatively.

The LVA has played a key role by providing an effective platform for connecting experts, policy makers, higher education, businesses and communities. This facilitation of new ideas and initiatives has yielded particularly promising results so far in the renewable energy space and around value creation in the food production sector.

By encouraging collaboration and innovation, the LVA has improved the business ecosystem that creates opportunities and jobs for the region’s future. The Smart Specialisation process has provided a new pathway for partnerships and building relationships at the local level to design and deliver meaningful outcomes.

The economist Mariana Mazzucato recently argued that the COVID-19 global crisis highlights the important role of government in providing not just financial support to communities and economies, but also in facilitating platforms for exchanging knowledge and skills.

In addition to investment in hard infrastructure, government investment in innovation processes and collaboration can help economies to recover faster and build resilience in the long term. We believe that Gippsland is about to demonstrate exactly that.

Banner: Gippsland’s rolling hills. Getty Images