Connectivity the key to growth

Economic development occurs at a national, regional and local level, but this is not a hierarchy. Each level is just as important as the others and the inter-relationships can be quite complex.

Local government has long made a direct and significant contribution to economic development at the regional and local level. Research by the Economic Development Association of New Zealand in 2007 showed that local and regional councils were committing about $40 million a year to economic development. This level of investment from local government includes salaries and project funds but excludes big spending on capital works, infrastructure provision and tourism.

The activities at a regional and local level are nested within a much broader context. There is basic agreement that our overarching goal is to increase New Zealand's prosperity. For many years, we have been slipping behind the other countries we tend to compare ourselves with. We want to catch up by growing faster than our trading partners.

It's a big ask. Even as we look to accelerate development, all the other countries will be doing exactly the same thing. This is the national context for economic development. The refreshed economic transformation agenda has five themes: growing globally competitive firms; innovative and productive workplaces; environmental sustainability; Auckland as a global city; world-class infrastructure.

Regional and local economic development takes place within that global and national context. Each level of economic development has set clear priorities. There is a critical expectation that the national context has been properly informed by local and regional needs. Some regional and local priorities link to national priorities but here's the rub – they all have their own regional flavour. Some regions may be working on the same national priority but likely to be doing so in very different ways. There is no one- size-fits-all solution nor should there be.

Additionally, each region will differ in the ordering of their priorities. The exercise of linking all these priorities is useful because it signals where national, regional and local priorities intersect. In turn, that makes it clear which priorities central, regional and local government can work together on in terms of actually implementing a solution.

Clearly, not all regional and local priorities will link to national ones. There is a place for regional and local priorities which are just that – regional and local solutions using regional and local resources. There are existing structures which can be used to develop these linkages, bring all the respective strategies together and to act as a useful conduit for coordinated action and implementation plans. If we can make this system work better, it will contribute greatly to development and growth.

Economic development is much more than just the various projects and programmes that play out at various levels around the country. Fundamentally, it is about the conversations with businesses about their needs and how that information then filters back up to shape policy.

Take the example of skill shortages. If the tertiary education system is to solve future skill needs, it will require focused talks with businesses about what those skill needs are going to be in, say, five years. If those talks do not happen, education and training become decoupled from business need. No one wins.

More broadly, we need to build connectivity within the innovation system. This involves creating meaningful, continuing links between business, research and educational institutions, which must be based on high trust levels, and all parties need to see the value in the process.

Local and regional councils can work with central government agencies to establish robust and action-oriented strategies and action plans. They can engage with business communities to ensure all those strategies and action plans are properly informed by the needs of those who are actually creating the wealth and jobs.

Only then can we begin to catch up.

* Bevan Graham is chief executive at the Economic Development Association of New Zealand (EDANZ).

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