In 2016 we conducted research to investigate opportunities for innovation in Te Tai Tokerau Northland.

We discovered that Northland as a region had a comparatively low level of private sector research and development (R&D) activity.

This is not uncommon internationally where rural regions are dominated by primary production, and do not have readily available or accessible research assets.

But Northland is not dominated by rural production, giving it a reasonably diverse economy with strong manufacturing and tourism sectors, enabling it to both recover quickly and ride out business cycles.

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So what's the issue?

The issue is that construction, which is a large part of the manufacturing sector, and tourism are both affected by business cycles outside of our control, like much of primary production.

Water management had an easier pathway and projects are under way to support, for example, intensive horticulture development. Photo / Supplied
Water management had an easier pathway and projects are under way to support, for example, intensive horticulture development. Photo / Supplied

The age-old adage "we need to add value to our exports" comes to mind.

Internationally, especially amongst OECD countries, policy makers and economic development professionals are looking at how rural regions (those outside of major cities) can build innovative and resilient economies.

One of the strategies is through "smart specialisation" building on a region's comparative advantages (the first C usually relates to things like a region's natural resources). In other words, build depth in a specific domain or specialisation, upon which internationally competitive advantages (the second C usually relates to those things where a business can gain some kind of competitive advantage) can be developed.

So we asked what domains would most benefit from increased R&D support to build specialisations and business opportunities in Northland. Two domains rose to the top in our work: The management and use of water, and bio-actives and related nutritional or pharmaceutical benefits, building on Northland's comparative advantages in flora and fauna, topography, soils and climate.

Lake Manuwai was formed in the 1980s for the Kerikeri Irrigation Scheme. Photo / Supplied
Lake Manuwai was formed in the 1980s for the Kerikeri Irrigation Scheme. Photo / Supplied

On balance we considered that for Northland to gain a global innovation advantage, the second option was the most viable. The first, water management, had an easier pathway and projects are under way to support, for example, intensive horticulture development as you read this. But how do we get those high-value products where the benefit stays in Northland?

The first two Cs are textbook economics with more than 200 years of theory behind them. The third C, collaborative advantage, is new economic thinking that relates more to how businesses work together to gain access and explore new markets and ideas.

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Lots of new business models and ways of working, such as The Orchard, are evidence of this. From an innovation point of view businesses, R&D organisations, and in some cases Government, collaborate to create new specialisations. These usually come from the first two Cs with smart thinking, networks and collaboration added to the mix - the third C.

Recently, as part of my work on the Independent Advisory Panel for the Provincial Growth Fund, I was lucky enough to revisit Opotiki and get a look at its Open Ocean green-lipped mussel farm development. That's right, "open ocean" of the coast of the eastern Bay of Plenty.

It is taking advantage of its special position with regards to plentiful supply of phytoplankton to feed the mussels. Plenty of work to be done to build a world-class specialisation but it is on the path.

Northland? Yes, well, where do we begin? So much opportunity! Manuka honey is just the beginning.

■ Dr David Wilson is the chief executive of Northland's Economic Development Agency, Northland Inc, and chair of Economic Development NZ.