Dr David Wilson: Our regions need to diversify

Dr David Wilson.

Concern and pessimism surrounding the recently released Maxim Institute report on the future of New Zealand's regions has raised some challenges.

However, there is a certain "demographic determinism" in the report that needs to be tempered by other factors such as global political and economic conditions, the structure of regional economies, their comparative and competitive advantages, intra and inter-regional dynamics, and local factors such as liveability, leadership and economic development efforts.

"Fortunes can be changed with the right interventions, but these are hard won and require a concerted effort over time. Internationally, these kinds of efforts are largely led by regional development agencies (RDAs)".

Unfortunately in New Zealand RDAs are largely funded by local government, with limited budgets (with the possible exception of the City RDAs).

This is where we agree with the Maxim Institute that there needs to be more "subsidiarity" in the system - the ability to apply resources at the right level to the greatest effect.

Some small towns, in some regions, may struggle in the future, especially if their economy is narrow or based on a single industry and they fail to, or don't have the means to, diversify.

This leaves them vulnerable to global economic shifts in one industry.

However, if their local economy is connected to the wider regional economy, then how the region performs, in terms of its international competitiveness, will be the likely deciding factor for future growth, not previous demographic trends.

It is not all doom and gloom in the regions; many are experiencing halo effects from larger cities, benefiting from worldwide shortages of protein, innovation in long-standing primary and productive sectors and tourism.

The export profiles (percentage of the economy based on export) of regions far exceeds those of our major cities.

So, regional disparity is not a rural region issue, it is a national issue, and needs to be thought of that way.

Therefore, we agree with the institute's recommendations for future research on "the role of multi-level governance as a way of finding new and innovative regional solutions", and exploring "smart specialisation" in rural regions, where there is not the "urban" factor in knowledge-based industries but significant depth in productive sectors and other natural advantages, and the role of "second tier" (their words) regions; those connected to our main city-regions exploring economic complementarities, physical and digital connectivity, logistics, the cost of doing business and shared innovation.

Cities and regions both have integral roles to play in New Zealand Inc and they are not separate. They are interconnected. It's not just about national economic policy either; business leaders, government, iwi and development agencies all have roles to play.

What needs to be strengthened are the mechanisms at a regional level to implement policy and to develop those opportunities.

- Dr Wilson is also CEO of Northland Inc - Northland's regional development group.