Emerging trends in local economic development: What you need to know
The landscape of local economic development is shifting. Traditional approaches - focused on infrastructure, business attraction, and workforce development - remain important. But new ideas are emerging, reshaping how cities and regions foster economic growth. Here are some of the key trends economic development leaders should be paying attention to.
Innovation ecosystems
For decades, economic development has focused on industry clusters - concentrations of related businesses that drive productivity and innovation. While this remains relevant, the emphasis - particularly in cities - is shifting to innovation ecosystems. These are the networks of startups, universities, investors and support organisations that enable industries to evolve. The difference? Innovation ecosystems prioritise collaboration, adaptability and knowledge exchange over static sectoral advantages.
Mission-driven economic development
More governments are embracing a mission-driven approach to economic development, setting clear goals around societal challenges such as climate change, advanced manufacturing or health tech. Instead of passively supporting industries, this approach actively aligns public and private resources toward common objectives, unlocking new investment and innovation opportunities.
Smart cities and digital transformation
The rise of smart cities isn’t just about technology - it’s about using data to make better decisions. From real-time transport management to AI-driven economic planning, digital tools are helping cities optimise services, support businesses, and enhance liveability. Practitioners who integrate digital transformation into their strategies will be better positioned to attract investment and support emerging industries.
The changing nature of work
The pandemic accelerated trends that were already reshaping the workforce: remote work, the gig economy and skills-based hiring. These shifts are influencing local economies in profound ways - changing demand for commercial space, redefining workforce development strategies, and prompting cities to rethink their value propositions. Regions that proactively address these changes will gain a competitive edge.
The clean economy as an economic driver
Economic development and climate action are converging. Cities that position themselves as leaders in clean energy, circular economy practices and climate resilience are attracting new investment, creating jobs and gaining reputational advantages. The shift to a low-carbon economy isn’t just a regulatory challenge; it’s an economic opportunity.
Beyond growth: Economic resilience and inclusion
While growth remains a core objective, economic development practitioners are increasingly focused on resilience - ensuring communities can withstand shocks such as economic downturns or natural disasters. This includes diversifying economies, strengthening social capital and ensuring economic gains are widely shared. A focus on inclusion - whether through supporting female entrepreneurs, reducing barriers for disadvantaged communities or investing in skills - is becoming central to modern economic development practice.
What this means for economic development leaders
The economic development playbook is evolving. Traditional strategies still matter, but success increasingly depends on agility, innovation and an ability to align economic priorities with broader societal goals. Econovation works with cities, regions, and industries to navigate this changing landscape - helping leaders craft strategies that are forward-thinking, practical and high-impact.
If you’re looking to adapt your economic development approach to these emerging trends, let’s talk. Contact Andrew Wear (andrew.wear@econovation.com.au) for a discussion on how Econovation might be able to help.
This post draws on more comprehensive research published by Andrew Wear in the Local Economy journal. See Emergent Concepts in Local Economic Development.