The regional development field has long studied the economic transformation of geographical areas. In particular, it examines the ways in which economic actors and institutions – such as firms and higher education – shape economic landscapes over time. It also considers how new development paths depend on the specific set of assets, economic actors, degree of networking, capabilities and institutions possessed by regions.
Various noneconomic factors have a profound effect on how these dynamics are shaped and what the resulting patterns of regional development are. For example, the socially determined normative principles and values a region’s residents hold about how they wish to live can influence what kind of growth they seek. Likewise, the political and international events that occur in a region can have an impact on what economic opportunities are available to it.
Another important factor is the extent to which a region’s economy can integrate into global markets. This often involves a great deal of competition with other regions that have the resources to compete with it, as well as a host of other challenges.
Finally, government policies can either encourage or hinder investment in a regional economy, depending on the way they are framed. The ability of a regional economy to bounce back from economic disruptions can also be influenced by the support and incentives a government offers in its efforts to develop local businesses and communities. For example, tax incentives can help a region to attract new businesses, while regulatory barriers can inhibit them.