Provincial Growth Fund: lessons from Europe

This article reflects on economic development philosophy, including comparisons between the Provincial Growth Fund and European funds based on personal experience. It is written by Ceri Macleod, who currently is Economic Development Coordinator at Gore District Council, and has previously worked in economic development in the UK and Australia.

Over the past fifteen years or so, I have found “I work in economic development” to be one of those statements that will generally bring a conversation to a close. Throw in the fact that you also work for local government and you are guaranteed never to be invited to any dinner parties ever again.

Sometimes, the other person in your conversation throws caution to the wind and asks what economic development is. What does it mean? What do you do?

How to answer that question depends to a large degree on how much value you place on a burgeoning friendship. Launching into a description of a profession that brings so much diversity, so many different people, places, ideas and plans into a huge melting pot has a time and a place – usually not within the acceptable time limitations of dinner party small talk.

Economic development is one of those fascinating areas that blends a little bit of everything to create an improved quality of life. As economic developers, we try and get our head around a huge range of policies, indicators, opinions, theories and realities to meet the needs of today, without compromising the needs of the future.  

With often conflicting economic theories at the back of our minds, this requires consideration of a wide variety of mechanisms to support the development of a nation, a region or a community. This can vary from initiatives focussed on infrastructure, business development, housing and job creation, to tourism, employability and community development. The broad aim is to create conditions for a little miracle to occur – that magic formula that will generate sustainable growth.

First experience with European funds

My first engagement in the profession came with a focus on regional growth through the intervention of European Structural Funds, primarily the European Regional Development Fund (ERDF) and the European Structural Fund (ESF). Viewed at the time by many Brits as a way of realising some value of European Union membership, ERDF and ESF part-funded a significant number of projects focused on creating jobs and training people. Tightly managed criteria around the development and implementation of projects focused on the classic trifecta of economic, social and environmental interventions to generate sustainable growth in regions with lowest GDP. Create jobs and the problems of the world will be solved. Right?

While those interventions did indeed generate jobs (many of which focused on the management and implementation of funds, mine included) your average Portuguese, Greek or Spanish citizen is likely to have a different interpretation of their success. With relative GDP identified as the major determinant of regional eligibility of funds, the jury is still out for many regarding the long term, sustainable impact of these interventions. The looming spectre of Brexit brings the inevitable loss of these funds to regions ‘most in need’ in the UK, along with a question mark over their relative value in the long term.

Provincial Growth Fund: lessons from Europe

Fast forward 15 years and I now find myself heavily involved in another fund focused on subsidising regions. Unlike funding streams such as ERDF and ESF, New Zealand’s Provincial Growth Fund (PGF) was pulled together quite rapidly, with a focus on quick wins and fast spends. The complex, convoluted and widely consulted sets of rules and criteria that I associated with European funding, have been replaced with a short term, bold and potentially risky approach towards generating growth in the regions.

The PGF, with its political lens, may indeed represent a once in a lifetime opportunity to meet its objective of supporting people in reaching their full potential, by helping build a regional economy that is sustainable, inclusive and productive. Allocating $3 billion – or $6 billion if co-funding aspirations are realised – over just three years, can be viewed as a brave move to stimulate growth. Done well, it could be transformational. Done poorly, it could be seen as a lost opportunity.

While we do not yet know how successful the PGF will be in driving sustainable growth, we do know that it represents an opportunity to take a fresh look at economic development. We have a unique opportunity to think outside the box and get creative. We also have a wonderful opportunity to involve our community, to bring them along on the ride with us, within a broader definition of sustainable growth.

At the very beginning of this piece I bemoaned the fact that economic development is not generally viewed as one of the sexier professions. The PGF has helped change that. Unlike the traditional, top-down, ‘Eurocratic’ policies and processes attached to European Structural Funds, the PGF is accessible, understandable (mostly) and very ‘now’. People generally ‘get’ what it is trying to achieve. It is generating conversations about growth and a recognition across regions that we can make a difference.

From my perspective, it has given me an opportunity to actively engage with a community, locally and regionally. The short term nature of the fund has forced conversations around partnerships, collaboration and the development and delivery of strategic projects mutually beneficial to a variety of stakeholders. It has initiated conversations about the role of socio-economic growth at local and regional levels, and connected to wider conversations about inclusive growth and a wellbeing agenda.

While not all of this can be attributed to the PGF, the fund has built on a momentum of change in the economic development space in recent years. The more traditional focus purely on job creation as a means of stimulating growth has changed considerably, and rapidly. While job creation still holds a significant place in conversations around growth, other factors are now considered essential in promoting sustainability.

Climate change and the use of natural assets are now regarded as highly important factors. Technology plays an ever-increasing and dynamic role in the way people access opportunities and markets, and communicate with each other. The impact on jobs – what they look like, how they are created, and how long they last – has been rapid and transformational. Stakeholder expectations, business longevity and access to markets have changed massively. Culture, ethnicity, social expectations, arts and heritage, creativity, innovation, accessibility and employability, all contribute to a broader conversation about growth, sustainability and ultimately – wellbeing.

The PGF is a good example of how we have changed the way we think about economic development, and how we drive engagement with communities in a meaningful way, to identify the conditions required to drive growth.

For me, those conversations linked into the creation of ‘Ready for Growth’, a community-led framework focused on the need to generate sustainable population growth across the Gore District. To date, the Ready for Growth framework has generated two Council-led PGF-funded initiatives for the District, one focused on arts and heritage, and the other on supporting young people through childhood and into employment. Neither of which look like your average ERDF or ESF project. A range of further projects have been identified for implementation outside PGF. All are genuine, collaborative and focus on key priority areas identified by our community: attraction; community wellbeing; facilitating growth; and business and workforce development.

At the beginning of this discussion I argued that economic development blends a little bit of everything to create an improved quality of life. My professional life has in the main focused on driving the development of specific projects to do just that. 15 years ago the formula required to drive that growth looked pretty straightforward – create jobs, wait for the little miracle to occur, and all will be well.

Today that formula looks ever-more complex – and exciting. Employability, technology, tourism, community resilience and ageing populations are just some of the issues that contribute to – or hinder – that little miracle in the middle. There is no simple, magical formula to promote sustainable growth, which is inevitably shaped by dynamic and evolving needs – the need for inclusion, an eye on the big picture, and a finger on the pulse of our community and the dynamic, global environment it lives in.

The more I practice in this field the more I appreciate how complex it is. While the interventions may have the same broad focus, the need to blend a little bit of everything becomes even more obvious.

My overall philosophy of economic development – creating better lives through sustainable growth – remains the same. It’s just how we do it that changes, to best create the conditions for that little miracle to occur, to drive genuine, sustainable and inclusive growth.

This article has been written by Ceri Macleod, Economic Development Coordinator, Gore District Council.