Here is one uncomfortable possibility that doesn’t get discussed enough: we may be solving the wrong problems because we’re working from the wrong assumptions. Specifically, we’ve absorbed a set of ideas about what economic development looks like in a “developed” nation – assumptions about mature markets, functioning institutions, and broadly capable populations – that simply don’t hold in many parts of the UK. And in doing so, we’ve filtered out a body of knowledge and practice that could genuinely help us.
The Local and Regional Economic Development Handbook addresses this head-on. One of its most thought-provoking contributions is the argument that practitioners, policymakers, and analysts in the UK routinely dismiss as irrelevant a set of fundamentals that the international development literature has worked hard to establish. The logic goes: we’re not a developing nation, so what could there possibly be to learn? Quite a lot, it turns out. This piece draws on that thinking and asks what it would actually mean to take it seriously.
The Poverty Trap Is Not Someone Else’s Problem
Development economists have long understood that poverty is not merely an outcome of weak economies – it is an active drag on growth itself. This is not a compassion argument. It is an efficiency argument. When significant portions of a population face material deprivation, poor health, insecure housing, or food poverty, they cannot participate fully in economic life. Human capital depreciates. Labour markets function badly. Demand is suppressed. Local multipliers weaken. The economy loses productive capacity it never even knew it had.
In lower-income countries, this insight has shaped entire policy frameworks – conditional cash transfers, social protection floors, investments in basic services as economic infrastructure. But in the UK, we tend to separate economic development from anti-poverty work, treating them as adjacent disciplines that occasionally overlap rather than as deeply intertwined concerns.
When a local authority or combined authority looks at weak productivity figures, chronically low business formation rates, or persistent worklessness, it needs to ask whether deprivation itself is a structural constraint on economic performance – not just a consequence of it.
The Local and Regional Economic Development Handbook challenges that separation directly. In practice, this means that when a local authority or combined authority looks at weak productivity figures, chronically low business formation rates, or persistent worklessness, it needs to ask whether deprivation itself is a structural constraint on economic performance – not just a consequence of it. Are people unable to take up opportunities because of caring responsibilities they can’t afford to resolve? Are health conditions shaped by poor housing dampening labour market participation? These are economic questions, not just social ones.
The challenge for practitioners is that it requires crossing funding streams, crossing departmental silos, and in many cases crossing political comfort zones. Economic development teams are rarely resourced or mandated to lead on poverty. But understanding the mechanism matters, even if the levers lie elsewhere, because it fundamentally shapes how you read the economy and where you look for leverage.
Markets Don’t Correct Market and Economic Failures on Their Own – and They Never Did
One of the most persistent myths in UK economic policy is that the state’s job is to correct market failures and then get out of the way. Create the conditions, remove the barriers, and private enterprise will do the rest. It’s an appealing idea. It’s also, as The Local and Regional Economic Development Handbook sets out, largely contradicted by the historical evidence – which, you guessed it, is a cornerstone of international development theory and practice.
The theoretical basis here draws on a rich tradition of heterodox and institutional economics, from Mariana Mazzucato’s work on the entrepreneurial state to Ha-Joon Chang’s detailed histories of industrial development. What this literature shows, repeatedly and across very different national contexts, is that governments don’t just facilitate the development of industries – they actively shape, nurture, and direct them. The semiconductor industry, the internet, pharmaceutical innovation, the green economy: in each case, state investment, state procurement, state risk-taking, and state coordination preceded and enabled private sector growth.
For those working in combined authorities or other regional economic development agencies, this reframing has practical consequences. It means that the question is not whether to intervene in markets, but how, and with what theory of change. It means that sectoral strategies need to go beyond mapping existing industry strengths and creating business support programmes – they need to ask what capabilities the public sector itself needs to build or commission in order to catalyse development. It means that patient, mission-oriented investment is more likely to generate structural change than time-limited competitive grant funding.
This matters because much of the UK’s economic development architecture is still built on a facilitation model – the state as broker, as convener, as condition-creator. That model is not without value, but used exclusively it leaves enormous amounts of potential economic transformation off the table. The Handbook doesn’t argue for the state to crowd out private enterprise. It concludes, using economic and evaluation evidence, for a more honest account of the relationship between public action and economic development โ one grounded in evidence rather than ideology.
Public Goods Are Infrastructure, Not Charity
There is a related point about public goods that is worth dwelling on. In development economics, investment in public goods – clean water, health systems, education, transport, digital connectivity, the rule of law – is understood as foundational economic infrastructure. These are not nice-to-haves. They are the substrate on which market economies function.
In a British context, that logic has sometimes been lost beneath decades of debate about public sector efficiency and the size of the state. We have moved so far in the direction of treating public services as consumption items – things that citizens receive – that we have partially forgotten how to think about them as productive investments. The connection between a well-functioning NHS and a productive local workforce, between high-quality early years provision and long-run labour market outcomes, between reliable public transport and the geography of economic opportunity – these chains of causation are real, measurable, and important.
The Local and Regional Economic Development Handbook makes the case that practitioners need to hold this understanding firmly, especially at a time when public sector finances are under sustained pressure. When services are cut, it is not only a welfare impact that results – it is often a direct economic impact too, even if that impact takes longer to show up in the data. Understanding this helps make the case internally, politically, and in partnership structures for maintaining investment in the foundations of a functioning local economy.
In practice, this means building the analytical connections between public service quality and economic performance into your local economic assessments. It means being willing to make the argument – carefully, with evidence – that cutting the public realm has economic costs as well as social ones.
Institutions Must Grow, Not Simply Arrive
One of the most intellectually rich areas of the international development literature concerns institutions – the formal and informal rules, norms, organisations, and relationships through which economic activity is structured. The Nobel Prize-winning work of Elinor Ostrom, the institutional economics of Douglass North, and a wide body of comparative development research converge on a finding that carries real implications for local economic development practice: institutions work when they are adapted to context, and they fail when they are transplanted wholesale from elsewhere.
This is a lesson that has been learned painfully in international development – the World Bank-backed introduction of property rights systems that ignored existing communal arrangements, governance structures imposed without local legitimacy, financial instruments deployed without the relational infrastructure to make them function. These interventions often failed not because the ideas were wrong in principle, but because the institutional context wasn’t right.
Some UK institution have taken root. Many have not fully done so. And a significant part of the reason is that institutional design has been driven more by national political cycles and fashionable models than by careful attention to local conditions, histories, relationships, and capability.
The Local and Regional Economic Development Handbook draws the parallel explicitly. The UK has spent thirty-plus years creating, abolishing, and recreating institutions for local economic development – regional development agencies, local enterprise partnerships, mayoral combined authorities, investment zones, freeports, growth hubs – each arrived with its own logic, its own governance model, its own theory of change. Some have taken root. Many have not fully done so. And a significant part of the reason is that institutional design has been driven more by national political cycles and fashionable models than by careful attention to local conditions, histories, relationships, and capability.
The challenge for practitioners is this: when a new institution or programme lands in your geography, the question is not only whether it is well-designed in the abstract. The question is whether it fits? Does it align with existing relationships and trust networks, or does it cut across them? Does it have the right incentive structures for the local economy’s actual characteristics? Does it have the time to adapt and evolve, or will it be reformed or abolished before it has the chance to become embedded?
The design looks coherent from Whitehall. The logic model holds together. But in practice, in a combined authority office in the north of England or a county council in the south-west, the institution meets a reality shaped by history, local politics, legacy programmes, under-resourced teams, and relationships that predate the new architecture by decades.
This is where the gap between policy ambition and on-the-ground delivery so often opens up. The design looks coherent from Whitehall. The logic model holds together. But in practice, in a combined authority office in the north of England or a county council in the south-west, the institution meets a reality shaped by history, local politics, legacy programmes, under-resourced teams, and relationships that predate the new architecture by decades. Institutions take time to grow into their contexts. The evidence from development economics suggests that the most important thing is not to get the design perfect from the outset, but to build in the capacity and permission to adapt.
The Fundamentals Are Not a Given
Finally, The Local and Regional Economic Development Handbook returns us to something that can feel almost embarrassingly basic: the fundamentals of capital investment, innovation, enterprise, skills, and productivity still apply. They are not automatically present just because we are a G7 economy. They are not to be assumed.
Parts of the UK have capital markets that function poorly for productive investment. Innovation ecosystems that are fragile, shallow, or geographically concentrated. Enterprise cultures that have been shaped by generations of industrial restructuring and economic insecurity. Skills systems that are misaligned with local labour market needs, or that train people for jobs that no longer exist. And productivity levels that trail not only international comparators but other UK regions by a margin that ought to generate genuine alarm.
These are not peripheral problems. They are the central economic development challenge of our time in many places. And treating them seriously – building robust, honest local economic assessments, understanding the specific mechanisms through which they operate in a given geography, designing interventions that match diagnosis to prescription – is harder, slower, and less glamorous than announcing a new strategy or bidding for a new fund. But it is the work.
Bringing It Back to Your Place
If there is a single thread running through this chapter of The Local and Regional Economic Development Handbook, it is that intellectual humility is a professional asset. The temptation to dismiss knowledge because it comes from a “developing world” context, or because it feels too theoretical, or because it doesn’t fit the current policy framework, is understandable – but it is also expensive. It costs us better analysis, better strategy, and better outcomes for the places and people we are working for.
The ideas discussed here โ about poverty as an economic constraint, about the state’s active role in shaping industries, about public goods as productive infrastructure, about institutions that must adapt rather than simply arrive, about the basics of investment and innovation that are never to be taken for granted – are not radical. They are grounded in decades of evidence. They are practiced, with varying degrees of success, in local and regional economies around the world. They deserve a place in how we think about economic development in the UK too.
If this has sparked something for you, I’d encourage you to go deeper. The Local and Regional Economic Development Handbook is available at lredhandbook.com, and it is one of the most practically grounded resources available to UK practitioners right now. Read it. Share it with colleagues. Push back where you disagree. But above all, take the ideas seriously – because the places depending on us to get this right deserve nothing less.
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The Local and Regional Economic Development Handbook is available at lredhandbook.com.
Dr. Glenn Athey is author of The Local and Regional Economic Development Handbook and an advisor and speaker on all things to do with local, regional and city economies. Glenn has held CEO and SMT roles at economic development agencies and has a Ph.D. in Regional Economic Development.
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