Institutional thickness and institutional effectiveness: developing regional indices for policy and practice in Australia

There has been considerable discussion of the role of institutions in development, including regional development, since the early 1990s with the work of North in 1990 followed by major interventions from Amin and Thrift in 1995 and other researchers. In large measure this set of literature has focused on evaluating and describing the 'institutional thickness' of places, the relative richness or poverty of institutional structures that support economic activity and growth. While much discussed, this concept has struggled when considered quantitatively. Some authors have noted that regions can have too much institutional thickness, with agencies and government entities 'crowding' each other out and distracting growth efforts. Recently Rodriguez-Pose in 2013 has argued that there is a need to reconsider this set of concepts, and that there should be a focus on institutional effectiveness, not thickness. This paper takes up the challenge of measuring both institutional thickness and institutional effectiveness for Australia, producing an index at the level of local government areas (LGAs) and the territories of Regional Development Australia Committees. This disaggregated picture of effectiveness results in insights that highlight the importance of state structures, the relative advantage of metropolitan location, the pivotal role of political influence and the capacity of regions to shape their own future.