Governance for sustainable regions: can government meet the innovation policy challenge?

Governments have long attempted to encourage innovation and entrepreneurship in many policy spheres, including economic development at national and regional levels. Neoliberal market-based approaches to regional economic policy have been developed as an alternative to government subsidization and regulation. However the role of the state remains very significant in shaping regional strategies and in funding the physical and social infrastructure essential for economic growth. Neo-liberal approaches have focused on economic development through entrepreneurship, but regional innovation policy has been broadened to include economic, social and environmental objectives, summed up as 'innovation for sustainable regions'. Regional policy consists of a series of intersecting goals and programmes that are often in tension. Governments operate in complex institutional contexts and multi-level arrangements which constrain their responsiveness and their capacity to innovate. In the face of complex or 'wicked' issues, there are serious challenges for the government sector to develop capabilities for promoting successful innovation at the regional level. It is argued that governments need to play a leadership role, and that they require new approaches based on partnerships and networks.