The writer is an economic development consultant and the former trade and investment lead at the Local Government Association of Queensland.

In the world of economic development, the role of local governments often goes unnoticed. Their work can be overshadowed by the more visible actions of central governments. But the significant, at times critical, contribution that councils make towards nurturing economic growth and attracting foreign investment should not be diminished. 

My 15 years’ experience working within local government in Australia has proven to me the transformative role local governments play in driving economic prosperity and attracting foreign investors. It’s led me to a crucial question: are central governments overlooking the strategic importance of councils in fostering economic growth?

Unique vantage point

In an era where austerity has led to substantial cuts in council budgets across many developed countries, local governments’ ability to innovate and provide services that attract investors has been significantly curtailed. There’s a risk that central governments, preoccupied with national fiscal policies and macroeconomic strategies, might not fully appreciate the symbiotic relationship between flourishing local economies and the overall economic health of the nation.

Local governments have a unique vantage point, from which they gain insights into their communities’ needs and dynamics. Their proximity enables them to tailor investment opportunities that not only appeal to investors, but also bring direct benefits to their communities. 

They have unparalleled on-the-ground intelligence, such as access to detailed information on future infrastructure plans and local private sector networks. They can advocate on behalf of investors, facilitate intergovernmental cooperation, and help investors understand and navigate community sentiment to ensure their projects align with public interest and pre-empt community protests and resistance. Part of that involves engaging with influential local figures to foster support for foreign investments. They also play a pivotal role in site selection, identifying suitable land, coordinating with landholders and planning for future infrastructure needs.

This hands-on approach and deep local knowledge contrasts with the broader, often less-nuanced strategies employed by more senior levels of government. State and national governments’ broader scope can hinder their ability to provide the same level of detailed support. This disparity not only highlights the indispensable role of local councils, but also serves as a call to action for a more integrated approach to economic development that bridges the gap between local insights and national ambitions. 

More on economic development:

• The sociology of development
• The world’s most unequal countries
• FDI and economic growth have an ‘unstable’ relationship: World Bank research

Time for a paradigm shift 

Of course, many advocate for a macro-level focus in investment attraction, suggesting that larger economic benefits are best negotiated at national levels. Country-level strategies are undeniably important. Australia’s success with the Significant Investor Visa programme [which gives those investing more than A$5m ($3.22m) a temporary stay permit] and trade agreements have opened the doors to foreign investors and Australian businesses looking to tap key international markets. 

However, to overlook the value of localised engagement is to bypass economic development opportunities. A prime example from my tenure at the Lockyer Valley Regional Council involved a strategic business delegation to Singapore in 2015. This wasn’t just about showcasing our region’s capabilities as an investment destination, but also positioning a group of export-ready local producers for distribution into southeast Asia. One participant captured a staggering 33% of the lucrative Singapore retail market for their line of consumer foods. The trip was pivotal, educating foreign business about our local market, and laying the foundation for ongoing relations and investment — both outbound and inbound.

Fostering a conducive investment climate requires collaboration across all tiers of government, and empowering local councils can unlock a wealth of growth opportunities. It’s time for a paradigm shift that recognises local governments not just as administrative entities, but architects of economic prosperity, equipped to transform their insights and capabilities into strategic investment opportunities.

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