Australia’s prosperity is spread unevenly. While measures of economic growth and wellbeing have improved overall, many people and communities feel left behind.

This is understandable given disparities such as:

  • A strong rise in national income in 2016, but very weak growth in the wages of workers.
  • Just ten locations across Australia that are contributing over half of the nation’s economic growth—the largest share comes from Sydney and Melbourne as major cities, but regional centres and outer suburbs are languishing with low or no growth.
  • Greater Sydney (with GDP growth about twice that of Australia’s) has a marked divide, with jobs growth in the centre and East but population growth concentrated in Western Sydney.

This variation in prosperity between different places reflects the naturally-occurring benefits of agglomeration. It also results from the spatial effects of changing patterns of economic activity, with strong growth in the services sectors and the relative decline of traditional manufacturing and some resources industries.

For example, Sydney performs well in financial and professional services which concentrate in and around the CBD, contrasted with the ongoing reduction in manufacturing mostly located in industrial estates dispersed in suburbs.

However, communities on the wrong side of this prosperity divide should not be resigned to being less well-off and disadvantaged in their access to jobs, services and opportunities. These communities can shape their own future, both as an economy and as a society, by learning from what the Brookings Institution calls “the new geography of innovation”.

Brookings researchers, Bruce Katz, Julie Wagner and Jennifer S. Vey, have reported on their investigations into the shift from innovation being dominated by isolated, stand-alone Silicon Valley-like corporate campuses and technology parks, to emerging compact and vibrant ‘innovation districts’. These innovation districts have a mixed use of housing, jobs and social amenities which attracts both employers and talented employees, promoting knowledge-sharing and connections for better economic and social outcomes for these areas.

The rise of innovation districts reflects the growing trend for ‘open innovation’ and creative problem-solving across diverse firms, disciplines and sectors. Innovation districts are also a response to the preference of people to live, work and play in dynamic neighbourhoods that are walkable, liveable, and offer choice and the possibility of serendipitous encounters and relationships.

Innovation districts are geographic areas which foster uncommon connections between firms, people and places, resulting in an innovation-friendly environment for generating and using fresh ideas and knowledge, and spurring the growth of new businesses and jobs.

Brookings finds that innovation districts work by combining economic, physical and networking assets. This acts not only to advance economic development, but for social inclusion, liveability and sustainability of communities.

Economic assets are the organisations that drive or undertake innovation practices including companies, universities, research and medical institutions, entrepreneurs, start-ups, incubators, schools, training bodies, and supporting services and amenities.

Physical assets are the public and privately-owned spaces—buildings, co-working areas, open spaces, streets and plazas, broadband, transport and other infrastructure—designed and organised to stimulate new and higher levels of connectivity, collaboration and innovation.

Networking assets are the relationships between the actors in the innovation district that activate quick and seamless flows of knowledge and the building of trust, essential for collaboration and business alliances.

Innovation districts can take many forms, and are evident in cities from Barcelona to Stockholm, to Seoul, Manchester and London. But, from its analyses in the US and Europe, Brookings identifies three types of innovation district:

  • Those emerging around anchor institutions like universities and hospitals, e.g., Cambridge Massachusetts around MIT.
  • “Re-imagined urban areas” near historic waterfronts and industrial and warehouse districts, e.g., South Boston.
  • Reformed science parks with the inclusion of housing and new activities including retail and restaurants, e.g., North Carolina’s Research Triangle Park.

While innovation districts are a feature of urbanisation, their lessons can be applied to all regions and centres seeking to revitalise their communities.

So, what can communities aspiring to be innovation districts do? Three actions stand out:

  1. Understand their strengths and gaps as an innovation district through rigorous auditing and assessment, and champion a clear vision and action plan to address these.
  2. Strengthen the skills and capabilities of local people and attract talent so their community is well-equipped for the new jobs and industries that match their competitive advantage.
  3. Constantly search out new customers, markets and partners to help realise their opportunities as an innovation district.

The essential ingredients of innovation districts provide distressed communities with a greater chance of sharing in Australia’s prosperity.


Australian Bureau of Statistics, 5206.0 Australian National Accounts: National Income, Expenditure and Product, December 2016, issued 1 March 2017.

Matt Wade, Now for the good news: Life got better for Australians in 2016, Sydney Morning Herald, 4th-5th March 2017.

SGS Economics & Planning, GDP by Major Capital City, 2015-2016, December 2016.

Committee for Sydney, Adding to the Dividend, Ending the Divide #3, Issues Paper 14, January 2017.

Bruce Katz and Julie Wagner, The Rise of Innovation Districts: A New Geography of Innovation in America, Brookings Institution, 2014.

Bruce Katz, Jennifer S. Vey, Julie Wagner, One year after: Observations on the rise of innovation districts, Brookings Institution, 24th June 2015.