The concept of regional development has gained increasing prominence over the past two decades as policy makers and researchers seek to understand differences in economic performance and well-being across regions. In its broadest sense, it refers to the initiation and implementation of development initiatives at the local and regional level. These are typically initiated and carried out by actors and agents from the region themselves, aiming at regional benefits and largely based on regional resources. This type of regional development is often referred to as endogenous, in contrast with exogenous development, which is mostly the result of externally-driven forces and strategies.
Regional development efforts can be affected by a wide variety of factors, including demographic shifts (such as an aging population or urbanization), technological advancements that change the nature of work and industry in different regions, global economic trends such as commodity prices, trade flows and capital movements, environmental conditions (such as climate change) and political events both at home and abroad. Because of this, quality regional development policy is essential for economic inclusion and sustainability in both rural and urban areas alike.
While many economic theories of regional development still emphasize interregional trade and the mobility of capital, labor and technology between regions, modern economic geography and other disciplines now incorporate noneconomic factors into their understanding of regional dynamics. Noneconomic factors are primarily related to people and where they live and work, their attachments to places, their knowledge of the local and the environment in which they do business.