Towards a Paradigm of Proximity Economy for Competitive and Resilient Cities and Territories
Abstract
1. Introduction
2. Defining Key Concepts of the Proximity Economy
2.1. Dimensions: A Literature-Based Synthesis
- Geographical Proximity: Refers to the spatial distance in which economic activities occur. This is not a fixed distance but rather a “perceived closeness” that varies by context and between stakeholders, such as small businesses and medium-to-large enterprises. A high density of economic actors in an area is often seen as a relevant factor. While spatial proximity facilitates interaction and cooperation, it is not necessarily a prerequisite for interactive learning (Malecki and Oinas 1999; Torre and Rallet 2005).
- Cognitive Proximity: Denotes the extent to which economic actors share a common knowledge base. This shared knowledge is essential for facilitating information exchange, fostering innovation, and developing tailored solutions, thereby strengthening economic ecosystems (Nooteboom 1999; Sánchez-García et al. 2023).
- Social Proximity: Relates to the quality of relationships among economic and social actors, characterized by trust, reciprocity, and cohesion. This dimension is closely linked to the concept of embeddedness, reflecting the degree to which actors are rooted in social and community networks, influencing their cooperation and interaction in local contexts (Uzzi 1996; Pel et al. 2020).
- Institutional Proximity: Concerns the shared norms, rules, values, and incentives that govern economic and social interactions. It facilitates cooperation and coordination, particularly when actors operate within the same social system, such as academia, industry, or government. This dimension is critical for sustaining innovation and collaboration in contexts with shared governance and well-established institutional networks (Gertler 1995; Torre and Rallet 2005; Hoekman et al. 2009; Etzkowitz and Leydesdorff 2000; Ponds et al. 2007).
2.2. Strategic Objectives
- Environmental Sustainability: Promoting low-impact practices, such as using local resources, reducing transport distances, and applying circular economy principles. These practices not only cut carbon emissions but also enhance resource efficiency, contributing to sustainable development goals (Geissdoerfer et al. 2017).
- Resilience: Strengthening local economies’ abilities to withstand external shocks is a crucial goal. This can be achieved by diversifying economic activities and creating more robust local supply chains capable of addressing global disruptions and adapting swiftly to sustainability and productivity challenges (Martin and Sunley 2015).
- Quality of Life Improvement: The Proximity Economy aims to enhance overall community well-being by fostering local job creation, improving access to locally produced goods and services, and reinforcing social ties. This approach contributes to more cohesive and integrated communities (Healey 1998; Manzini 2021).
2.3. Examples of Policies and Strategies Promoting Proximity Economies
2.4. Some Considerations on Territorial Approaches to the Proximity Economy
3. Added Value and Impact Framework
3.1. Economic Contribution
- Revenue growth, profit margins, and market shares linked to collaborative dynamics, measuring the competitiveness of local entrepreneurial ecosystems (Porter 1998; Baumol and Strom 2007).
- Investments in capital goods, annual volume of joint investments, and their percentage growth, evaluating financial sustainability (Mazzucato 2018).
- Research and Development (R&D) investments tied to open innovation processes, monitoring the innovation capacity of entrepreneurial ecosystems (Chesbrough 2003; Bouncken et al. 2018).
- Number of new products and processes developed, patents filed as indicators of market differentiation (Feldman and Audretsch 1999).
- Collaborations between businesses, research centers, and local institutions, measuring the level of cooperative proximity among organizations dedicated to local development and innovation (Fitjar and Rodríguez-Pose 2014).
- Digitalization of businesses as a parameter to assess the construction of digital proximity between businesses and consumers (Caragliu 2022).
- Creation of local jobs, ensuring stable incomes and dignified working conditions, as well as upskilling the local workforce (Rodríguez-Pose and Wilkie 2019).
3.2. Environmental Contribution
- Reductions in transport distances and the lowering of greenhouse gas emissions (Taptich et al. 2016).
- The adoption of circular practices, such as reuse, repair, and recycling, to optimize resource use and reduce waste production (Badhotiya et al. 2022).
- The percentage of materials reused as opposed to newly produced materials, to measure efficiency in resource reuse (Cooper and Gutowski 2017).
- The use of local renewable resources, such as solar and wind energy, to reduce reliance on external sources and enhance energy sustainability (Khorasany et al. 2018).
- The monitoring of traffic flows and local congestion to assess the impact of transport on environmental quality (Sanchez et al. 2020).
- Evaluations of material life cycles and ecological sustainability in local production practices to ensure overall sustainability of economic processes (Hellweg and Canals 2014).
3.3. Social Contribution
- Social Networks: The Proximity Economy fosters an environment in which social interactions intensify due to geographical closeness. This leads to the development of stronger social networks, where trust, cooperation, and cohesion among community members are enhanced (Granovetter 1985; Putnam 2000). Such connections are vital for creating a sense of belonging and solidarity, which in turn stimulates community engagement and mutual support. These reinforced social bonds can improve the quality of life and community resilience (Tricarico et al. 2023).
- Resilience: Local economies strengthen the ability of communities to face crises and economic challenges. Community projects, such as energy cooperatives, not only promote energy self-sufficiency but also the creation of local jobs, contributing to economic and social security. This type of initiative boosts both economic and environmental resilience, enabling communities to adapt and recover more quickly from adverse external events (Iacobucci and Perugini 2021).
- Well-being Improvement: Direct access to locally produced goods and services, often using sustainable methods, contributes to an overall improvement in well-being. This improvement encompasses not only the economic aspect but also social dimensions, enhancing quality of life through the promotion of healthier lifestyles, social inclusion, and the reduction of inequalities (Dempsey et al. 2011). Well-being is further supported by activities that involve socially vulnerable groups, promoting their integration and active participation in the community (Adro and Fernandes 2022).
- Community Engagement: Measured by the number of community initiatives involving local residents and the success of civic proposals, reflecting direct citizen involvement in local decision-making (Cortés-Cediel et al. 2021).
- Market Inclusivity: Observation of how local economic activities integrate individuals from diverse social, ethnic, or economic backgrounds, reducing discrimination within the community (Micelli et al. 2023).
- Talent Development for Disadvantaged Groups: The number of training and retraining programs organized locally for target categories (e.g., NEETs), aiming to prepare the workforce for upcoming economic opportunities (Corradini et al. 2023).
- Community Well-being: This indicator considers the improvement in quality of life through access to locally produced services and goods, positively influencing health, education, and leisure within the community (Kent and Thompson 2014).
- Income Equality: Monitoring how the local economy distributes economic benefits among residents, focusing on the accessibility of earning opportunities for all socio-economic levels within the community (Florida and Mellander 2017).
- Housing Market Accessibility: The impact of local economic activities on the cost of living and access to affordable housing, maintaining community unity and inclusivity (Haffner and Hulse 2021).
- Community Resilience: Assesses a community’s ability to maintain or increase its local population, indicating that the Proximity Economy offers sufficient opportunities to live, work, and grow within one’s neighborhood or city (Kapucu et al. 2024).
4. Relevant Examples
4.1. OpenDot and Fondazione TOG (Italy, Milan): Industrial Innovation with High Social Impact
- Location: Milan, Lombardy, Italy
- Sector: Digital Innovation and Health
- Stakeholders Involved: OpenDot (FabLab), Fondazione TOG (TOgether to Go)
4.1.1. Project Description
4.1.2. Exemplary Output
4.1.3. Success Factors
- Proximity: OpenDot operates within a locally rooted ecosystem, collaborating with universities, public institutions, and other local entities. Most of the suppliers are located within 30 min of Milan, which shortens the value chains compared to traditional bicycle manufacturers, who operate on national and international scales.
- Social Innovation: The project has involved university students and other local actors, fostering the acquisition of skills and promoting social interactions at the territorial level. The direct beneficiaries are the children of Fondazione TOG, their families, and therapists, who can rely on innovative and customized tools. Co-creation allows the development of solutions that meet the specific needs of the local community, improving access to advanced technologies for artisans, SMEs, and end-users.
- Environmental Impact and Sustainability: Thanks to digital fabrication and the proximity of suppliers, OpenDot reduces the consumption of raw materials, encourages local production, and contributes to territorial resilience. The production process uses recycled or reclaimed materials and relies on local suppliers, contributing to a shorter and more sustainable production chain.
4.2. Grööntüügs (Münster, North Rhine-Westphalia, Germany): Food Networks and Short Supply Chains
- Location: Münster, North Rhine-Westphalia, Germany
- Sector: Agri-food and Circular Economy
- Stakeholders Involved: Grööntüügs (Open Food Network Germany)
4.2.1. Project Description
4.2.2. Exemplary Output
4.2.3. Success Factors
- Proximity: Grööntüügs operates as a local hub, where 82% of customers live within a 15-min drive. These data highlight the centrality of territorial proximity in the economic model, significantly reducing logistical complexity and transport costs. Moreover, the strategic positioning of the hub in an area with high customer density optimizes order frequency and community participation. The physical and relational proximity between producers and consumers strengthens the local economy, creating a more direct and transparent system compared to traditional supply chains.
- Social Innovation: Grööntüügs uses the Open Food Network (OFN) platform to facilitate the connection between producers and consumers. The platform allows producers to register as hubs or shops, selling their own products in combination with those of other local actors. During the COVID-19 pandemic, Grööntüügs responded to the increased demand for local food products, demonstrating the adaptability of the model to rapid changes. Through the OFN, local producers gain access to new markets, contributing to economic diversification and the building of direct relationships with customers.
- Environmental Impact and Sustainability: The reduction in the distances travelled by products along the supply chain results in significant savings in CO2 emissions, contributing to a more sustainable model of production and distribution. Grööntüügs encourages the use of local resources and the regeneration of the territory, with a particular focus on reducing food waste. The economic model is supported by regenerative agricultural practices, while the collaboration between local producers reduces reliance on external resources and limits environmental impact.
4.3. Križevci Solar Roofs (Croatia, Križevci): Local Solar Projects and Citizen Participation
- Location: Križevci, Croatia
- Sector: Renewable Energy and Community Participation
- Stakeholders Involved: Green Energy Cooperative (ZEZ), Municipality of Križevci
4.3.1. Project Description
4.3.2. Exemplary Output
4.3.3. Success Factors
- Proximity: The project is an exemplary case of the Proximity Economy in the energy sector. It fosters direct interaction among citizens, local institutions, and the ZEZ energy cooperative, reducing dependence on large energy market operators and focusing the benefits within the local community. Approximately 25% of the investments raised came from Križevci residents, ensuring a strong territorial grounding and stimulating a sense of community ownership. Moreover, the model demonstrates that it is possible to promote local energy independence without relying solely on public funding or large private investors.
- Social Innovation: One of the most innovative aspects of the project is the direct involvement of citizens through a participatory financing model. This approach, the first of its kind in Croatia, allows residents to become co-financiers of the project and receive economic benefits. The initiative has also led to the creation of the Križevci Laboratory for Innovation in Climate (KLIK), a community energy hub that promotes education and awareness of climate and energy issues, helping citizens develop new sustainable projects. KLIK has become a point of reference for creating innovative solutions in the environmental and social sectors, expanding the project’s reach to agriculture and education.
- Environmental Impact and Sustainability: The project is having a significant environmental impact by reducing CO2 emissions and promoting the adoption of renewable energy sources. It is estimated that the installation of the solar panels will save 412.5 tons of CO2 over ten years, making Križevci a tangible example of a city committed to combating climate change. Additionally, the initiative supports the Municipality’s goal of becoming energy independent by 2030, integrating renewable sources and engaging the local population.
4.4. Materialenbank (Belgium, Leuven): Circular Economy in Construction Materials
- Location: Leuven, Flanders, Belgium
- Sector: Construction and Circular Economy
- Stakeholders Involved: Materialenbank, City of Leuven, KU Leuven, Circular Flanders
4.4.1. Project Description
4.4.2. Exemplary Output
4.4.3. Success Factors
- Proximity: Leuven’s strong circular economy ecosystem has contributed to the success of the Materialenbank project. The proximity between the university, local authorities, and private businesses allows for rapid dissemination of knowledge and practice, creating a robust circular construction industry in the region.
- Social Innovation: The project introduces a new approach to the construction industry by encouraging the reuse of materials and reducing waste. It also engages local communities by raising awareness of circular practices and offering consultancy services to businesses and contractors.
- Environmental Impact and Sustainability: The Materialenbank project has a significant environmental impact by reducing construction waste and promoting the reuse of materials, lowering the carbon footprint of construction activities.
5. Conclusions: Proximity Economy and European Policies
- Globalization vs. Localization: Although the Proximity Economy aims to strengthen local economies and reduce dependence on global supply chains, the EU is committed to maintaining free trade and competitiveness in international markets. This creates tension between promoting localization and the need to preserve the benefits of globalization. However, it is important to recognize that proximity is not incompatible with globalization. EU policies should encourage localization in strategic sectors and specific stages of the value chain, where it adds significant value, without compromising global competitiveness. A key element is the concept of “added value”; the Proximity Economy does not represent a universal solution but should be promoted when its contributions outweigh those of traditional economic models, either in absolute economic terms or by also considering environmental and social benefits. This raises the need for proper measurement of the “added value” generated by such practices, challenging the adequacy of GDP as the sole indicator of progress and economic value. In this regard, it may be useful to connect to broader research programs, such as those focusing on the “Beyond GDP” or “GDP + 3” approaches, which aim to integrate indicators of well-being and sustainability in measuring economic and social progress. For example, the recent Competitive Sustainability Index 2024 developed by the Cambridge Institute for Sustainability Leadership (2024) represents an innovative model for European competitiveness that goes “beyond Draghi”. This index incorporates elements of well-being, environmental sustainability, and innovation, offering a framework to measure economic progress more comprehensively and consistently with the EU’s sustainability goals. Integrating such tools into EU economic policies could help to better balance the needs of localization and globalization, fostering a model that values proximity without sacrificing European competitiveness on a global scale.
- Economic Competitiveness vs. Social and Environmental Goals: Proximity-based businesses and production ecosystems tend to focus not only on economic competitiveness but also on social and environmental values, such as social inclusion and sustainability. While these goals often reinforce each other, especially in the long term, trade-offs may arise in the short term, related to the distribution of costs and benefits among different actors. In such cases, it is essential to find a balance that maximizes the overall benefits. European policies, such as the Green Deal and the digital agenda, can facilitate this process through tools such as economic incentives, sustainable public procurement, and support for social enterprises, helping to reduce disparities and promote a fair transition.
- Standardization vs. Local Specificity: The EU promotes standardization policies to facilitate trade and mobility, while the Proximity Economy thrives on valuing local specificities. European policies must allow sufficient flexibility to experiment with local solutions without compromising common regulations. Smart Specialization Strategies (S3) are an example of how the EU is promoting innovation based on regional strengths, fostering territorial approaches that address global challenges in a locally adapted way.
- Digitization vs. Inclusivity: Digital technologies can enhance the Proximity Economy, but the risk of digital exclusion must be addressed through policies that ensure all citizens have access to these technologies, as well as the necessary skills. European policies should promote inclusivity, ensuring that digital transformation does not exclude the most vulnerable groups. The European Commission should incentivize the development of digital skills, integrating digital transformation into local economies, ensuring it does not become a barrier for certain social groups.
- Public Support vs. Market Sustainability: Proximity-based businesses often initially rely on public support (subsidies, favorable financing) to emerge but must be able to grow to become self-sustaining in the long term. European policies should ensure that proximity businesses can develop sustainably, avoiding permanent reliance on public support. EU state aid rules must be considered in such a way as to allow support for emerging businesses while ensuring they can operate independently once they reach a certain level of stability.
Roadmap for Future Research and Operationalization of the Proximity Economy Framework
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
1 | Building on prior research conducted by the European Commission, we show how localized social innovations have delivered sustainable solutions, emphasizing exemplary outputs and success factors. However, due to their illustrative nature, these examples lack a structured comparative framework or standardized benchmarks, reflecting their role as contextual snapshots rather than generalizable models. Their relevance lies in illuminating the varied policy contexts of Proximity Economies across European regions. |
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Tricarico, L.; Hausemer, P.; Gorman, N.; Squillante, F. Towards a Paradigm of Proximity Economy for Competitive and Resilient Cities and Territories. Soc. Sci. 2025, 14, 394. https://doi.org/10.3390/socsci14070394
Tricarico L, Hausemer P, Gorman N, Squillante F. Towards a Paradigm of Proximity Economy for Competitive and Resilient Cities and Territories. Social Sciences. 2025; 14(7):394. https://doi.org/10.3390/socsci14070394
Chicago/Turabian StyleTricarico, Luca, Pierre Hausemer, Nessa Gorman, and Francesca Squillante. 2025. "Towards a Paradigm of Proximity Economy for Competitive and Resilient Cities and Territories" Social Sciences 14, no. 7: 394. https://doi.org/10.3390/socsci14070394
APA StyleTricarico, L., Hausemer, P., Gorman, N., & Squillante, F. (2025). Towards a Paradigm of Proximity Economy for Competitive and Resilient Cities and Territories. Social Sciences, 14(7), 394. https://doi.org/10.3390/socsci14070394