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News article19 October 2023European Innovation Council and SMEs Executive Agency3 min read

Improving the Socio-Economic Knowledge of the Proximity Economy: Insights from European Union expert

Learn about the findings on industrial ecosystem and socio-economic impacts of the workshop, which took place on 29 September 2023

Two sets of arms, exchanging a box containing apples
Two sets of arms, exchanging a box containing apples
©Dmitry Kovalchuk/

On 29 September 2023, an online workshop entitled “Improving the Socio-Economic Knowledge of the Proximity Economy” brought together experts and practitioners from the European Union to develop a common definition and understanding of this industrial ecosystem, and its social and economic impacts in urban and rural areas.

The workshop was organised on-line by VVA Brussels, Spatial Foresight and LSE cities. This event is part of a broader project funded by the legacy COSME programme aimed at refining the concept of proximity economy and assessing its role as one of the 14 industrial ecosystems identified by the European Commission. The project will ultimately develop a monitoring framework so that this ecosystem can be operationalised and incorporated into future policy actions. 

The workshop explored several dimensions considered important for the development of this ecosystem. According to preliminary findings, the proximity economy cannot be defined without considering both the geographical and relational dimensions of proximity, and how they interact. Participants argued that the physical closeness of stakeholders is key, even if geographical proximity does not necessarily have a fixed distance and can be perceived differently by each actor. The relational dimension was identified as an equally important element to facilitate the creation of networks of direct relationships and social cohesion.

Participants further discussed the impacts of the proximity economy in terms of added value from an economic, environmental and social perspective. For example, experts agreed that this ecosystem can increase sustainability by shortening value chains, it can strengthen the local identity of a territory or neighbourhood, and its quality of life. The proximity economy can also generate new jobs and empower local actors, especially the most disadvantaged segments of the population and smaller businesses, and can incentivise innovation and knowledge sharing. However, participants also emphasised the risks of the proximity economy, particularly territorial inequality and the increased tendency of proximity economy actors to fall into patterns of traditionalism.

Discussions also focused on the enabling conditions which can facilitate the implementation of the proximity economy, and allow it to thrive. In an urban setting, these include population density, a strong network of local stakeholders, technologies and infrastructures facilitating sustainable mobility patterns, as well as vibrant social and circular economies. In rural areas, enabling factors include strong social cohesion and trust-based relationships, a strong digital infrastructure, the availability of essential services, and access to local finance. Notably, the proximity economy is not always a bottom-up, spontaneous arrangement among local actors, and the role of public authorities is fundamental to coordinate all stakeholders in both urban and rural settings.

Finally, due to the blurred distinction between these areas, participants agreed on the necessity to develop more links between urban and rural regions through improved access to essential services and infrastructures, so that the proximity economy can develop and succeed across these territories.

While the participants have certainly covered a lot of ground in the event, there are many interesting and challenging questions that can be addressed further. The final study will also aim at reflecting the discussion and exchanges made.

Explore the workshop’s slides for an in depth sneak peek of this work in progress. Note: the definition of the proximity economy in the slides is a preliminary one that needs to be reviewed based on the discussions.

An in-depth overview of the initiatives on proximity and social economy including projects implemented under the former COSME programme and currently in the SME pillar of the Single Market programme (SMP) by EISMEA in collaboration with the Directorate General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) is available on DG GROW website, while a further insight on social economy projects is available on EISMEA website.

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Publication date
19 October 2023
European Innovation Council and SMEs Executive Agency