Resilience by Design: An emerging chapter in innovation and industrial ecosystem thinking

Dr John H Howard
5 hours ago
9 min read

John H Howard, 1 September 2026

This working paper is one of a series prepared by the Acton Institute for Policy Research and Innovation to inform the UTS research project Turning AI into Productivity: The Role of Innovation Ecosystems, supported by the Google Foundation. The project's final report will be launched by the Minister for Industry and Innovation on 22 September 2026**.

Resilience moves to the centre of policy

In his first address to the National Press Club in March 2026, Senator Tim Ayres chose resilience as his through-line. Australia, he argued, must become stronger, smarter, safer and more resilient to the shocks that keep coming (Ayres, 2026a).

The address treats industrial policy as security policy. A society's capacity to withstand shocks rests on strong institutions, social cohesion and a robust industrial base; research, science and innovation build all three. Finland, aligning social policy, industry, education, research and defence around national endurance, supplied the model.

The Minister named four requirements: mission-led research tied to national priorities; statecraft that turns ambition into delivery; scale through international partnership, including Horizon Europe association; and capability in artificial intelligence, which he places inside resilience itself.

In June he sharpened the point: resilience means little unless an economy can “make the things it needs, when it needs them most” (Ayres, 2026b).

The 2026-27 Budget carried the theme into institutional form. It announced a National Resilience and Science Council in place of the National Innovation Council that the Strategic Examination of Research and Development had proposed, binding science explicitly to national purpose. The policy narrative has moved forward: resilience names the outcome, and science, research and innovation name the means.

Where Australia sits in the world

The Minister’s reading belongs to a wider shift, not a local improvisation. The IMF, drawing on its New Industrial Policy Observatory, describes “a qualitatively different kind of industrial policy” since 2020, motivated by supply chains, security and geopolitics, and the OECD has returned the field to its ministerial agenda (International Monetary Fund, 2026; OECD, 2026).

The scholarship points the same way. Juhász, Lane and Rodrik (2024) define industrial policy as government action that targets the transformation of economic activity for a public goal, and locates its success in administrative capacity and the discipline to let losers go.

Australia’s closest cousins are the United States and Japan. Biden’s final strategy framed resilience as government-enabled, private-sector-led investment that “crowds in private capital” (The White House, 2025), and Japan’s industry ministry warns that lost manufacturing infrastructure is difficult to recover (Ministry of Economy, Trade and Industry, 2026).

The Minister’s catalytic public capital, deployed through specialist vehicles, sits in that company. International practice adds one refinement: re-localising production alone is not the answer, and diversification, open markets and flexible supply chains carry much of the load (OECD, 2025). An ecosystem strategy can maintain capability onshore while remaining open.

Three interpretations, three policy directions

Three broad interpretations of resilience are relevant to innovation and industrial ecosystems, and each points policy in a different direction. Table 1 sets them out.

Table 1: Three interpretations of resilience in innovation and industrial ecosystems

Interpretation	What it means for an ecosystem	Where it points policy
Bounce back	The ecosystem returns quickly to its pre-shock growth path once a shock passes	Remove barriers to rapid adjustment: flexible markets, lighter regulation, and quick reallocation of workers and capital once a shock passes
Absorb	The ecosystem holds enough buffers and spare capacity to take a shock without losing its shape	Build buffers before the shock arrives: reserves, spare capacity, diverse suppliers, and protection for essential or critical capabilities
Adapt and transform	The ecosystem reshapes its industries, technologies and institutions when disruptive change arrives	Invest for the long run in structural strength: skills, research, infrastructure and institutions that let industries reconfigure

© Acton Institute for Innovation, Sydney, drawing on the resilience literature. See: Gopalakrishnan Nair, R. (2026)

Australian policy draws on all three at once. The Productivity Commission (2025) leans towards the bounce-back interpretation, with taxes, spending, and regulation as the levers.

The Minister’s speeches combine absorb, adapt, and transform: hold the industrial base, then upgrade it through capability, coordination, and sustained investment. The terms of reference of the new National Resilience and Science Council may settle which prevails.

Resilience as an element of ecosystem value

Resilience also sits within a wider account of how innovation and industrial ecosystems deliver value. Recent Acton Institute work identifies three elements: productivity, conferral and resilience.

Productivity converts research, technology adoption and collaboration into output and income.
Conferral covers the benefits an ecosystem brings to its host community and region: skills, amenity, identity and opportunity.
Resilience is the capacity to adapt and keep delivering the other two when shocks arrive.

Companion papers in this series examine the first two; this Insight looks at the third.

The field evidence

The Acton Institute's innovation ecosystem evidence base covers 109 innovation ecosystems across 35 countries, with 44 detailed case profiles and 15 field visits (Howard, 2026). Across that material, resilience appears as a property of ecosystem structure: identifiable design features produce it, rather than macroeconomic settings alone.

Several features stand out.

Anchors and income spread across several sectors. Ecosystems that draw on several anchor institutions and income sources absorb shocks better than those organised around a single firm or funding channel.
Activity across several centres rather than one campus. Distributed structure costs more to coordinate but is less fragile, because no single node can bring the system down.
Governance that outlives funding cycles. Trusts, cooperatives and layered arrangements hold an ecosystem together through changes of program and government, where time-limited schemes fall away.
Broad ownership. Wide ownership and participation keep value within the host community and sustain local support through hard years.
The accumulated stock of infrastructure beneath the flows. Transport and digital networks, energy and water systems, and research facilities carry the capacity to adapt when a shock arrives.

These are summarised in Figure 1.

Figure 1: Five design features through which resilience accumulates

© Acton Institute for Innovation, Sydney.

Sustained investment in physical, knowledge, financial, and social infrastructure is a necessary condition for ecosystem performance (Howard, 2025). Resilience is capacity held in reserve, and it accumulates over time.

Resilience across four sectors

Four sectors show the features at work, and what happens without them. Table 2 summarises the cases, the shocks they faced, and how each adapted.

Table 2: Resilience across four sectors: cases, shocks and mechanisms

Sector	Emblematic cases	Shocks faced	Resilience mechanism	Australian counterpart
Food and agriculture	Rothamsted, Saskatoon, Piracicaba, Wageningen	Climate, disease, commodity prices, regulation	Knowledge infrastructure held in trust; crop diversification; industry-led networks	UNE SMART Farms; Toowoomba agtech
Urban design	Barcelona 22@, Tsukuba, London Knowledge Quarter	Property cycles; anchor relocation and retreat	Mixed sources of value; rebalanced land use and tenure	Fishermans Bend; the Sydney Plan
Renewable energy and industrial transition	Danish wind cooperatives, German bioenergy villages, Aalborg-Aarhus	Planned industry closure; subsidy competition; price volatility	Community ownership; diversified transition bets; trading capability	Gladstone, Newcastle and the Pilbara; Gippsland
Manufacturing	Kaiserslautern, Hsinchu, Turin	Component failure; drought; corporate restructuring	Modular production; secure infrastructure; workforce and management capability	ARM Hub; metals processing interventions

© Acton Institute for Innovation, Sydney.

Food and agriculture. Rothamsted in the United Kingdom holds a 180-year experimental archive, owned in trust, and uses it to model farming under climate stress. Saskatoon, Canada, turned a wheat province into a world leader in lentils and other pulse crops. Long institutional memory, converted into adaptive capacity, links the two.

In Australia, the University of New England's SMART Farms connect technology demonstration to the Future Drought Fund's Armidale hub, and Toowoomba's precinct has broadened from digital agriculture into biotechnology.

Urban design. Innovation districts live or die by early choices about land use, tenure and mix. Barcelona's 22@ district prospered while property markets rose, then stalled in the 2007 financial crisis; policy has since rebalanced offices with housing and community facilities.

Melbourne's Fishermans Bend shows the risk of a single anchor. The University of Melbourne's 2025 decision to pause its engineering campus deferred the precinct's catalyst for at least five years.

The resilience frame now extends to Australian land-use planning. The Sydney Plan, launched in August 2026, treats resilience through planning instruments: minimising the impact of natural hazards on communities, protecting natural assets, and recognising Aboriginal peoples' continued connections to Country (NSW Department of Planning, Housing and Infrastructure, 2026).

Renewable energy and industrial transition. Denmark's community-owned wind cooperatives built the participation base for a global export industry, and Germany's bioenergy villages keep transition value in local hands. Australia's experience is more sobering: hydrogen projects in Gladstone, Newcastle and the Pilbara stalled or collapsed when costs rose, and partners withdrew.

Strategies that depend on a single future industry are fragile. Gippsland offers the alternative, spreading its transition across energy, food and fibre, health and the visitor economy.

Manufacturing. Kaiserslautern in Germany builds resilience into the factory itself, with modular production lines that reorganise themselves when individual components fail. Taiwan's Hsinchu park kept semiconductor fabrication running through the island's worst drought in fifty years.

Australia ranks last among OECD countries in manufacturing self-sufficiency, producing about 68 per cent of what it consumes (Stanford, 2020).

Brisbane's Advanced Robotics for Manufacturing Hub finds that successful technology adoption is roughly 70 per cent people and process. The Government's interventions to secure metals processing at Tomago, Mount Isa, Port Pirie, Hobart, Whyalla and Gladstone sit squarely within the Minister's frame; the complementary task is to surround those plants with diversified, well-governed innovation and industrial ecosystems.

Tomago works as market-shaping through a specialist investment vehicle, not an ordinary rescue (Green, 2026).

From organising principle to design practice

For resilience to guide innovation and industrial policy, the term needs practical content, and ecosystem design can supply much of it. Table 3 turns the field evidence into propositions for governments funding precincts and regional programs.

Table 3: From field evidence to ecosystem design propositions

What governments could do	The question to ask	The cases that show it
Assess concentration risk as deliberately as opportunity	What happens when the dominant firm contracts, the anchor university pauses investment, or the funding cycle turns?	Gladstone, Newcastle and the Pilbara have already run the experiment with hydrogen
Prefer governance and ownership built to outlast budget cycles and political terms	Who will still own and steer the ecosystem in twenty years?	Rothamsted and the Danish cooperatives, against the time-limited program pattern
Treat infrastructure stock as resilience capital	In which networks, facilities and institutions does the capacity to adapt live?	Hsinchu's water systems; Rothamsted's data archive
Measure capacity as well as activity	What productive capacity remains when the flows are interrupted?	The measurement task set out for the Council below
Evaluate adaptation rather than rebound	Has the region reshaped its structure, or merely recovered its growth rate?	Turin; Tsukuba

An agenda for the National Resilience and Science Council

The Council will define, through its early choices, what resilience means in Australian innovation policy. The absorb, adapt, and transform combination in the Minister's own speeches gives it a stronger foundation and calls for instruments that have capability and build adaptive capacity.

There is also a measurement task. A framework for assessing precincts and regions could weigh resilience alongside productivity and conferral, using observable indicators: anchor diversity, governance durability, ownership breadth and infrastructure depth.

Treating resilience as a designable property of innovation and industrial ecosystems gives the policy narrative a mechanism, an evidence base and a work program. On that footing, the narrative is moving forward, and resilience becomes an emerging chapter in innovation ecosystem design.

References

Ayres, T. (2026a, March 24). Smarter, stronger, safer and more resilient: A Future Made in Australia backed by research and development [Address to the National Press Club of Australia]. https://www.minister.industry.gov.au/t-ayres/media/smarter-stronger-safer-and-more-resilient-future-made-australia-backed-research-and-development

Ayres, T. (2026b, June 16). The British connection and Australian resilience in the 21st century [Address to the Australian British National Resilience Summit]. https://www.minister.industry.gov.au/ministers/timayres/speeches/british-connection-and-australian-resilience-21st-century

Gopalakrishnan Nair, R. (2026). Resilience guiding innovation policy: Is that a good idea? Acton Institute for Policy Research and Innovation. https://www.actoninstitute.au/post/resilience-guiding-innovation-policy-is-that-a-good-idea

Green, R. (2026, August 13). Why the $2.5 billion Tomago aluminium deal is no ordinary bailout. The Conversation. https://theconversation.com/why-the-2-5-billion-tomago-aluminium-deal-is-no-ordinary-bailout-289629

Green, R., & Howard, J. H. (2026, forthcoming). Turning AI into productivity: The role of innovation and industrial ecosystems. University of Technology Sydney.

Howard, J. H. (2025). The handbook of innovation ecosystems: Placemaking, economics, business, governance. Acton Institute Publishing.

Howard, J. H. (2026). The ecosystem evidence base: One hundred and nine innovation ecosystems across thirty-five countries. Innovation Policy Insight. Acton Institute for Policy Research and Innovation.

International Monetary Fund. (2026, May 28). Industrial policy is adapting to crises, but remains hard to implement effectively. IMF Blog. https://www.imf.org/en/blogs/articles/2026/05/28/industrial-policy-is-adapting-to-crises-but-remains-hard-to-implement-effectively

Juhász, R., Lane, N., & Rodrik, D. (2024). The new economics of industrial policy. Annual Review of Economics, 16, 213-242.

Ministry of Economy, Trade and Industry. (2026). White paper on manufacturing industries. Government of Japan.

NSW Department of Planning, Housing and Infrastructure. (2026). The Sydney Plan (Version 1.0). NSW Government. https://www.planning.nsw.gov.au/plans-in-nsw/plans-by-region/the-sydney-plan

OECD. (2025). Supply chain resilience review. OECD Publishing.

OECD. (2026). Getting industrial policies right for open markets, growth and prosperity. OECD Publishing.

Productivity Commission. (2025). Creating a more dynamic and resilient economy: Inquiry report. Australian Government.

Stanford, J. (2020). A fair share for Australian manufacturing. Centre for Future Work. https://futurework.org.au/report/a-fair-share-for-australian-manufacturing/

The White House. (2025). Building resilience through a Made in America industrial strategy. United States Government.

**Dr John H. Howard is Executive Director of the Acton Institute for Policy Research and Innovation, Sydney, and Research Director of the UTS research project Turning AI into Productivity: The Role of Innovation Ecosystems, supported by the Google Foundation. The project is led by Emeritus Professor Roy Green AM, Special Innovation Adviser at the University of Technology Sydney, who reviewed drafts of this paper and contributed advice on its argument and policy framing.