Pike et al. (2016b) indicated that before the twentieth century, the world comprised several strong or strategic national governments and regional governments that were relatively weak or non-existent, with regional governments being either weak or non-existent in many cases as compared to local ones. Before 1970, the number of truly devolved countries was so small that it could almost be counted on the fingers of a single hand. Following this initial wave of empowerment at the local level, primarily through devolution, the concept has spread rapidly throughout the world, explaining the importance of delegating or dividing government roles at different levels of governance. Consequently, different subnational governments have gradually been entrusted with a variety of governance powers. This has resulted in the responsibility of the government of taking better decisions or utilizing the most effective mechanisms to achieve the desired level of development for local communities. When compared to the manner in which socio-economic development was undertaken and achieved in the past, it represents a very significant shift in its paradigm. Place-based strategies for economic development, which take into account the different preferences as well as needs of local agents and make use of local characteristics, are utilized to replace centrally driven approaches to economic development (Metaxas 2010; Ioannidis 2016).

Blair and Olpadwala (1988) indicated that the fact that subnational authorities now have the ability to utilize different territorially oriented approaches or mechanisms all aimed at enhancing development is undeniable. This also represents an important opportunity for most localities or regions across the world to fully realize their economic potential. Although this is a promising prospect, realizing it in practice is frequently fraught with difficulties, and solutions are not guaranteed. First and foremost, there are questions about the most effective manner in which strategies for development should be implemented in a given setting. It is undeniable that the federal level of a country, such as the United States, is usually not enough to deal with the different local development problems (Kalogiannidis et al. 2021).

Local empowerment successfully offers local authorities the autonomy, capabilities, and resources that were before unavailable to them, allowing them to mobilize and act on the information that they have acquired. Policymakers can use their understanding of the needs of local communities to effectively design and implement the different types of contextually tailored policies that are unlikely to be implemented otherwise. Policymakers also have the ability to undertake different decisions that may be very hard to make under a centralized system but that appear to be completely necessary given the recognized uniqueness of each jurisdiction. One of the most significant benefits of local empowerment is the ability to modify governmental policies to meet the requirements of individual communities (Krasniqi 2019). Regions and municipalities, on the other hand, often find themselves in a difficult situation. The fact that they have been granted this empowerment and, more specifically, the option to adopt methods that in theory represent the different needs of local communities that may have been overlooked in a top–down framework is one of the benefits they stand to obtain (Bachtler et al. 2014; Ioannidis 2016).

In southern Europe, the economic downturn of the last decade, but also the high unemployment rates observed combined with the low-investment activity, continues to characterize growth based on the global financial crisis and austerity policies (Leick and Lang 2018; Hadjimichalis 2011; Ballas et al. 2017; Papadopoulos 2016). This situation was inevitably exacerbated by COVID-19 and continues to be exacerbated by the war in Ukraine (Mbah and Wasum 2022; Liadze et al. 2022).

Hadjimichalis and Hudson (2014) argued that these problems date back to the 1990s and that the national systems of the euro-area countries failed to detect the onset of the crisis due to a wider maladaptation and neglect of the capitalist crisis, a failure that can also be ascribed to formerly successful regions. Furthermore, Hadjimichalis and Hudson (2014) estimated that approaches driven by neoclassical geographical and regional development theories have failed to develop a systemic view of capitalism. Thus, because periodic capitalist crises have been neglected, problems have escalated and manifested as a global financial crisis (Hadjimichalis and Hudson 2014; Harvey 2011).

As Rodríguez-Pose and Wilkie (2017) argued, local and regional governments are constantly gaining power and are de facto protagonists of economic dynamism and prosperity. This empowerment is a consequence of globalization—not entirely, but certainly in part (Rodríguez-Pose 2011; Barca et al. 2012; Smoke 2003; Pike et al. 2016a). At the regional level, the pressures imposed by increasingly competitive global economy ends, but also the more specific national pressures, are specialized for the regions, thus shaping the growth trajectory (Rodríguez-Pose and Wilkie 2017).

It is understood that the institutional framework is a key factor in the effectiveness of local development strategies. The policymakers behind the development strategies need to know and understand the potential of these regions or, better, locations, in order to make the most of human capital, infrastructure, or innovation interventions (Rodríguez-Pose and Palavicini-Corona 2013; Rodríguez-Pose and Wilkie 2017; Mura and Hajduová 2021). Therefore, a comprehensive institutional and, at the same time, explanatory framework should be based on the interactions among the economic and political factors (Martin 2015). After all, deficiencies in the socio-economic context jeopardize the institutional, social, and environmental factors (viability of local businesses and derailment of the effectiveness of any policy action designed to make them viable).

One point that is mentioned simply because it is an important element of local and national development is the relevance of small and medium-sized enterprises (SMEs). Small and medium-sized enterprises are the backbone of a good economy, the basis of employment, added value, and prerequisite for sustainable economic growth. Furthermore, small and medium-sized enterprises, when properly functioning, create entrepreneurship, contributing to innovation and healthy competition (Mura and Hajduová 2021; Dvorský et al. 2020; Hudáková and Masár 2018; Chreneková et al. 2016; Zaušková and Rezníčková 2020; Bărbulescu and Constantin 2019). Sustainable development strategies are very essential in the mitigation and overcoming of a territory’s limitations. Bachtler et al. (2014) indicated that a localized strategy for development that is implemented in one area may consist of completely unique programs as compared with a strategy implemented in another context, and the two approaches may ultimately appear to be diametrically opposed to each other. Among other types of policies, localized approaches and strategies may also focus on enhancing education and skill development programs among the locals, which is important for the growth of a local community (Figure 1). The way different initiatives or policies are integrated into a localized strategy or approach for economic growth varies from one context to the next, depending on how specific the broader strategic goals are, as well as the context in which they are to be pursued (Pugalis and Tan 2017).

The concept of sustainability has occupied the scientific community in relation to its integration into university management practices, teaching, and research and, more generally, for the adoption of the terms “sustainable university” and “entrepreneurial university” (Velazquez et al. 2006; Adomssent and Michelsen 2006; Waas et al. 2010; Lozano 2006; Brătucu et al. 2020). Universities in the field of regional development have attracted attention since the 1950s in central European countries. For example, economics considers universities to be soft local agents of knowledge and know-how that enhance innovation. Educational sciences emphasize the reduction in spatial and social inequalities, the access to educational opportunities, and the strengthening of the local labor market. Geographical sciences study the spaces required by the university to operate, as well as the mobility of students, graduates, and teaching staff to include the spatial dimension in research. In general, what universities look at when they think about how to help their communities to grow, excluding aspects such as production and social capital, is how human and intellectual capital can help (Peer and Stoeglehner 2013; Moulaert and Sekia 2003; Lehmann et al. 2009; Gensch 1980).

Multilevel governance plays a key role in enhancing the level of local and regional development. The different coordination as well as collaboration activities associated with local governments help ensure the proper allocation of resources or the allocation of resources to the most essential areas that support development. Research has indicated that the most common barrier to the desired development under multilevel governance is when there is a mismatch that may exist between the resources and authorities transmitted downward to the local government (Bachtler et al. 2014). Local governments may become overloaded as a result of their duties in relation to the authorities and resources assigned to them. Makowska (2021) indicated that addressing vertical coordination shortcomings seems to be critical to ensuring that communities receive the advantages of increased decision-making ability at the local level. One way to address vertical coordination failures is to promote multilevel governance by mostly undertaking decisions that help in the implementation of public policies. Most policies under multilevel governance are effective when formulated through collaborative relationships between vertical and horizontal levels of governance. Multilevel governance structures, especially territorial networks, help people to talk to each other and share information, which is important for cross-territorial coordination and, eventually, better devolutionary processes (UCLGA 2016; Ioannidis 2016).

According to Pugalis and Tan (2017), most local leaders can become actively involved in political processes leading to economic growth and may be better able to communicate and push central governments on their behalf. As a result, these concerns of influence may be more severe in smaller locales and communities, but they are by no means confined to them (Pugalis and Tan 2017). While vertical coordination failures offer different obstacles to economic growth, the failures of horizontally based coordination, such as that among subnational agencies, do occur and must be addressed. Promoting interconnection, conversation, and territorial networks but, this time, among subnational players, can help mitigate these horizontal coordination problems (Makowska 2021).

Horizontally based collaboration may help promote conversation and cooperation between subnational authorities to a greater extent, resulting in an effective alignment of both the territorially oriented policies adopted by local governments and the subnational authorities’ aims. This might reduce the prevalence of wasteful inter-territorial investments as well as economic activity, among other things. Makowska (2021) explained that coordination at the horizontal level can help disclose and enable the general realization of different synergies among smaller subnational authorities. This always leads to resource utilization and contributes to improved coherence between planning procedures and the goals of the different subnational territorial collectives. The overall impact would be to boost their influence on higher-level government decisions, all of which would help mitigate the capacity and other restrictions that these territories regularly face (Herrmann and Kritikos 2013).

Local governments are frequently confronted with a slew of technical capacity issues. Absolute shortages of technical knowledge, skills, or experience may be the source of these constraints. Mismatches between the available and required capacities are the most common causes of these problems. Krasniqi (2019) stated that there are times when policymakers or people in charge of making decisions in a certain territory are capable in a broad sense, but they lack the experience, skills, and technical knowledge to perform a certain set of tasks.

Local capacity constraints have a variety of effects on the level of economic growth. In the current era of globalization, it is very important to look at the discussed issue in terms of economic growth (Mura and Hajduová 2021). Deficits in technical capacity at the local level, for example, may make it impossible to design and monitor efficient fiscal systems (Makowska 2021). Local and regional governments’ ability to raise revenue through taxes may jeopardize their ability to implement viable development plans. Capacity constraints can greatly limit the ability to effectively communicate with different stakeholders at the local level and to articulate the needs and demands to central governments. Inadequate skills, technical knowledge, and experience limit local governments’ ability to mobilize resources and powers and thus achieve development goals. Krasniqi (2019) indicated that capacity-building initiatives are also very essential with regard to ensuring that different localities are able to achieve the desired economic growth and development, as well as improvements in the well-being of the people who live there.

Boyce and Brown (2019) indicated that efforts to improve local technical capacities can take a variety of different shapes. Capacity development is associated with the different processes in which individuals and institutions, as well as societies, develop abilities in order to perform functions, set achievable goals, and solve different governance problems. Krasniqi (2019) indicated that capacity building for localities should include efforts at both the individual and institutional levels. Upskilling, training, sharing knowledge, and learning from other people’s experiences all fit into this category. Capacity-building projects of all kinds are necessary to help local governments deal with the frequent shortages of people with the right skills (Mura and Hajduová 2021; Nordic Working Group 2006).