An analysis diversification strategies in regional Queensland using a two-region, portfolio selection model

This paper presents results from the application of a portfolio selection model to Queensland data. The model presented here comprises two-regions, being Brisbane-Moreton and the Rest of Queensland. The reason for this choice of regional disaggregation rests on the recent policy discussion in Queensland, where concerns about congestion in the south-east of the state have resulted in the consideration of policies aimed at encouraging settlement outside this region. While such a policy may reduce population pressures in the south-east, there may be implications not only for regional, but also state economic growth. Traditional portfolio selection models allow the evaluation of regional development strategies, by simulating the impact of changes to the employment structure on regional growth and stability. The additional insight of the two-region formulation used here, is how the geographic location of activity affects overall state growth and stability.