Breaking path dependency? Factors to enhance capacity for rural local governments in Newfoundland and Labrador, Canada

Path dependency, often coinciding with the downloading of various responsibilities with reduced funding from higher levels of governments during the neoliberal era, has led to capacity challenges for rural local governments to pursue sector diversification activities. Despite these challenges, research has indicated that, through entrepreneurial efforts, breaking path dependency is possible. Drawing from Staples Theory, Evolutionary Economic Geography, New Public Management, and New Localism as well as primary data from key informant interviews, this paper identifies five factors that influence the capacity of rural local governments to break path dependency. In doing so, it identifies a relationship between New Localism and local governments, and its potential as a bridge for rural economic development. These findings are important, as they contribute to the limited but growing literature related to New Localism and its potential applications for rural local governments in Canada to facilitate economic development.