From Geothermal Investment to Local Economic Transformation: Developing a Policy-Enabled Conceptual Framework

Geothermal investment can create local economic opportunities, yet these do not necessarily translate into sustained regional transformation. This study develops a Policy-Enabled Conceptual Framework explaining how investment-generated economic linkages may evolve into locally embedded productive capabilities. Using a theory-building design and purposive, theory-driven literature synthesis, the framework integrates geothermal development, extractive-industry linkages, Global Value Chain governance, and regional embeddedness perspectives. It distinguishes five constructs: Geothermal Investment, Local Economic Linkage Mechanisms, Linkage Quality, Economic Embeddedness, and Local Economic Transformation. Six linkage mechanisms are identified, while Linkage Quality is characterized by depth, durability, breadth, and interconnection, distinct from Economic Embeddedness through local ownership, productive control, and reinvestment. Three governance functions; coordination, capability enabling, and institutionalization; are theorized to influence specific developmental relationships under territorial and project-specific boundary conditions. Seven refutable propositions and an enclave-to-anchor development continuum are proposed. The framework's contribution lies in distinguishing relational linkage quality from territorial economic anchoring and specifying policy-enabled pathways requiring future empirical validation.