Instead, they should keep doing whatever they do best - except if that 'specialisation' is in mining.

The counter-intuitive new findings are contained within a new report - 'The impacts of specialisation and diversification of Australia's mid-sized towns' - released this week.

The RAI report found that communities which 'double down' on industries where they have a competitive advantage were likely to build an economy with higher wages and stronger growth.

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RAI Chief Economist Kim Houghton said the report findings were robust and provided useful direction for local political leaders.

"The dominant sort of discussions we hear from regional leaders is that they think they need to diversify. This analysis shows that that's not always the best option," he said.

"It depends a fair bit on what you specialise in and where you want to take your community."

RAI researchers used econometric analysis to examine the growth patterns of towns and cities between 5000 and 50,000 people throughout Australia.

The report had no specific advice for cities that rely on agriculture, the retail trade, healthcare and government-provided services like Tamworth.

The "primary determinants of growth appear to be other factors," the report said.

Dr Houghton said Tamworth ought to diversify, but within its existing strengths of agriculture.

"What Tamworth shouldn't do is diversify into unrelated areas just because it feels like it needs to diversify. That might help in some cases, but it generally starts to bring wages down because you're moving into areas that you're not economically competitive in."

Member for Parkes Mark Coulton said improving technology and productivity had, paradoxically, cost jobs.

"I think for too long we've thought about the jobs being in mining and agriculture," he said.

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