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Vocational education and training has been widely identified as a key element in strategies aimed at promoting economic growth and development at both national and regional levels. This paper seeks to examine critically the analytical basis of this policy proposal. The simple relationships which are implied between vocational education and training (VET) and economic growth are actually highly complex, especially at the regional level. In particular, the impacts of VET are crucially mediated by other aspects of managerial strategy. For 'less favoured' regions, where economies are already characterised by low skill levels, firms may adopt managerial strategies which accommodate to these low skills; thereby creating a 'vicious circle' of low skills. To break out of the latter implies a much more proactive strategy with respect to VET and regional economic development than has operated historically, whether by influencing managerial strategies themselves or by influencing the kinds of VET undertaken by individuals. Recent changes in the governance of VET in Britain have made the achievement of such a proactive strategy less likely. In particular, the creation of forms of markets for qualifications, on the one hand, and for types of trained labour, on the other, are not reconcilable.