Purpose: The purpose of this paper is twofold. First, to identify spatial and temporal disparities in economic growth and human capital in the Australian context; and second, to discuss the relative contribution of two theoretical approaches to address these regional disparities in relation to the university as a vehicle for community engaged knowledge creation and distribution. The two approaches are Sen’s capability approach, and ‘enterprising human capital’ and ‘sp-ethics’ originated by the author and others in earlier work. The questions reviewed in this context have implications for local strategies for economic sustainability based on endogenous knowledge accessibility and social inclusiveness, the underemployment and flight of human capital from many nonmetropolitan regions, and the community engaging role universities play in these regional human capital questions. The questions are addressed from three perspectives: the normative individual seeking to enhance their human capital or realise their capability; the region as a creative and innovative milieu or place for connectivity; and the learning institution (the university in particular) and its role for these individuals and spatial societies. It is argued that these actors and agencies need to be strategically connected, or engaged, with a focus that goes beyond a concern only for production and commodities and moves towards capability-building initiatives and matters of social inclusion. The latter takes into account individual cognition and the influence of attachment to place as an exogenous environmental determinant. Design / Methodology / Approach: The research uses econometric analysis to identify the extent of spatial disparity in economic growth and to identify its significant drivers across 94 regions in the Australian context over an 18 year period. The disparity is manifest in such labour market/ demographic characteristics as an ageing population, skills ‘brain drain’, ‘just-in-time’ vocational training, rural-urban population drift, daily out-commuting, and ‘lifestyle’ underemployment which are now familiar labour market characteristics that affect many regions outside the major metropolitan conurbations. The paper examines two approaches as mechanisms for addressing the spatial disparity, viz: Sen’s capability approach, and ‘enterprising human capital’ and ‘sp-ethics’ both originated by the author and others. A regional example from Sweden is presented which demonstrates the role of the university in building human capability within an innovation system in a region undergoing revitalisation. The paper concludes both approaches have their role and both need to be enhanced through either having stronger connection to the regional milieu and attachment to place in the case of the capability approach and to detailed aspects of cognition in the case of the ‘enterprising human capital’ approach. Originality / Value: The research offers two original elements. First, it undertakes a substantial spatial and temporal analysis of spatial growth and its drivers and consequently identifies stocks and flows of human capital as the most significant determinant causing entrenched and increasing regional growth disparity. Second, it suggests the regional milieu and attachment to place are exogenous influencers of human capability and are a means of addressing spatial disparity. The research provides evidence for government education and spatial policy and for regional and business practice concerned with building individual capability and regional outcomes. The approach identifies a new avenue of application in the use of the capability approach and offers a new avenue for theoretical, policy and practical work in relation to regional development. Practical Implications: For the individual it suggests the possibility of enhanced capability through investment in learning during ‘critical life stages’ and through engagement in the regional community as ‘critical and sensitive places’ of significance. The paper suggests a new approach to policy and practice at an institutional and local community level in addressing growth in non-metropolitan regions. The regional milieu and attachment to place are offered as a supportive atmosphere for collaboration and dialogue where knowledge spillovers and transmission effects are nurtured and promoted and can therefore generate community outcomes beyond individual achievement. For the university it offers a practical approach to its ‘third mission’. Universities play an important regional role because of their focus on human capital and the creation and dissemination of knowledge, their spatial distribution, and their relative institutional freedom of thought and expression. It is argued that universities, with others, have a common good responsibility to ‘reach out to’ and ‘pull through’ the human capital pyramid people with capability who are on the margins of the community and to enhance social inclusion as well as economic sustainability.