Business leaders have backed calls for a new "Greater Birmingham" region with the power to raise £36 million a year in extra taxes.
But they stopped short of calling for a directly-elected mayor to lead the city region.
The proposals have come from the Centre for Cities, part of the Institute for Public Policy Research (IPPR), a left wing think tank with links to Labour.
In a report called City Leadership: giving city-regions the power to grow, the IPPR said Greater Birmingham should have a budget of £675 million to spend on economic development, regeneration, transport and training. The money would come from raiding the budgets of existing quangos such as Advantage West Midlands and regional housing and transport boards, topped up by a five per cent levy on business rates.
A directly-elected mayor would provide "accountability and leadership", the report says.
The five leading business support groups in Birmingham - Birmingham Chamber of Commerce and Industry, Birmingham Forward, the Confederation of British Industry, the Engineering Employers' Federation and the Institute of Directors - said they believed in the potential for a city-led region.
Jerry Blackett, the Chamber's policy director, said: "We know that better decisions will be made if more power and funding is placed into local hands.
"The UK is one of the most centralised economies in the free world but there is much work to be done to recapture the sort of civic leadership that distinguished Birmingham in the 1950s and the Victorian age, when local family-owned businesses made such a positive contribution to the future of the city."
Chris Clifford, regional director at the CBI in the West Midlands, said: "Generally we support the report but we are not ready to embrace a full-blooded scheme of supplementary business rates.
"Nor are we ready for the re-localisation of business rates. We need to see some concrete proposals that define a meaningful role for business in the governance arrangements for the city region and we need to see the city region deliver."
John James, chairman of the Institute of Directors West Midlands Region, said: "We need some time to build long-term, collaborative and trusting working relationships between business and the public sector."
Simon Murphy, chief executive of Birmingham Forward, said: "We need to agree some demanding success criteria by which we are prepared to be judged.
"If, within 24 to 36 months, we have fallen short then it is clear that a regionally elected and/or Birmingham Mayor, as proposed by the IPPR, will come back into the equation so that we can fulfil the prize of dramatic economic growth that we seek."
Peter O'Grady, representation and strategic development manager of the Engineering Employer's Federation, added: "The city region can be a real boost to the manufacturing and engineering sectors, which can be at the heart of this region's renaissance. These sectors will prosper with the right sort of economic agenda."
According to the IPPR, the region should include Birmingham, Solihull, Coventry, North Warwickshire, Tamworth, Lichfield, Cannock Chase, Walsall, Wolverhampton, Sandwell, Dudley, Bromsgrove and Redditch.