For those not fully-aware of the timeliness of the industrial policy and strategy debate, we are on the brink of the fourth industrial revolution which will result in some of the most fundamental changes to economy and society. Why is this important? Because it will alter how we live, work, and how we relate to each other. Some of us still remember life without the internet and smart phones, right? That is the scale of transformation taking place, but with much more complex and long-term implications.
Like the revolutions that preceded it, the fourth industrial revolution has, in theory, the potential to raise global income levels and improve the quality of life for populations around the world. However, it could also have the opposite impact; it could yield greater inequality, particularly in its potential to disrupt labour markets and the world of work.
The UK, alongside other OECD members, is experiencing a slowdown of economic growth, and low productivity is becoming a systemic issue. There is increasing competition, especially from emerging economies, coupled with trade-deficits, an over dependence on the financial sector, precariously over-stretched supply chains, and growing inequalities between localities, cities and regions.
Set against this background, it is timely to revisit the aims and objectives of industrial policy and strategy, which were the focus of a two-day conference I attended last week at the University of Cambridge.
Some of the profound questions that set the scene for animated discussion, included:
What should the scope of the industrial policy be? Should it be place-based? Should it include social protection and welfare? Can industrial policy help resolve national problems? Or rebalance geographical disparities and imbalances? Are these both in conflict? Do we have the right framework to deliver it? What is the role of place? What type of devolution is required? What should the role of the state be? How does industrial policy translate to strategy? How do we engage policy-makers? Have they got the right policy toolkit to make this work? What are the real choices facing policy-makers? What are the similarities and differences between regional policy and place-based industrial strategy? Where is the evidence behind smart specialisation? How do you ensure that lagging regions and people don’t get left even further behind?
The responses to these thought-provoking challenges suggested that:
We probably need as many policy instruments as targets.
Measuring productivity is problematic, especially if regional specificities cannot be taken into consideration.
Industrial strategies should exist to tackle the persistent under-utilisation of local potential. But we can’t necessarily expect it to solve each and every societal challenge.
It was a mistake to abolish, in its entirety, England’s regional economic infrastructure. Improving the spatial relationships between the national and local levels should be a priority. In doing so, alternative and experimental governance models that enable citizen participation should be encouraged.
The scope of place-based industrial strategies should be more holistic if sustainability and social justice issues are to be addressed.
The choice of sectors within the UK industrial strategy benefits more prosperous regions, and there is a risk that some places will continue to stay ahead of those areas that have been left behind.
Imbalances are long-standing. In times of uncertainty and crisis a universal or foundational infrastructure offer that prioritises good provision of public transport, energy, broadband, soft infrastructure, education and healthcare, as well as the protection of natural capital, should exist equally for all.
The existing binary distinction between manufacturing and services in industrial policy is unhelpful as the lines between the two have become blurred, and there are so many interdependencies that are impossible to ignore. Large manufacturers do much more than just manufacturing, they have creative development, services, logistics and distribution within their portfolios.
Universities, as anchor institutions, engaged in research and innovation, are vital to establishing and maintaining networks with industry, and are key drivers of local and regional growth.
The bottom line, according to this esteemed gathering at Cambridge, is that the rationale and the demand for long-term industrial policy and strategy never really disappeared in the UK, and that now it is once again in vogue amongst policy-makers, it is time to make a real difference. More information on the event, as well as the audio of presentations and slides, will be available shortly at: http://www.cpes.org.uk/events/cjres2018/